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maec-2020

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2015

CCL

CCL #Overall, continental Europe is probably more challenging. When you think about all of the economic difficulties and the geopolitical issues and the growing refugee concerns, that's the area that has had the most challenges in terms of pricing for 2016. But we've had these challenges all year in 2015 to some extent, and we are forecasting that we're going to get yield improvement for our EAA brands for 2015. Hopefully despite all these challenges, we'll be able to do that in 2016 as well. One of the things to keep in mind, as well, is we are also seeing a transfer ---+ we've announced the Costa Fortuna will be going to Asia in 2016. Costa will have reduced capacity, which also helps play in less supply in this type of environment, which should help yields for 2016. The other comment, too ---+ keep in mind, and I know why you guys focus on yield, and we do too. But there's another aspect of this. We can be return-accretive and drive return on invested capital in certain markets across certain brands, even with some challenge in yield. That results from just capacity additions and overall improvement in total mix, and on-board revenues, et cetera. While yield is definitely a key metric, and we totally focus on it as well, slower than you might expect yield growth does not necessarily equal slower than you might expect return accretion. Just real quickly before <UNK> comments. We'll give you guys full guidance in December. We're about to go into our planning meetings, as <UNK> mentioned. We're evaluating all the reviews from the brands in terms of investment spending they may want to make in digital media, broadcast media, events, and PR, promotions, other things to drive demand. We'll take a hard look at all that. Our plan is to deliver the double-digit return on invested capital. We're not going to save our way there, but we also have a focus on cost containment. We, as I've mentioned to you in previous calls, we are focused on cost containment for two reasons. One is the drag on earnings, but the other is it creates the dollars to invest to drive revenue. We are achieving the cost savings that we set out to do. Then the question is whether we let them fall to the bottom line, or we invest them to drive. The investments we've made to date appear to have paid off because of the significant improvement in the business, and we'll be taking a hard look at that going forward. Yes, and I went through some of the areas. <UNK> just talked about the investments that we could potentially make and we'll evaluate; but the other thing that I had mentioned in my notes are the fact that while headline inflation is zero, there is because of commodity prices, there is inflation in certain areas of our business. We built that into our 2016 numbers, as well. But offsetting all of that, we are looking at leveraging our scale. We had talked about the fact we saved $70 million to $80 million in 2015. We're working hard to do something similar for 2016. We also have some benefit from the reduced dry dock days, as well. It's a combination of all those things, which led me to give you guidance that costs could be up slightly next year. It's too early to ---+ but it's plausible and it's possible. It's too early to conclude that at this point in time. But what would not be too early to conclude is that if the yields come down, it will still be return accretive. <UNK>, I'm surprised you're this deep into the call before a heard a question from you, so normally (laughter) No, that was a for example. It was a for example. Okay, it's really an apples and oranges comparison, because in June, the comments that we were making related to the back half of 2015, the last two quarters and the first quarter of 2016; whereas the comments I made here related to the first half of 2016. Because the prior-year comparisons are different, you're really ---+ it's hard to read in. These are apples and oranges comparison, because they're different time periods. Well we had ---+ we've seen, as we had indicated in the third quarter, we had seen a 20% increase in volume. We were very pleased with the volume, but we did say it was at lower prices. We are driving the booking curve ahead, and overall, we believe we'll get yield improvement for 2016. Yes, I would just add to <UNK>'s comment that, as <UNK> said, it's too early to give yield guidance for full 2016. But if you're saying what's the feeling compared to June, I would just say that we remain very confident in our ability to drive directionally towards the double-digit return on invested capital in the next three to four years. To do that, we have to have solid yield improvement. We feel very confident, probably even more confident than we did in June, that we can deliver on solid yield improvement next year. That's despite some of the head winds that today exist in Europe. By the time we get to December, maybe those things won't be the same. But today, with some of the head winds in Europe ---+ geopolitical, macroeconomic malaise, the intense tension over there around the refugee situation that has affected all travel ---+ not just cruise, but all travel. Those things may still be present, or they may wane between now and when we get to December, but we'll give you full guidance then. I think I'll just start with a general comment. From a deployment standpoint, I think that's a fair statement, and <UNK> will certainly comment on those numbers. But I think that the comment we were making was from a source market perspective. We are still sourcing a substantial amount of consumers in the third and fourth quarter, and that doesn't change from quarter to quarter. On the deployment, in terms of where the ships are sailing, <UNK>. In the third quarter, it's about 25% of our capacity is in the Caribbean and 45% in Europe. That goes up to 30% in the Caribbean in the fourth quarter, and Europe goes down to 30%. You're right, there are more ships in the Caribbean and less in Europe in total in the fourth quarter than the third. You have to remember that on a year-over-year basis, it was a similar trend in 2014. When you're comparing year over year, you're comparing then apples and apples. As <UNK> indicated, we saw some pretty good yield improvement in the fourth quarter of 2014. As a result of that yield improvement, we are guiding to 3% constant currency yield increase in the fourth quarter which may be down slightly from the third, but remember, the fourth quarter last year was higher than the third quarter last year in improvement. It is a more difficult comparison. We did not see any fall off in demand related to stock market or general economic fluctuations, none whatsoever. Well, by moving the booking ---+ driving the booking curve further out, we're actually hoping to have a lot less to sell closer in overall. We're looking at it as a situation where as we've said before, what we want to do is have people book early. It is the best time to book because the pricing will only go up, and there won't be last-minute deep discounting to fill those cabins. That's a strategy we've been talking about for about two years now. As a result of that, I think we're on the right path towards good yield improvement for 2016. There are other factors in a transactional currency and stuff that influenced the appearance of early pricing and yields. We have targeted affinity groups that some of the brands target. They book earlier. That can make the yield look lower, but in fact it's coming sooner rather than spread over time for those affinity groups. Those affinity groups have big on-board spend patterns, and overall we yield in total very nicely on those. Of course, we don't have the on-board revenue yield factored into this at this point in time. There are a lot of dynamics that can influence what it looks like early. Some of it is just a pricing philosophy of a brand, and some is just booking patterns and charters, and all that can come into play, as well as affinity groups to fill our cabins and drive on-board revenue. Thanks. Yes, our policy has been to use the cash-less collars. We have already, I believe, 48% of 2016 already collared. The future pricing, which is what you have to establish the collars on, is not the same of course as the spot pricing. At this point in time, we've seen no advantage to unwinding those collars, or anything to that effect. When we looked at it once earlier this year, we examined if we had done it we would lost on both ends ---+ unwinding and setting then setting the new collars in. At this point we don't have any particular plans to change, but we review it constantly. We also, as you can see in our filings, we've got the cash-less collars for 2017 and 2018, as well. We are well positioned and well hedged at this point in time. But we continually re-evaluate it, as <UNK> indicated. <UNK> and Mickey and I and Josh Weinstein, our Treasurer, frequently get together and talk about it and take a look at it, and review input from other sources, as well. The first comment I'd like to make is that our European brands have performed well, so I don't want to leave an impression like they're stumbling and bumbling or anything. They've performed well. As <UNK> mentioned, EAA overall for us, despite all the stuff we've been talking about and that has occurred this year, has seen yield improvement and has seen return improvement. That's the first comment. The second comment is that continental Europe has been hit hardest. We've seen ---+ we had the 175th anniversary year for Cunard. That was a very successful year for the Cunard brand. We had the spectacular launch of the Britannia, which helped elevate the entire P&O brand. The UK did well, very well this year. Again, AIDA continues to perform in Germany despite capacity introduction from competitors, as well as just also the impact of sailings related to geopolitical tensions and so on and so forth. But the brands continue to do well, and are doing better collectively than they have in the past. We expect that to continue into next year, despite the challenges. Well, there the sweet spot will vary over time, as you would expect, s people change, environments change, and all types of things. I don't think there is a Nirvana. That's something that we continue to look at over time and will evaluate that. But where we stand today, as I talked about in my notes, the North American brands were well ahead. The North American brands are at the higher end of the historical booking curves, whereas the EAA brands, which I said were in line with the prior year, while they're still within the historical booking curves, they are at the lower half of the historical booking curves. It's a mix of two worlds. As we talked before, the strength of the economy in North America clearly has helped shape the booking curves in the two segments of our business. Yes, we've given you the ranges before. As I said, North America is in the higher half and EAA is in the lower half. For competitive reasons, that's all the detail I want to share. It's very early to tell. It's very hard. We have not gone through. We have a difficult time enough time analyzing it quarter by quarter within 2015, as you saw the timing of expenses between the third and fourth quarters that I referred to. It's very difficult to tell this early in the year where we are. The one thing that I did mention relating to the first quarter or the first half is that there is a significant transactional currency impact, particularly in the first quarter. As you think about next year, keep that in mind. I would say again we're not going to give any more guidance for 2016. It's still early for us. But the reality is that Carnival out-performed late last year, as well. They continue to out-perform throughout this year, the Carnival brand, which is primarily in the Caribbean. They've had an outstanding year with strong demand and strong yields, reflected in everything we said to this point, and reflected in the fact we've raised guidance for the full year. We have a lot of momentum there. We feel very good about it. But at this point, it's too early to give firm yield guidance or anything for 2016. Absolutely, yes. Other brands, as well. We had growth in both sides of the Atlantic, as <UNK> pointed out. But the Carnival brand definitely out-performed again, yes. Thank you. We'll take one more call, operator. Yes, it did change a little bit. For the year, our capacity growth came down to 1.7%, and for the fourth quarter is 2.3%. Fundamentally for the Carnival brand, to get everyone up to speed, we basically allowed people to achieve a certain payout at a lower tier level in the commission structure. That was a combination of one acknowledgment to travel professional partners for the great work and contributions they've made to our success this year, and also just a recognition for the brand in their Carnival conversations discussing with travel professionals, changes that the travel professionals thought would really make a difference, and would balance things from their perspective. It's in response to input from the travel professional partners, and an acknowledgment of their contributions, and what we thought it would take to help them help us sustain the momentum. Each brand does their own evaluation. The brands have some overlap in travel professional partners. There's also distinctions, differentiations because the guests are different. Each brand makes its own evaluation. Carnival brand was starting from a different point than some of the other brands were, so all the brands will make independently their decision. Thank you. Everyone, thank you very much again. We appreciate your interest. We feel great about the quarter. We've increased guidance for the year. We feel strongly looking ahead that we are on a good path to deliver the double-digit return on invested capital in the next three to four years. We see solid yield improvement for next year. We'll give you actual yield guidance and stuff in December, as well as tighter cost guidance for the future. We feel very good about the business and the momentum, and we thank you for your interest.

2015_CCL

2018

MASI

MASI #Thank you. Hello, everyone. Joining me today are Chairman and CEO, Joe <UNK>; and Executive Vice President of Finance and Chief Financial Officer, <UNK> <UNK>. This call will contain forward-looking statements, which reflect Masimo's current judgment, including certain of our expectations regarding fiscal 2018 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 forecast are discussed in detail in our periodic filings with the SEC. You will find these in the Investor Relations section of our website. Also, this call will include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We general refer to these as non-GAAP financial measures. In addition to GAAP results, these non-GAAP financial measures are intended to provide additional information to enable investors to assess the company's operations in the same way management assesses its operations. Management uses non-GAAP measures to budget, evaluate and measure the company's performance and sees these results as an indicator of the company's ongoing business performance. The company believes that these non-GAAP financial measures increase transparency and better reflect the underlying financial performance of the business. Reconciliation of these measures to the most directly comparable GAAP financial measures are included within the earnings release and supplementary financial information on our website. Investors should consider all of our statements today together with our 10-Q for the first quarter to be filed with the SEC in order to make informed investment decisions. In addition to the earnings release issued this afternoon, we have posted a quarterly presentation within the Investors section of our website to supplement the content we will be covering this morning ---+ this afternoon. I'll now pass the call to Joe <UNK>. Thank you, <UNK>. Good afternoon, and thank you for joining us for Masimo's first quarter 2018 review. We achieved record product revenue of $204 million with non-GAAP earnings of $41.9 million and EPS of $0.75. Our results reflect demand for our breakthrough technologies and solutions and the effective execution of our plan to achieve at least 8% to 10% product revenue growth and 150% of that rate in earnings growth. We're expanding operating margins over the next 7 years. We saw strong performance in both our U.S. and international business. We're realizing gains across the health care spectrum from internationally recognized institutions to community hospitals as the value of our solutions is increasingly recognized by clinicians and administrators for improving patient outcomes and reducing the cost of care. For the first quarter, our worldwide shipments of noninvasive technology boards and monitors rose to 53,600 units, which reflects an increase of 12% over the prior year quarter. The growth is attributable to both our direct and OEM business. We will see some noteworthy CE and FDA clearances during the quarter, including a clearance for home use of our new Rad-97 telehealth monitor with 2-way audio and video capabilities. I'll discuss these with some additional business updates later in the call today. Now I'll ask <UNK> to review our Q1 results in more detail and provide you with an update to our 2018 financial guidance. <UNK>. Thank you, Joe, and good afternoon, everyone. Before I get started with the financials, I want to take a moment to discuss the new accounting standard, ASC 606, which we adopted in the first quarter 2018 using the full retrospective method. Although these changes had a modest impact on our first quarter 2018 results, the adjustments to our historical results were much more significant. At a high level, the most significant impact of the new accounting standard is that ASC 606 changes the accounting for 2 primary types of transactions here at Masimo. Number one, product revenues related to sales to our just-in-time distributors will be reported going forward and have been adjusted in prior periods to reflect revenue recognition on a sell-to method under ASC 606 as compared to the sell-through method that we had previously ---+ had historically reported under ASC 605. Number two, nonrecurring revenues related to our partnership with Philips will be reported going forward and have been adjusted in prior periods to reflect revenue recognition on a percentage of completion method under ASC 606 as compared to the completion of milestone method that we had historically reported under ASC 605. The implementation of the new accounting standard has resulted in adjustments for prior periods that had the effect of increasing our Q1 2017 product revenues by approximately $4.3 million and our Q1 2017 nonrecurring engineering revenues by $6 million. As a result of our first quarter of 2017, total revenues were increased by $10.3 million. Also, our Q1 2017 non-GAAP earnings per share were increased by $0.11. These adjustments to our Q1 2017 numbers have reduced our apparent growth rates for Q1 2018 despite delivering very strong results this quarter that significantly exceeded our expectations. For further information regarding the historical adjustments related to the new accounting standard, ASC 606, please refer to the supplementary financial information in the Investor Relations section in our website. Now moving on to our financial results for the quarter. As another reminder, the financial measures that I will be covering today will be on a non-GAAP basis and will also be based on the new accounting standard, ASC 606, unless otherwise noted. For the first quarter of 2018, we reported total revenue, including royalty and other revenue, of $213 million. Our product revenues were $204.4 million for the quarter, which reflects growth of 12% or 9.9% excluding the impact of FX. As I mentioned previously, the prior period adjustment related to the new 606 accounting standard resulted in the addition of approximately $4.3 million to our product revenues from what we had previously reported in Q1 2017. Excluding the prior period adjustment in Q1 2017, our first quarter 2018 product revenue increased by approximately 14.8% or 12.6% on a constant currency basis. Just to be clear, this is a comparison of product revenue for the first quarter of 2018 under ASC 606 versus what we had previously reported in the first quarter of 2017 under ASC 605. We did not prepare our first quarter 2018 results under ASC 605 since we adopted the new standard using the full retrospective method. Royalty and other revenue was $8.6 million for the quarter compared to $14.2 million for the first quarter of 2017. The current quarter results included $8.1 million in royalties compared to $8.2 million in the prior year quarter. In addition, the current quarter included approximately $400,000 of NRE revenue related to the integration of various Masimo technologies and to Philips monitors compared to an adjusted $6 million in NRE revenues in the prior year quarter. The prior period adjustment related to the new 606 accounting standard resulted in the addition of $6 million to our NRE revenues from what we had previously reported in Q1 2017. Now let's turn to the rest of the P&L. For the first quarter of 2018, non-GAAP gross margin, including royalty and NRE revenue, was 67.5% versus 67.4% in the prior year period. Our product gross margin for the first quarter increased 70 basis points to 66.2%, which was in line with expectations. We remain positive about the potential to realize increasing gross product margins due to manufacturing efficiencies as well as the favorable mix benefit that we will realize from customers upgrading to the newer RD sensor line. Non-GAAP selling, general and administrative expenses increased 8% to $70.9 million in the first quarter, which was well below the rate of our product revenue growth, illustrating a clear improvement in operating leverage. Non-GAAP research and development expenses increased to $18.6 million or 8.7% of our total revenue, due to increased staffing levels and higher project-related costs as we continue to invest in delivering innovative technologies to the marketplace. Our first quarter non-GAAP operating profit margin was 25.5%, which reflects the stronger revenue and profitability we typically see in the first and fourth quarters of our fiscal year. Moving further down the P&L. Nonoperating income on a non-GAAP basis was approximately $500,000 compared to $300,000 in the same period last year. Now turning to tax. Our non-GAAP tax expense in the first quarter was $12.9 million, resulting in a non-GAAP effective tax rate of 23.6% compared to a non-GAAP effective tax rate of 31.6% in the year-ago period. The lower tax rate reflected the recent changes in U.S. tax laws. Our weighted average shares outstanding for the quarter was approximately 55.6 million, essentially level with the year-ago period. We repurchased 196,000 shares during the quarter for approximately $16.5 million at an average price of approximately $84 per share. First quarter 2018 non-GAAP net income was $41.9 million or $0.75 per diluted share. In comparison, first quarter 2017 non-GAAP net income was $36.2 million or $0.65 per diluted share. As I mentioned previously, the prior period adjustment related to the new 606 accounting standard resulted in the addition of approximately $0.11 to our non-GAAP earnings per share from what we had previously reported in Q1 2017. Excluding this adjustment, our Q1 2018 non-GAAP earnings per share increased by more than 30% in the first quarter. Once again, for further information regarding the historical adjustments related to the new accounting standard ASC 606, please refer to the supplementary financial information in the Investor Relations section on our website. Our days sales outstanding improved from 55 days at the end of last year to 45 days in the first quarter of 2018 primarily due to improved cash collections from outside the U.S., where we generally have longer payment terms. Our inventory turns were at 3.0 for the first quarter, which was in line with our performance at the end of last year. As a result of our strong earnings and working capital improvement, our cash and short-term investments increased by $54.2 million during the quarter to reach $369.5 million. Now I'd like to update you on our full year 2018 financial guidance. For 2018, we are now projecting total revenue, including royalty and other revenue, to be approximately $846 million, which represents an increase of $10 million from our prior guidance. We are now increasing our product revenue guidance from $810 million up to ---+ or sorry, from $808 million up to $818 million, which now reflects 2018 over 2017 growth of approximately 10% on a constant currency basis. Our guidance for royalty and other revenue remains unchanged as we are still anticipating approximately $28 million for the year, which is still comprised of $3 million in NRE revenues and $25 million in royalty revenues. Our expectation for non-GAAP gross margins, including royalty and other revenue, remains unchanged at 66.8% for the year. Our non-GAAP product gross margin guidance remains unchanged at 65.8%. And our total non-GAAP operating expense guidance remains unchanged at 42.4% of total revenue. Based on these assumptions, we are continuing to project total non-GAAP operating profit margins of approximately 24.4% of total revenue. We still expect to generate $4 million in net interest income in 2018. And based on our expected mix of U.S. and OUS profits, we are now estimating that our non-GAAP tax rate will improve to approximately 24%, which is 100 basis points lower than our prior guidance of 25%. Also, we are still estimating that our weighted shares outstanding for the year will be approximately 56 million, which does not reflect any additional share repurchases for the remainder of this year. Based on all of these assumptions, we are now increasing our non-GAAP EPS guidance to $2.88 for the year, up from our prior guidance of $2.80. And from a GAAP perspective, we are projecting a GAAP tax rate of 20.2% and GAAP earnings per share of $3.01 for the year, up from our prior guidance of $2.90. Included in this projection are $8 million of excess tax benefits from stock option exercises and approximately $1 million of after-tax foreign exchange gains, which were offset by acquisition-related depreciation and amortization expense of approximately $1.3 million net of tax. With that, I will turn the call back over to Joe. Thank you, <UNK>. Our Q1 results clearly illustrate the expanding adoption of our innovative technologies around the world as we realized SET pulse oximetry sales growth well above the market growth rate for pulse oximetry products once again. Our newer product lines, including rainbow and noninvasive blood constituent monitoring, NomoLine Capnography, SedLine Brain Function Monitoring and O3 Regional Oximetry delivered another strong quarter of performance and are adding to our growth rate. As <UNK> just described, we now expect to realize product revenue growth of 10% in 2018 and deliver earnings growth for our core business that is even faster than our product sales growth this year. In the first quarter, we were happy to renew some important customers, including Rush University of Chicago and the Long Beach Memorial Health system with multiple hospitals in Orange County area. In addition, we won a significant multiyear contract with the John Peter Smith Hospital network in Texas. Overseas, we secured a substantial contract for Rad-67 Spot-check SpHb with the blood donation program of the transfusion center of the region of Valencia in Spain. Through a large U.S. Defense Department contract awarded to one of our OEM partners, ZOLL, we are providing the Air Force, Army and Navy with rainbow Pulse CO-Oximetry technology in a big way. As we move through 2018, we're excited about our recent product launches and new product pipeline. In January, we received CE mark for our RD rainbow Lite sensors, which enabled the use of our revolutionary Oxygen Reserve Index and RPVi, which is an improved rainbow-based version of PVi but in a less costly sensor than the rainbow sensors. We expect to see a growing body of clinical data that supports the use of ORi and RPVi for improving patient outcomes. In a recent reported study from the UC Davis School of Medicine, the potential clinical utility of ORi as an early warning of impending arterial hemoglobin desaturation in obese patients was investigated. The research has concluded that the study demonstrates the ability of ORi to provide advanced warning of arterial desaturation as an adjunct to SpO2 in this high-risk patient population. This additional warning time can potentially translate to improved patient safety by allowing earlier calls for health assistance from a more experienced person or modification of airway management. In another recent study, researchers at Children's Medical Center in Dallas concluded that ORi could provide clinicians with a median of 31-second advanced warning of impending desaturation in pediatric patients with induced apnea after pre-oxygenation. Masimo's Eve application for helping clinicians screen newborns for critical congenital heart disease, or CCHD, received a CE mark for inclusion in our new Rad-97 Pulse CO-Oximeter in February. Eve incorporates a proprietary pre-ductal to post-ductal comparison algorithm designed to reduce calculation errors in the screening process for this dangerous condition, which affects approximately 8 newborns per 1,000 live births and requires intervention soon after birth to prevent significant morbidity or mortality. Eve also allows clinicians to incorporate perfusion index into screening, which has been shown to increase sensitivity for the detection of CCHD in infants with pathologically low perfusion. In a study of over 122,000 infants, the largest CCHD screening study to date, CCHD screening sensitivity increased from 77% to 93% with the combined use of Masimo SET pulse oximetry and clinical assessment. Another study evaluating perfusion index as a biomarker indicated that it would be a useful additional tool in CCHD screening. And a recent 2017 study concluded that when PI is included, the sensitivity of CCHD screening can be further improved. Masimo's application allows perfusion index to be incorporated into the Eve screening protocol. A notable new product announcement during the first quarter was for Replica, our application for smartphones and tablets that works in conjunction with Masimo Patient SafetyNet. Replica is a supplemental remote monitoring and clinical notification system that allows clinicians to view continuous monitoring data for multiple patients as well as view and respond to alarm and alerts all from their smartphones or smart tablets regardless of location. Replica also displays data relayed from connected bedside Masimo and third-party devices, such as ventilators and patient monitors, while also enabling the display of the high-fidelity data, such as waveforms, in near real-time to the smartphone screen. Perhaps most importantly, Replica features intelligent 2-way alarm and alert notification technology derived from Patient SafetyNet's existing capabilities that offers significant advantages over conventional systems, which send notifications without the confirmation of delivery. Clinicians can respond to notifications from the app, choosing to accept or forward and see if other clinicians have already responded, thereby improving their alarm response workflow. ORi or PVI, Eve and Replica are just a few examples of the product innovation at Masimo. We expect to launch a number of other new products during the remainder of 2018, which will further help clinicians improve outcomes while lowering the cost of care. In closing, we're encouraged by the steady gains we're achieving for increased adoption of our differentiated technologies. Masimo is dedicated to helping health care professionals improve their patient care practices and associated outcomes, all while reducing cost of care. With that, we'll open the call to questions. Operator. Well, thank you, Rick. The Philips relationship really at all levels has been excellent, perhaps even better than we had expected after years of being in the courts with each other. I believe while we haven't done all the things that we said we're going to do together, the numbers that we're seeing from the volume of technology adoptions through Philips customers have been ahead of both of our anticipation. And I think that's one of the reasons despite trying to give you our best account of what the future holds, we'll keep exceeding our numbers. So as far as what's next and the programs ahead, we're excited about new technologies that are going to be introduced by Philips from Masimo and some of the marketing initiatives that we're going to be jointly doing that have begun, to some extent, in some of the countries but still remaining to take shape in other countries. So hopefully, we'll continue not just doing what we say we're going to do together and expediting some of the plans we had together that may have not exactly gone at the speed we both hoped, but hopefully we'll ---+ despite that, we'll continue seeing results that are better than both sides had anticipated. Well, Rick, the general ward market really is in a way dumbfounding because it's a no-brainer. By monitoring patients from a general floor with Masimo technologies, hospitals have over and over and over again have shown dramatic reduction in costs and dramatic reduction of some elimination of preventable deaths due to opioid overdose. So while we can brag about over 1,000 systems that have been implemented in the last few years in different general floors around the world with Patient SafetyNet and the SET technology, it's still a drop in the ocean. So we see the general floor market as potentially 3x to 4x the size of the intensive care unit and operating room market, and yet the business coming out of the general floor is a small fraction of the critical care, intensive care market. So when will every hospital say enough is enough, this is something we have to do, it saves us lives, it saves us money. I don't know. We saw the Joint Commission recommend it. We saw Anesthesia Patient Safety Foundation recommend it. Even CMS a couple of years ago recommended it. And it may unfortunately eventually come to maybe some laws that get everybody to do it. All right. Thank you, Rick. Just sticking on the first point, on the manufacturing efficiencies. Where we saw those where over the course of the last year, in 2017, we were kicking off a lot of unfavorable manufacturing variances, where we're trying to vertically integrated a second ---+ another plant, a manufacturing plant. And that basically, we knew ---+ we felt going into the year that, that was going to get behind us. We're starting to see that turn into more favorable variances, so we're starting to get the absorption that we need out of those fixed overhead costs, and we're seeing positive variances for the first time in a while. So that's one thing. And of course, we've got strong volumes. Our underlying volumes of our business, our sensor volumes have been very strong and that's helping us to absorb more of those costs. On the RD sensors, we're still in the early innings of RD conversions. We've mentioned this before that it's going to take next several years as we work through converting new customers and renewing contracts with that new sensor line. But it's definitely still very early innings, and we've got a lot of opportunity there to drive to a much lower cost but also a much higher quality. Sure. Thank you, Larry. Well, I think last summer, we were looking at acquiring something that kind of fit very tightly to the parameters we had. And while they have been short-term dilutive, we thought it would be long-term quite accretive. But some assumption changed on the 11th hour of that acquisition, and we ended up not doing it. Since then, we haven't found anything like the parameters I had explained to what we were looking for. So while we are looking at some tuck-ins and small M&As, there's really nothing out there that unfortunately fits what we were looking for. So we'll continue looking, but for the foreseeable future, I don't see a significant M&A in our horizon. Well, I like the Apple announcement today. Stock buyback doesn't seem like a bad idea, so we're going to look at that. I think you noticed we did buy some more shares today, but we might get more aggressive with that in the future. Yes, of course. We had another really strong quarter with rainbow and SpHb specifically. I think ---+ no, we decided to not break down everything for you, but it grew over 100%, so it's a nice, nice quarter. As far as the flu season, the flu season was probably one of the worst from a health perspective and probably one of the best from a pulse oximetry sensor revenue perspective, and so some of that certainly helped in our numbers. The good news is as indicated by our guidance, we not only increased our guidance for the year based on the additional revenues we saw in Q1, but we even raised it slightly above that because we do continue seeing the very solid outlook, positive outlook, short-term, midterm and long-term. No. It's really ---+ I mean, I'm sorry, I don't have that number on the tip of my hand. But what I can tell you is that generally strong ---+ very strong flu season may add about 1% to our quarterly numbers. I don't think they're that significant, especially because of the growth we continue to have in our total business. I think if our business was most ---+ more flat and more falling to oximetry business growth, the impact might look larger. Thank you so much. It looks like you and Rick have not looked outside your window. It looks like the weather is really nice in New York and Boston. So I think you guys are our only 2 questioners today. The rest of the analysts are out playing. So thank you all for joining us, and we look forward to our next quarter report. Thank you. Bye-bye.

2018_MASI

2018

WLH

WLH #Thanks, Bill. As Bill mentioned, we've seen a very strong start to our spring selling season. As compared to last year, this year's selling season really came out of the gate strong with a solid orders number for January, up 38% year-over-year. We are particularly pleased with the acceleration of our monthly absorption pace as the quarter progressed, with the rate increasing sequentially each month starting at 4 in January, 4.3 in February and an absorption pace of 4.7 in March, averaging [4.4] (corrected by company after the call) sales per month for the quarter. The strong sales pace continued into April, where our sales pace was 4.5 homes per community on net new home orders of 481, up 11% over what was by far our most difficult comparable from last year. As Bill touched on, our focus on the entry-level buyer is really driving this orders growth as we continue to see the most favorable demand dynamics and pricing power at our lowest price point projects in our various markets. In nearly all of our markets we experienced significant year-over-year improvement in absorption pace for our entry-level product ---+ and in three of our divisions, including Northern California, Arizona and Washington, achieved an absorption pace of over 7 homes per community per month for entry-level product. On a companywide basis, our entry-level product produced a sales pace of 5 sales per community per month, well above the company average for the quarter and an increase over 4.4 for the same period last year. Our first-time move-up product offerings have also performed extremely well for us this year, outperforming last year's first quarter sales pace by a full one sale per community per month. Across the board, each of our product segments ---+ from luxury and second-time move-up to the lower-priced products ---+ demonstrated improvements in absorption pace during this year's first quarter as compared to last year. We continue to balance this strong pace with opportunistic price increases. During the first quarter, we increased prices at approximately 80% of our active selling communities. In all, our dollar value of orders for Q1 was $603 million, up 33% over the prior year. On a trailing 12-month basis, the dollar value of orders was $1.9 billion, up 28% over the previous 12-month period and up 55% over a 2-year period. While I'm pleased with the performance of each of our divisions during the first quarter, I think there are several in particular worth highlighting. First, our Colorado division recorded 144 net new home orders, a 136% improvement over last year. Denver continues to be a dynamic market with strong employment and lower levels of new-home inventory. In addition, our strategy to move to product with a price point well below the median new-home price has been well received, particularly at our Avion at Denver Connection master-planned community, where pricing starts below $300,000. We continue to see robust sales activity in our Washington division with net absorption of 6.6 sales per community and net new home orders of 179, an 18% increase over last year. We're also seeing significant pricing power with double-digit same-store home price appreciation year-over-year. Our Washington division continues to maintain a focus on creative product solutions, including townhomes and small lot detached offerings to maintain affordable new home solutions in this very dynamic and tight supply market. Our Nevada division has demonstrated significant signs of improvement over last year. Net new home orders for the quarter were up 42% to 109 units, with each product segment absorbing at a pace above 3 sales per community per month for the quarter, including our fastest absorbing luxury product in the company. Closings in Nevada were also up 54% year-over-year during Q1. In Texas, we currently have 20 active selling communities and offer a range of new detached homes targeting the entry-level and first-time move-up buyer. Central Texas' vibrant local economy driven by a large and diversified employer base across tech and other professional sectors continues to exhibit strong demand for housing. Our entry-level focus on new homes priced below $300,000 continues to outperform the overall new home market on an absorption basis. Our monthly absorption rate in Texas has been approximately 4 sales per community since the date of acquisition. The Inland Empire market, which includes legacy <UNK> communities as well as communities acquired through the RSI Acquisition on March 9 have performed exceptionally well year-to-date. We've seen absorption rates in the Inland Empire that are almost double that of the coastal markets at approximately 6 sales per community per month since the start of the year. Overall, our backlog conversion rate for stand-alone <UNK> was 80% for the quarter, which reflects a significant improvement from the 68% conversion rate we experienced in the first quarter of 2017. With our spec/start strategy, we're able to meet the demand of needs-based buyers that want to move in quickly and have shorter escrows, and better manage our cycle times, direct construction costs and deliveries on a more consistent basis. In addition, having move-in ready inventory for buyers creates an opportunity for us to capitalize on the sense of urgency that buyers may have in an environment of rising interest rates. For the first quarter, we sold and closed 25% more specs than last year's first quarter and they represented 33% of all homes closed during the quarter. Our average sales price of homes closed during the first quarter was approximately $503,000, down 15% sequentially, driven by geographic mix as well as the addition of lower-priced communities associated with closings in RSI projects for the three weeks at the end of the quarter. ASPs for <UNK>iam <UNK> Homes standalone business was approximately $530,000. We continue to experience very healthy year-over-year same-store price appreciation, which averaged 8% per homes closed during the quarter. Our average community count for the first quarter was 84, up slightly from the 82 average communities during the first quarter of 2017. The high level of demand in our attractive Western markets can make it difficult to replace communities fast enough to keep up with the timing of closeouts, but we continue to bring new communities online in each of our markets and this is, of course, bolstered by our acquisition of RSI. As of March 31, we were selling out of 105 active sales locations. We expect to open approximately 45 communities during the remainder of 2018, and continue to expect to be selling out of approximately 125 new home communities by the end of 2018. For a discussion on our financial results, I'll turn the call over to <UNK> before wrapping up with some commentary and our outlook for the remainder of 2018 and strategic initiatives going forward. Thank you, Matt. Total homebuilding revenue for the first quarter of 2018 was $372 million, up 44% year-over-year from $259 million in the year-ago period. The increase in home sales revenue was driven by a 48% increase in the number of homes delivered and partially offset by a 3% decrease in ASP to approximately $503,000 per home as Matt mentioned. During the first quarter, our homebuilding gross profit increased to $65 million, up 61% compared to the first quarter of 2017; and adjusted homebuilding gross profit grew were 63% to $85 million. GAAP gross margins for the first quarter were 17.5%, a 190 basis point improvement from the year-ago quarter. Excluding closings associated with the RSI Acquisition, homebuilding gross margins for stand-alone <UNK> was 17.8%, an increase of 220 basis points year-over-year. Our adjusted homebuilding gross margin percentage was 22.7% during the first quarter as compared to 20.1% in the first quarter of 2017. Our sales and marketing expense for the quarter was 6.1% of homebuilding revenue as compared to 5.7% in the year-ago quarter. The increase is primarily driven by the impact of the adoption of accounting rule ASC 606, adopted on January 1, 2018, requiring the company to record certain selling costs that were previously recorded as cost of sales to sales and marketing expense. General and administrative expenses were 6.6% of homebuilding revenue compared to 7.3% in the first quarter of 2017. The dollar amount of our general and administrative expense increased during the quarter over the prior-year period due in part to increased headcount from the RSI Acquisition. These combined for a total SG&A expense of 12.7% for the quarter, an improvement from 13% in the year-ago period, excluding one-time transaction expenses. Income from our financial services group was $0.9 million, up from $0.2 million in the first quarter of 2017. As discussed on previous calls, financial services remains an area of focus for us, and we are excited about bringing in Brian Hale to run the group, which Matt will touch on in greater detail. Adjusted pre-tax income for the quarter was $18.5 million, and adjusted EBITDA was $41.7 million, up 169% and 108%, respectively, over last year's first quarter. During the quarter, we spent $3.1 million in pre-tax dollars on transaction expenses related to the RSI Acquisition. We anticipate approximately $1 million of additional transaction-related expenses to be recorded in the coming quarter. Our provision for income taxes was $2.8 million during the first quarter for an effective tax rate of approximately 18% for the quarter. The lower-than-expected tax rate was driven by certain one-time tax benefits that were recorded during the quarter. We are still expecting a tax rate for the remainder of 2018 of approximately 24%. Income attributable to noncontrolling interests was $4.3 million during the quarter as we had a higher number of deliveries from certain joint venture communities in the quarter than in the prior year. Net income available to common stockholders during the first quarter was $8.3 million or $0.21 per diluted share based on 39.9 million fully diluted shares. Excluding the impact of the RSI transaction costs, adjusted net income to common stockholders was $10.9 million or $0.27 per diluted share. For the first quarter, our land acquisition spending, excluding the acquisition of RSI Communities, was approximately $130 million and horizontal spend was $50 million for a total land spend of a $180 million. As of the end of the quarter, our total lot count of owned and controlled lots was 28,800, which is comprised of 56% entry-level product, 27% first-time move-up product and 12% Ovation active adult product which is representative of how we see our product mix evolving over the coming years. Now turning to our balance sheet. As Bill mentioned, during the quarter we successfully completed a high-yield bond offering issuing $350 million of 6% senior notes due in 2023, which were used in part to finance a portion of the RSI Acquisition and also to repay all of our $150 million of 5 3/4% senior notes that were due in 2019. With this financing, our next senior note maturity is in August of 2022. As of March 31, 2018, our total debt to book capitalization was 60.4%, which is in line with Q1 of 2017, and up from 54.5% at the end of 2017 but primarily driven by the RSI Acquisition. Our net debt to net book capitalization was 59.5% at quarter end, up from the 49.6% at December 31. As Bill mentioned earlier, we expect to end 2018 with key leverage statistics in line with 2017. And now, I'll turn it back to Matt. All right, thanks, <UNK>. Before we open the call up to your questions, I'd like to provide some additional information regarding our outlook for the coming quarter, remainder of the year as well as some long-term strategic goals. The strong start to 2018 positions us well to achieve our goals for the year and our expectations for the full year on a combined basis, including new home deliveries of approximately 4,400 to 4,750 units, home sales revenue of approximately $2.2 billion to $2.3 billion and pre-tax income before noncontrolling interest of approximately $175 million to $185 million, inclusive of RSI transaction expenses and purchase accounting. For the second quarter of 2018, we expect our backlog conversion rate to be between 70% and 75%. Our average sales price is expected to be approximately $480,000, based primarily on geographic and product mix. We anticipate GAAP gross margins of 17.4% to 17.6%. Also during the second quarter, we expect income attributable to noncontrolling interest to be approximately $4 million. For Q2, we anticipate our SG&A percentage to be approximately 11% to 11.2%. This is a bit higher than a year ago based on ASC 606 from a sales and marketing perspective, as well as increased headcount on the G&A side due to the growth ramp in both RSI divisions, as well as costs associated with the financial services side of the business, which we'll talk about shortly. As is typical, we'd expect to see the SG&A percentage to improve throughout the back half of the year. With next week marking the 5-year anniversary of our IPO, I think it's important to reflect on how far we've come as a company, but more importantly, where we want to go. Five years ago we were selling out of 22 communities in 4 states and coming off a year of 950 closings with an average sales price of $275,000. Today, our footprint and product mix have substantially changed into a significantly more diverse and operationally efficient company, operating in 9 divisions across 7 states and over 100 active selling communities. While we can all take an enormous amount of pride in what we've accomplished, we must continue to focus on how we see ourselves evolving and maturing over the next several years. Based on the current economic and demographic fundamentals we're experiencing in our markets, we feel the next few years should be positive for our industry and for us, specifically as a company. We remain focused on the integration of our recent acquisition of RSI as well as the organic growth of our other existing divisions. Additionally, we remain steadfast in how we can continue to improve shareholder value and returns over the coming years while continuing to strengthen the company's balance sheet. On the heels of completing the RSI Acquisition, our next strategic goal is to improve and build out our financial services business. As we announced earlier this year, we have hired Brian Hale to lead this business segment. Brian is a 35-year veteran in the mortgage business and one of the most recognized and well-respected executives in the industry. Our initial objective will be to continue to enhance the mortgage side of the business while expanding into title, escrow and other settlement services as a means to deliver a better customer experience while simultaneously improving earnings and return on equity. Our long-term goal for this group and its related businesses is to account for approximately 10% of the company's pre-tax income by 2020. We also anticipate continuing to invest in systems and technology to achieve a better customer home buying experience. This will ultimately lower our sales and marketing expenses through highly efficient and targeted advertising and reduce outside broker commission expenses by appealing to a consumer base, which is willing to purchase directly if given access and transparency to data ---+ when, where and how they want it. You'll see our desktop and mobile websites morph over the balance of this year and into next, with increased functionality which will help remove hurdles to the consumer quickly, finding the home that best suits their needs. It will provide us with integration into our new CRM platform, enabling us to capturing more information about our prospective homebuyers and create a more personalized connection with them throughout the home buying process. Geographically, and from a land pipeline perspective, we feel that we are well-positioned to see growth out of our newly expanded footprint. Our increased allocation of both entry-level and Ovation active adult lots will enable us to continue our growth and deliveries over the coming years. When we look at our footprint, we feel that with reasonable expectations we can grow to approximately 5,500 to 6,000 deliveries by 2020. As Bill touched on earlier, we continue to be focused on our balance sheet goals following our acquisition. While we anticipate our year-end 2018 leverage ratios to be consistent with year-end 2017, we know we must continue to take strides to show improvement as we move through the balance of this cycle. Our goal by 2020 is for debt to book capitalization to be at or below 40%, with net debt to be below that target. Those goals include significant growth in shareholders' equity through accretion of earnings, as well as paying down our most expensive debt, our $350 million 7% notes, well in advance of their maturity date in 2022, as it becomes callable at par starting next year. It's been an extremely busy start to 2018, and I'd like to thank all the <UNK>iam <UNK> Homes team members, including a number of new faces that have joined us through the RSI Acquisition, for all of their hard work and dedication toward the achievement of our goals. We're extremely excited about the future of <UNK>iam <UNK> Homes, and we look forward to an exciting 2018 and the coming years. I'd now like to open up the call to your questions. Operator, we're ready for the first question. Yes, Mike, it's Matt. As we said, we gave you a rolled-up guide for Q2, which obviously includes, on a GAAP basis, RSI and the purchase accounting effect. We still see the full year inclusive of purchase accounting to be slightly up year-over-year on a consolidated basis. I think as we've laid out for you guys, we've given you where we see revenue, pre-tax and units. Obviously, quarter by quarter, we'll give you short-term guides. I think, encouraged obviously by the start of the year from a sales perspective, as well as the ability to raise pricing at 80% of our communities, as well as the same-store guide that we've given. So nothing's changed from that perspective. Well, I think on a pre-tax basis Mike, transaction expenses in Q1 were $3.1 million and <UNK> indicated about another $1 million here in Q2. Relative to the purchase accounting, I don't think that we've got anything that we're going to guide you to. I think we're going to keep it focused on the GAAP side. Well, Mike, I think relative to your first part of your question, relative to financial services, right, it is going to be a ramp. And I think we've got kind of what we have been doing, which is fairly minimal over the last couple of years, bringing Brian on, and Brian's got a defined strategy as to how we go about executing and implementing those. I think 2018 will be a year that we'll look to implement as much as we can. We're starting to realize some of the benefits in '19, with 2020 really being where we expect to see the full flow through. So I think it's reasonable to expect 2019 to be incrementally positive over '18 from a financial services perspective. But obviously, we wouldn't expect it to leap all the way to kind of that 10% of pre-tax goal quite by '19. I think relative to the SG&A guide, I don't think that's something that we're going to be giving specific long-term guidance on, at this point in time. I think, obviously as we've talked to investors post the acquisition, they'd want to understand what the increased footprint means for us. Obviously, we were very upfront about the fact that we're willing to take leverage up a bit to do the transaction, but it tends on bringing it back down. And so I think the areas that we've focused on are the areas we're comfortable giving some longer-term guide at this point. Yes, a good question. It's something that we certainly take a look at. And as we kind of look at our backlog as well as homes we've closed recently, right now our buyers are spending about 27% of their income on housing. And we've gone back and looked historically, and even excluding prior cycle peaks, we would expect to see those numbers a bit higher than that at this point in time in the cycle. So I think the reality is, is we look at people who are currently renting and coming in to buy a home from us. They're typically spending north of 30% of their adjusted gross income on housing at that entry-level price point, so that 27% is pretty consistent across our divisions. We're a little bit lower than that in Arizona and Nevada, maybe a bit higher than that in coastal California. But we typically are seeing in some of our higher price point markets like the Bay Area, people coming in with higher down payments, to kind of keep that debt to income lower than we've historically seen. So I think the credit statistics are telling us that our buyers, from a FICO, liquid assets as well as debt to income ratios, they can afford more housing. I think people are being prudent. But I think also, we've got the ability, between interest rate increases, as well as elasticity in pricing, to absorb some of that on the consumer side. You touched on a point that I know you and I have talked about in the past, we're really seeing zero percent of our buyers use ARM products. And I think we continue to see rates move, that would be something that we would historically look at as a little bit of a release valve for people who are focused on that front-end payment. Going back to 2002 to 2004, which were more normalized periods of the last cycle, before we saw the meteoric rise in '05 and '06, we were seeing people, about 30% of our homebuyers put some form of ARM product in place, especially at that entry-level price point. So we still think there are tools in the tool kit, as rates continue to rise to make sure that we can put affordable payments in front of our buyers. Well, I would say trying to guess what is going to be the outcome of anything going on in Sacramento is not something that I want to play. But, look, I think the reality of the situation is California's energy codes are some of the most stringent in the nation. And even to me, existing energy codes, a high percentage of our existing product is already utilizing solar to meet those energy codes. RSI was doing a pretty significant amount of their product as well, in the Inland Empire, with solar. So look, it's not like we're going from potentially 0 to 100. We're going to somewhere in between that to potentially something greater than that. I think the cost of solar has continued to come down a bit as well. And I think that there is some ability to push some of that forward. Obviously to the extent we can't push it forward to our homebuyers and we don't believe that there's the ability to raise prices if costs go up, land residuals theoretically should go down. But the land market is not necessarily 100% linear either. I think it's one of those things that as a company, we've been focused on the fact that California has had a net zero initiative in place for a number years that we've all been working towards. So I don't think we're talking about a situation if that passes it's automatically a net deduct to builders' short-term margins. Thanks for taking my questions. The first one I had, could you repeat all of the 2020 guidance that you provided. I couldn't write it down fast enough. Sure, <UNK>. I think from a deliveries perspective, looking ahead, we are targeting 5,500 to 6,000 deliveries by 2020, bringing debt to cap down to 40% and really having our financial services and related businesses account for approximately 10% of total company pretax income by that time. The next question I had. Arizona, it looks like the community out there was down pretty meaningfully, as were the orders. Can you remind us what the plan is there. And are there other opportunities, were it to replicate some great success in Colorado, with moving the price point down. Are there some other areas of the country that you might have those same opportunities. Well, look, I think Arizona is a little bit of just being gapped out right now. We've got a pretty significant Ovation active adult community that's going to be opening up in the second half of the year in Arizona, which will provide us, kind of a ramp back up in community count that will be pretty similar to where we were at for most of last year. We've also mentioned on previous calls, we had a previously held large asset that was, for tax purposes, held Rancho Mercado master-planned community, which is 500 acres and 1,900 lots up in the Northwest. We've activated that community. We would anticipate getting to model the lots next year. And so we do see Arizona, really, we're a little bit saddled there right now in terms of community count based on some really impressive absorption rates over the last couple of years ---+ and again, they've been focused on a lower price point product that's been extremely successful. I think Colorado, <UNK>, you kind of hit the nail on the head, is figuring out a way to introduce product at a lower price point that has really significantly improved our absorption rates in that division. That's something that I think our Pacific Northwest team has continued to do extremely well. I would say that also has been contributing to Nevada's year-over-year improvements as well. We opened a pretty significant mini- master plan in Summerlin that was targeted specifically at the entry-level buyer and that's performed well. So I think that we're going to continue to look, and I think as <UNK> mentioned, we'll try to provide you guys a little bit more detailed look into the designation of kind of our lots held ---+ our lots owned and controlled, relative to the breakdown of entry-level and as well as move-up and active adult. So we would expect to see our average square footage continue to trend down on a plan by plan basis over the coming years. And then, I've just got a couple of more and these have to do with RSI. As you think about where the ASP ---+ I know you all gave the guidance for 480 for 2Q, but is it going to be something in that mid-400s, as we go out and maybe even into '19, is that what you guys are planning now. And then also, if you could give us what the base run rate should be for G&A now with the ASC 606 change plus the additional headcount from our side that both those items would be helpful. Yes, <UNK>, it's <UNK>. On the ASP conversation, the run rate relative to Q2 is probably what we're going to see rolling out to the rest of the year. And then relative to your SG&A conversation, we'll see maybe 40 basis points of increase in Q1. Part of that was just the way the mix shook out, relative to California deliveries. I think we'll see that number being more like up 20 basis points change for the rest of the quarters through this year. So if you factor that into your modeling, I think that would be helpful. Yes, I think relative to RSI, I don't know that they were radically different than we were on a company average basis. I think where we've been seeing success is as I've mentioned, we've got to do a better job utilizing technology and platforms that in particular, as we see kind of the adulting millennials really embrace some of the platforms that are out there for starting their home buying search. If you can give people enough information and transparency I think to shop online and really understand what you are offering and get people into our sales offices before they pick up the phone and call a broker, we have our best possible opportunities to continue to bring that down. I think the other side of it is where we're in extremely tight supply markets such as the Pacific Northwest, as well as the Bay area. We've been continuing to push for either reduced broker co-op percentages or even a flat fee to try to bring that down. I think a big challenge has been the fear of trying something new for some of our divisions. But year-to-date, we've had a lot better success implementing some of those changes. But I think a big onus is on the builder to make sure that we're putting as much information out there, so that the public can make a home buying decision, potentially even before they come into our sales offices. So look, it's something that over the course of the next couple of years, you're going to continue to see trend down from just the viability of the external broker community. Well, I think, obviously one of the things that we did with the RSI transaction, which is cash flow efficient was, we banked some of the longer-dated, more capital intensive assets of their business with a land banking transaction that will effectively allow us to fund the horizontal improvements and get those to finished lots. So with a higher percentage of optioned lots moving forward as we continue to grow, we expect to be a little bit more efficient on cash flow. I would say obviously for us, that cash flow needs to be used for really two primary purposes. One, to fund kind of the business as we have laid out from a growth perspective, but also to chip away on leverage over the course of '19 and '20 as we've outlined. So on a percentage basis, yes, you'd expect to see free cash flow continue to improve as operating margins continue to improve on a larger revenue base as well. But I don't think we want to give specific year-by-year kind of cash flow generation metrics just yet. Well, I think one of the things that we've done is, we kind of provide to you guys in our earnings deck, kind of quarter-by-quarter historical backlog conversion rates. I think that we would anticipate some variation quarter-by-quarter. I think that RSI's build model is fairly similar to ours. So while we're going to expect some variability quarter-to-quarter, it's really difficult for us right now to give you a quarter-by-quarter estimated conversion rate. But historically, for the full year, going back the last couple of years, we've averaged somewhere in the mid-70s for each quarter on a full year basis. So we wouldn't anticipate a significant change to that this year over last year. I think we're going to just ---+ yes, we're going to give kind of the numbers as we've presented them on a combined basis, going forward. All right. Thank you so much. I'd like to thank you all for joining our call today. We look forward to speaking to you next quarter. Have a great one.

2018_WLH

2018

ABMD

ABMD #Good day, ladies and gentleman, and welcome to the Fourth Quarter Fiscal Year 2018 Abiomed, Inc. Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, <UNK> <UNK>, Director of Investor Relations. Please go ahead, ma'am. Good morning, and welcome to Abiomed's Fourth Quarter of Fiscal 2018 Earnings Conference Call. This is <UNK> <UNK>, Director of Investor Relations for Abiomed. And I'm here with Mike <UNK>, Abiomed's Chairman, President and Chief Executive Officer; and <UNK> <UNK>, Vice President and Chief Financial Officer. The format for today's call will be as follows: first, Mike <UNK> will discuss strategic highlights from the fourth fiscal quarter and then turn to our key operational and strategic objectives; next, <UNK> Trap will provide details on financial results outlined in today's press release. We will then open the call for your questions. Before we begin, I would like to remind everyone that this presentation includes forward-looking statements about the company's progress relating to clinical, regulatory and commercial matters as well as government regulation, litigation matters, capital and other expenditures and financial performance. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these risks and uncertainties appears under the heading Forward-Looking Statements in the press release we issued this morning, our annual report on Form 10-K in the year ended March 31, 2017, and our most recently filed quarterly report on Form 10-Q. The forward-looking statements in this presentation speak only as of the date of this presentation, and we undertake no obligation to update or revise any of these statements. Thank you for joining us. I am now pleased to introduce Abiomed's Chairman, President and Chief Executive Officer, Mike <UNK>. <UNK>, the information you're referring to is ---+ lead author is <UNK> Flaherty, it was published in the Journal of Circulation Research in 2017, it has 230 patients and what it shows is that the use of Impella for low EF patients significantly reduced the risk of AKI acute injury, for Impella, it was 5.2 and the for the control arm, it was 28%. Impella also significantly reduced the risk of dialysis, which is, increases mortality, length of stay and cost. So the answer is, yes. We do have more extensive research that will be coming out over the next 2 to 3 years. And what we believe is happening, is the forward flow driving more blood flow to the kidneys, has a hormonal benefit, it increases urine production and it allows the kidneys to remove impurities in the blood. One of the Achilles heels of all of PCI and now also TAVR is acute kidney injury, because of the contrast, because of the stress to the heart and what the kidneys can do is sometimes shut down. So you'll be seeing, over the next 3 years, a lot of publications around the research, the basic science, but also you'll be seeing this in patients and studies that are happening both in Europe and the U.S. in the future. Sure, Raj, there's 2 big questions. So first on new EF. The patient population, if there are already surgical turndown and they have everything I described about comorbidities or complex anatomy or severe coronary disease, they don't have the option to go to surgery if something goes wrong. And we do think it will have an impact, and I think it will have an impact also in identifying patients that just do better with hemodynamic support. So it allows them to do longer inflations, potentially atherectomy, potentially reduce acute kidney injury, so we do think it will have an impact, and we're watching it as it goes out and it takes time for this information to filter. The second question on the reimbursement. What's happened is, CMS has now created a dedicated code for percutaneous heart pumps, it is now cath lab only patients as well as the ICU emergency patients, are all in DRG 215. They maintained the focus on biventricular support and they also gave ---+ permanently created a DRG for biventricular Impella. So we think the simplicity of having everything together will be beneficial, but we'll watch it and make sure that we have appropriate use and appropriate reimbursement. When they do the analysis, that is being proposed and potentially can take effect next October. They are usually looking at a subset of data that's 2 years old, and that data may or may not have the most recent trends of more emergency patients than elective patients. But the nice thing about the process is one, if a hospital gets better outcomes (technical difficulty) ensure that the hospitals can do the right things for the patient, and have a win-win for both the system itself with heart recovery, but also for patients that they can avoid having to go down the cascade of more surgeries and potentially a transplant. As the way this system works is. As the costs or the patients get sicker and the cost goes up, reimbursement goes up, and what we try to do is bring those costs down by reducing length of stay and readmissions and additional resources. So as the balance goes, we work with it, but just to remind all our investors, 3 years ago, we were being paid at a lower rate for a mix between DRG 216 and 221, the coding was difficult, we did not have biventricular support with Impella. There essentially was no additional support, and many of the hospitals per transfer would not receive any reimbursement for patient management in explant of Impella. So we now have a dedicated system, we now have approval of essentially, an extensive array for elective urgent and emergent indications from the FDA, and now it's up to us to continue to execute and partner with our hospitals to get better outcomes. It is possible, I'll answer the last question first. It's possible for the DTU, it depends on how fast we can close out here, but we're potentially planning for that, it may be a little after, but that's the ---+ that's what we're looking to do and we're excited to look at the data. This is a epic study, because this is what we believe can impact the epidemic growth of heart failure. To remind our investors of today's standard of care for patients having heart attacks without shock, within 5 years 70% have heart failure and 40% die. So we think that helping to protect and do work with the heart muscle will have a profound impact on preventing future heart failure patients. So that ---+ we're very excited about that. We're looking forward to getting into the feasibility. Now we do have a lot of work ahead of us, we have to make sure that the feasibility is successful. We have to work with the FDA to design the pivotal study, and we have to do it the right way, and that's going to take time. So that's what we're working on, but we're very focused and excited about looking at that and analyzing that data. On the question on the 5.5, we are launching it under a controlled method in Germany this year. We have selected German hospitals that have established heart recovery protocols. And we'll give more details on the U.S. timeline in the future, but again it's not approved in the U.S. When we collect the data, we'll be working with the FDA to talk to them about how we'll enter the U.S. market, but we will definitely be studying it and collecting data initially at all our cVAD Registry sites, so that's the plan. On ECP, it'll also happen late midsummer timeframe as we've talked about. And we'll give more details on that as we move forward. Question on R&D spend as it relates to your 2019 guidance. You mentioned the STEMI program is well ahead of schedule there and wanted to maybe get some context, as to how we should think about the investment they're ramping into '19. Are there ---+ now that you've got, sort of, ahead-of-schedule timeline, should we assume follow-up works for us to get pulled forward. So I just want to make sure I get that properly dealt into the 2019 expense line items. Sure, <UNK>, we expect to finish here, as I said mid- to late summer. We'll have to collect the 30 days MRI images and analyze the data, which means we're going to be submitting that information to the FDA, probably around the end of our fiscal year. In the back half, we'll start designing the pivotal study, again, if the feasibility study is successful. Which means, we'll be getting into next year, the next fiscal year to line up our randomized larger pivotal study, and we'll be able to give you the details of that study moving forward. I ---+ you don't need to plan for anything more extensive than what is currently in closing out the feasibility study. Matt, this is our sustainable growth target and I think it probably is one of the highest in all the med tech, if not the highest. And so we want to make sure its sustainable growth and we're continuing to improve outcomes. We are replacing technology that's been around for 40 years, and we're going for the global standard of care. If you look at last year, we gave a range of 25% to 29%, and this year we're giving a range of 25% to 30%. So we're actually increasing the top line forecast, we're definitely increasing the net increase in revenue. And we're also maintaining this best in growth rate at a higher base and we're doing it while improving operating margin. So again, it's sustainable growth it's strategic, but we have to continue to improve outcomes and go at the right pace to have that ---+ the success we want, which is to achieve the best outcomes for patients. So Jason, on the first part, you mean Germany specific or overall. Germany. So the growth in Germany is a function of ausbildung, daten and zeit, which is training, data and time in German. And it's ---+ what's happening is, as you mentioned, we grew 95% in the quarter, you have a couple of factors. So that's been very beneficial to have physicians come in where we go through hemodynamic science best practices. We've also seen an increase in the mix of increase in high-risk PCI. Years ago, Germany was 95% shock patients and now we have high-risk PCI growing. The third is that it just continued reinforcement, that in Germany, the intra-aortic balloon pump is a Class III for cardiogenic shock, which means that it's harmful for patients. And then we're now active with over 200 hospitals and there are 600 to go in Germany, so we're making progress in opening new centers with our added distribution. And as we do that, we'll continue to grow both indications, but also ---+ we'll go deeper in new site and that drives strong growth itself. Your question on the 5.5, the answer is that it's a little bit of cannibalization, because it will replace completely the 5.0, but because it's longer term the CE mark is for 30 days, because its peak flow is above 6 liters, it will have an optical sensor because patients can get up and ambulate. There is a lot of interest in new science of unloading, we will match the Impella use, things with stem cells or immunosuppressant drugs, but there is no question that when you put the 5.5 in a patient, it completely unloads them, their kidneys make urine, patients feel better, and they can get up and move around because it's designed for the axillary implant and it avoids the sternotomy. So we're very excited. We're going to go slow and steady, we're going to collect data to publish, and we're going to work with the FDA early so they understand how this product will replace the Impella 5.0. Margaret, we've always believed and stated that cardiogenic shock adoption would take time, and we mentioned that on the first call, when we got approval. And it ---+ the reason is just because it requires a heart team, and it requires an approach and an implementation of best practices, so that takes a group of people. One of the things that's very rewarding for us is the Detroit CSI program, Cardiogenic Shock Initiative is now national. It's independent of Abiomed, and it's kind of a call-to-arms by physicians to enable not only the Impella, but better processes of putting the Impella in before the PCI, using a catheter to monitor the patient. And we just had a recent publication showing that the Impella CP has a even higher survival effect over the Impella 2.5. So there is lots of information in there, we love seeing the improvement in outcomes. And we really enjoy meeting these patients and seeing them having the ability to go home with their own hearts. So it's working well, it's growing. But again, the key to success and sustainable growth is getting these improving outcomes and native heart recovery. <UNK>, thanks for the question. The current DTU study are patients that are not having cardiogenic shock, so we do not treat any of them today. The thesis that we're testing is not just the unloading benefits of Impella, where it takes the work demand and reduces the oxygen demand for the heart, it's the ---+ and there is a publication on this thesis. It's that the unloading of Impella preconditions the myocardium, so when the patient is revascularized, where they open up the blockage, that, that preconditioning of Impella will reduce the reperfusion injury that happens in the normal process and standard of care today, where they try to open the clogged artery within 90 minutes. And reperfusion injury results from that solution, because what happens is there is a process called apoptosis, which is programmed cell death, and that's why patients today that survive heart attacks, again, the average is ---+ the statistics are that 70% of these patients that survive their first heart attack will suffer from heart failure in 5 years. So we think that this has really a huge impact in looking at the way STEMI patients are treated. If it is not successful, it does not change the fact that Impella is proven to reduce the oxygen demand, it doesn't ---+ it's been proven to help increase coronary ---+ cardiac power, it reduced acute kidney injury and multiple other benefits that we've already studied with the FD<UNK> What's unique about this again though is, it's new science on what unloading does in preconditioning and helping to reduce reperfusion injury. Thanks for the question, Chris. As we mentioned it's going to be around $10 million in revenue for this fiscal year, should be around $16 million in expenses. I believe we have about 40 employees currently in Japan. We have our office there, and we also have a training center set up in Tokyo. We're going to kick off a meeting in May, which will be basically hemodynamic training course for our current users as well as the next generation ---+ or the next group of hospitals that will be getting Impella. We're planning for another 30, this coming fiscal year, and again, as you mentioned, we're planning on going deeper to get ---+ again get great outcomes and show the benefits of native heart recovery in a country that really doesn't have transplants or do LVADs or prefer ---+ and prefers not to do sternotomies. One note that is important, that just happened in Japan, is the Japanese Society Guidelines just came out with a classification, and they have downgraded the intra-aortic balloon pump to Class III in cardiogenic shock, which again Class III means, it's potentially harmful to patients and is not recommended. So, we're glad to see that, that guideline has been updated and we're very excited again to bring our best practices to Japan to drive native heart recovery as a standard of care. And we'll give more updates as we go, but again, we think that the Japan is the second largest market opportunity in the world and is custom designed to our mission of recovering hearts. So the question is, just clarify is on, how many people use, I would say, you have to then look at which population you're talking about. If you're looking at interventional cardiologist, where that's our primary user, I would say, we have usually 3 to 5 champions at each center, 60% sounds a little high to me, relative to how many interventional cardiologists are there, and we're seeing that broadly increase, as we're doing training centers and programs on access and closure. There's a lot of physicians that are a little bit nervous to close a 12-French or 14-French hole. So, I would say, it's not 60% for interventional cardiologists yet. You also have multiple indications, so you may have an interventional cardiologist using it for high-risk PCI, but not for shock or vice versa. For surgeons, we have only penetrated about half the market with the 5.0, so the 5.0 has got a long way to go and again, we think the 5.5 will replace that and we'll be at all 1,000 heart hospitals in the U.S. alone. In the RP we're only 19% penetrated in the install base. So we have essentially, many years ahead of new doctors, new indications and new products into all the existing U.S. hospitals in our current install base. So we're very excited, but again as we train people, we train to get the best outcomes both for high-risk PCI and for cardiogenic shock. Thank you, everyone, for your time today, and we appreciate your support for last fiscal year. If you have any follow-up questions, please feel free to reach out directly. Have a great day.

2018_ABMD

2015

JCP

JCP #<UNK>, I'll start. This is <UNK>. We're quite gratified by the start in February. Frankly, we're had a plan, despite the inclement weather as well as the port issues. So we feel we're off to a good start. But it's certainly early in the season. I think that we plan well. I think across the four quarters, to be sure that we continue our improvement, we recognize that we have to compete aggressively peer-to-peer at this point. We've fixed the vast majority of the issues that were plaguing us in the past. Margin improvement is still available, as <UNK> mentioned in his comments. Part of that comes from obviously the restoration of our private brand mix and the growth in the center core categories, where typically, the margins are the highest. So I would say there's nothing extraordinary about the quarterly progression. <UNK>, this is <UNK>. I would just add that in our three-year plan that we laid out in October, we laid out a 36.5% margin. We know there was upside to that or expect upside to that. This gets us not all the way there, but pretty close. And we expect that there's continued upside beyond this. But just like we said at our analyst day, we continue to be conservative on that. And a lot of our initiatives, particularly center core, kick in the second half with their margin benefits. So we'll wait and see as we get through the year. First of all, it's absolutely in line with what we said in October and the 5% is kind of the number at the top of what the range we're providing at this point. It obviously grows throughout the three-year period as we kick in with, for example, the center core initiatives pretty much don't start until the fall season this year, so that benefit will gain momentum throughout the three years. But our EBITDA commitment is clearly what the team is focused on. Well, the strength, as I mentioned in my remarks, is our apparel business. And we keep looking back to what our business was like prior to the previous strategy. And we've got pretty much full recovery in fine jewelry; very solid recovery in the big apparel businesses. So that would argue that the areas that we have focused in the accelerating growth are the ones that have the most opportunity. So footwear and handbags and kids and home as well as the dotcom business. So we know we have 87 million active customers in 2011. We have 87 million active customers today. The issue is that do we have the attractions by category so that their spend actually gets back up to the level or above that we ---+ what we are used to. <UNK>, this is <UNK>. I'll take most of those. I'll start with CapEx. We spent a little over $250 million this year in CapEx. We expect next year to be roughly in line with this year. Depending on some of the tests we are running, it could inch up slightly, but we expect to be in line. And we expect liquidity at the end of 2015 to be in line with this year, with free cash flow neutral. We'd expect to still have roughly $2 billion to $2.1 billion worth of liquidity at the end of next year. We continue to look at the balance sheet and look at are there opportunities to monetize things. I think we did a nice job last year monetizing assets and we'll continue to look for those opportunities this year. Frankly, there's not a lot baked into the guidance for free cash flow neutral. So anything substantial there would be upside to that free cash flow number. We obviously do have a real estate term loan that we looked at, that has a lot of assets collateralized in that. As the call provision on that rolls off, we all look at other opportunities around that as well. I'll start with that. I think the team has done a good job in the last several years of taking a hard look at where we invest SG&A as opposed to overall looking at things from a negative point of view. We know that process improvement is the most effective way to get savings to keep the customer-facing associates active and supported by the tools they need to do the job. So we still think there's more process improvement available in terms of on the supply chain side as well as in store operations. We also are looking at administrative expense in the non-revenue-generating areas. We also as a team believe that it's a team effort, that as a leadership group, it's our responsibility to manage our expenses down. In the past several years, incentive compensation has not been paid to the team because of lack of performance. We'd like to say that we want to make sure that that part of SG&A starts to get back to a normal level by earning it the old-fashioned way, by just being successful across the board. So we felt that 2014 was a great start. Our people felt good about the progress we made and we were able to pay incentive comp. So I think it's a number of initiatives, but is clearly one of the objectives of the team. I think that's a great question and, frankly, plays to what we talked about in October. We really haven't added a lot of brands from outside. We exited 14 brands that did not resonate with the customer from the previous strategy. That was a difficult challenge during 2013 and the first part 2014. So where that is behind us pretty much, we've been able to bring back Ambrielle, restore St. John's Bay to the level that the customer really expected. Liz Claiborne has been very strong. So our private brands are performing well and back to nearly 50% of the total brand mix, which is essential for two reasons. One is it delivers great value to the customer. And importantly, delivers great profitability and gross margin for us. On the national brand side, our strongest partners are the largest brands, the Levis, Nike, Dockers, Dunner, Carters, IZOD, Van Heusens of the world. They are great partners. They stuck with us through our difficult days and now all of us are quite optimistic about our ability to drive those businesses. Probably the thing that's the least understood by many is our attractions to the exclusive brands. Quite honestly, Sephora is just such a great opportunity for people to experience beauty in a completely different way. It's been greatly received by customers. We're now in 492 locations and continue to grow that business. It's a centerpiece of center core as fine jewelry is. I think that the other exclusives, the Disney shops that are, frankly, legitimate full Disney presentations of merchandise and experience. You'll see another 100 of those rolled out this year, with Disney Baby as a different idea that would be in 30 locations later in the year. Modern bride, our engagement jewelry, is an attraction. And we're seeing great response to that branding. And Mango, a fast fashion brand inside the store; Call It Spring and Aldo, a shoe concept inside the store. So we think the combination of private brand, value, and style and quality, great national brands they expect to see in the store, and attractions and things they can't find other places leads us to a desire to create other attractions like that. And the salon is a terrific opportunity to take the opportunity of at least 850 salons in our Company that we are branding as salon by InStyle, working in partnership with InStyle magazine and Time Inc. That prototype will start to roll out this year, with 15 stores: 5 smaller, 5 medium, and 5 large. I wouldn't underestimate the opportunity for us to really have that aesthetic be attractive to our customers, just like Sephora was attractive to our customers, when they didn't really know the concept. It's really taken off, we believe. The salon business over the next several years will have the same opportunity. So we're putting a lot of support behind that in terms of enthusiasm with our team. And you'll see with our stylists, with our upgrade of the environment of the salons, and the back-and-forth interaction with our other merchandise categories. So all of those things added together, I think we have very strong proposition for the mid-tier customer. We like to say that it's three Ps: it's having the right people, and we think we have the warrior spirit with our people; the right product, which we think private brands is the centerpiece for the other attractions and national brands; and clearly, the place. We think the store as well as our omnichannel capabilities within dotcom that we can give the customer a very balanced experience that she can afford and that speaks to her family. That's why we say when it fits, they feel it. So it's a bit of a mouthful, but I really believe that the viability of JCPenney going forward has never been stronger by positioning ourself right in the middle of the mid-tier with all those attractions. Sure, <UNK>. First on sales, as we mentioned earlier, we do expect most of our initiatives that we talked about at the analyst day, the one that kicks in for this year, kick in later this year. In addition, we are up against some softer comps in the third and fourth quarter ---+ or third quarter. And also the first quarter is impacted by our liquidation of a lot of clearance last year. So based on that, we don't see dramatic swings in the quarter by sales, but we do think that there's more opportunity as you get towards the back half of the year than the first half. And clearly, we expect Q1 to be on the lower end of probably all three of them. From a gross margin standpoint, because of all that clearance selling we took last year, the biggest opportunity in gross margin is in Q1. We do think that the normal historic calendarization of gross margin will still apply, so we don't see any difference in that. But we do think from a comparable to last year, we've got the most upside in Q1. Then on SG&A, we're still working through the third and fourth quarter budgets, but we expect that SG&A savings to be pretty consistent throughout the year. Yes, I think it was our double-digit increase in home last year. We know we have an opportunity in dotcom to grow back the home business more traditionally. Got clearly close to 50%; it's a little over 40% at the present time. There's still space opportunities for better productivity in home and we think we have some attractions that can make it more productive. The soft part of home is now pretty much in the right proportion to (technical difficulty) working aggressively in terms of you have the right promotion, the right product the right (technical difficulty). One advantage we have is, frankly, we have trained sales associates in some of the tougher businesses to run in window and custom decoration. So we wanted to capitalize on those strengths that some of our competitors don't have. We also know the customer wants to have a sense of anticipation that they're going to find something new every time they come to the home store. That's something we're working on. But you're right to identify home as one of the big opportunities. It's one of the things we said at the analyst meeting, that we knew that we had to get the productivity back up and earn it the old-fashioned way by getting customers into the store. One of the advantages of the new environment was it's very, very attractive and light and airy. One of the disadvantages ---+ in some ways, it looks expensive, so it's taking a while for our customers to realize that the quality of our private brands, the shopping experience itself should not be intimidating, and they should feel welcome there. And it gets better every month. So you're going to see the new home book, the 120-page book, drops in two weeks and I think that will help attract customers that maybe have lost track of JCPenney because we stopped sending catalogs three or four years ago. Sure. First of all, we really value the sales associates and our people and want to make sure that we are comparable in the market we have in various parts of the country. We have very few people that really are in the minimum wage category, just so you know. I think people forget that retail is a great entry point for a great career for many people and they have a huge opportunity for improvement. So a lot of our entry people come in on the basis they're going to be a sales associate and then end up growing throughout their career into other opportunities. So we obviously are going to watch what's going on and making sure that we're not going to lose to a competitor and making sure we get the right people and have them properly compensated. So I would say it's certainly not anything that's a (technical difficulty) from what we're doing today. I think maybe ---+ there aren't many situations in retail where you completely change the inventory within a short period of time. So a lot of our clearance from the last year or so has been the discontinuation of the different strategy. And in <UNK>'s remarks, he made reference to the fact in the third and fourth quarter, the non-clearance selling was actually much more successful than what might be visible by just looking at the comps. So the 8% range in the fourth quarter and a little over 5% the third quarter, which really came across as flat with the total comps. So the clearance part really was dragging us down. And so we obviously were not getting the kind of return on clearance that you'd expect in a normal situation. We think this year is much more likely to be on a go-forward basis, we're able to deliver margins that are accretive to profitability. So we think there's still more upside there. I can't quantify what it will look like. Our new clearance strategy in shoes and throughout the store is resonating with customers. They like the idea we have clearance zone that they can find. And we're selling in shoes, for example, selling more on the first markdown as opposed to the third markdown by the way we are marketing it. So I think our people are motivated to sell it well. At the same time, we also want the customer to respond very well to our non-clearance merchandise, which seems to be on a good trend. Yes, this is <UNK>. We really feel like we rightsized our inventory as we went through 2014. And as we expect to grow sales next year, we'll expect inventories to grow roughly in line with our comp store sales. I would just make the comment that I really have a point of view that the mid-tier customer, frankly, has languished in terms of average weekly wage and hours worked and so forth. So in many cases, I think the extra savings they're getting, they're are either paying down their credit card or they decided to reinvest it in their family budget. We haven't seen a surge as a result of that. I think we've had to earn every dollar of sales that we have gotten. But it's certainly a positive as opposed to a negative. Because I think the concept that somehow everybody's just go out and spend their gas savings on discretionary items, I'm not sure that's played out. I think the people in the lower quartile obviously struggle and every dollar is ---+ goes right to the family welfare. And the people in the upper quartile, obviously it's not as big a factor. So I think the two quartiles we do deal with most, I think it's favorable, but not probably measurable in our results. This is <UNK>. So our total SG&A for 2014 was $3.993 billion, where the $50 million to $100 million savings was off of that number. And then the store closings did have an impact. It's $25 million to $40 million, give or take, for the store closings. But in addition, there's ---+ obviously there was a lot of tailwinds, with raises and incentive comp and other things that we are overcoming within that number. So it's all blended together, but net net we expect SG&A to be $50 million to $100 million less than it was last year. Yes, this is <UNK>. We buy in dollars, so I don't think it's going to be a significant impact to how we buy or the price. What I will tell you is that we really believe strongly in our private brand strategy. And we believe, as I said in my comments, that it is a point of differentiation that you're going to see us talk more about ---+ you're going to see it more in stores and it could be more prominently displayed in our go-forward strategies. For a simple reason, it's exclusive to us and it's more profitable. So we're going to continue to ramp it up, but we don't see any risk from a cost standpoint. <UNK>, there's really nothing too material in and of themselves. There is ---+ we still have some fringe land that we expect to monetize through the gain sharing we have with them; joint venture. And there's still some PBAs that we're looking to monetize in a couple closed stores. All in all, it's $50 million-ish for the year, nothing material, and no large transactions on the books right now. That could always change, but nothing planned right now. First of all, the book that we discontinued was one ---+ back when we had the Big Book, we had three Big Books a year, over 1,000 pages each. The paper and postage of that obviously got to be a situation. If we kept doing it, eventually it was going to be a big drag on the business. This is a very different approach. This is 120 pages. It's more of a view book. It recognizes fact that the customer ---+ I'll use an example. We might have 20 beds to 30 beds in a home store that they can see what the fashion is by category and by bed. We might have 150 beds online. It's very hard to see 150 beds one screen at a time. When you have catalog, the customer is telling us what they want to see more views of what we have. And that encourages them then to go online or come to the store for the transaction. So we think that we may be lost as many as 10 million customers to our home business by the discontinuation of the home part of our catalogs years ago. So it basically is part of omnichannel. It's a nondigital piece to omnichannel, but if the customers finds it useful, why not. There are some other retailers who have chosen to go back in a much bigger way. We're going to test this and see if this is the right vehicle. If it's very, very successful, we'll obviously do more of it. And if it doesn't give us the top-line advantage ---+ but most of the top-line increase, in my opinion, will be on online, because they'll have bigger opportunity to search and find the things they're looking for. <UNK> may have a point of view on this, because he's obviously very omnichannel savvy. <UNK>, the only thing I'll add is this catalog will also be repurposed as a digital catalog, which is something that the Company couldn't do back in the heyday of having the Big Book. We see this as an inspirational strategy, where customers, to <UNK>'s point, can see a broader assortment. But having the ability to make this digital, where customers can look at the item, go straight to the ordering process online, we think will be potentially beneficial. But we'll see. We're excited about the possibilities. And if it works, it's something you'll see more of. And if not, we'll go to Plan B. But we think this will be a good way to continue to target those customers that were core customers at home years ago that stopped after the catalogs went away, to target those customers specifically to see if we can get them to come back and shop at JCPenney.

2015_JCP

2015

B

B #I think two primary end markets that we saw softening with NGP. One being China, and it's enjoyed great success there over the last few years in terms of expansion. So we saw that contracting somewhat in the quarter ---+ over the course of the quarter. And the other area that we saw softening was in North America. Europe also was not that it was unaffected, but not as significant as we saw in China and North America. I think that we're remaining optimistic that the worst of any destocking is behind us. We are talking and in close communication with the distributors. And they are clearly sizing their inventories to what they believe the go-forward demand is. And they are indicating that they feel comfortable with where they are after adjusting to in Q3, but are going to keep a cautious eye towards any feedback from the market as they move forward. As you know, we don't provide margin at that level, but of course, they would be down, and we are seeing that, given the softness on the top line. But as <UNK> mentioned earlier, the commentary around cost management and just managing headcount as we go through this period of reduction, that continued to be able to continue to preserve margins. But yes, we are seeing the impact on the operating margin line for OEM. Good morning. Good morning, <UNK>. Engineered components was down low-single digits. General industrial and auto, I think two combined. Right. If you think about our plastic molding solutions, as we refer to it now, they are continuing to enjoy very strong demand for the products on the medical market side of the equation. On the automotive side, North America continues to do very well, and that new product introductions continue on the North American side. And then overall macroeconomic conditions in China have seen a slowdown. We continue to grow but at a decelerating rate. No, different platforms. One thing that I want to mention relative to the performance of the OEM side of the Business in Aerospace, the team there done a magnificent job in terms of the complexity of components that we work on, and how they have brought them to final completion. The programs at hand are a combination Airbus A350, the LEAP, and B2 military programs. These particular programs constitute probably what are some of the more complex components in our history. And the teams have just done an outstanding job in terms of overcoming some of the challenges. That said, unfortunately they didn't get to where they had planned on until late in the quarter, and that, coupled with the necessary customer approvals on these complex parts, had them slip out of the quarter. We're not quite there yet. I think that there's going to be challenges for the next couple of quarters as we continue to work on them. We are perfecting them part by part, so there is visible improvements, visible efficiencies being gained on a part-by-part basis, but there are a range of different components, some of which are further along than others. So it's a mixed bag, and I think it's fair to say that we have work to do still in the coming quarters. The way we think about it entering into service is more into early 2016, <UNK>. And so as we ---+ as it enters into service, then our standard practice is that we will continue to provide content for platform on the aircraft as it enters into service. I think what we are seeing relative to the quarter, I wouldn't read anything into that in terms of the overall outlook for Aerospace as an industry or relative to the cycle. I think what we saw were just [heating] problems as we continue to bring what are very complex parts to final readiness for shipment to the customer. As we look forward into the cycle, I think what you have is a number of moving parts where the demand against the narrow body remains robust. The question will be: Will it expand in terms of production rates that have been discussed. And that, I think, will be tempered as time goes on to where the OE ---+ the Airbus and Boeing will both adjust accordingly to what the economy or the overall cycle does, yet I think it will remain at healthy levels. First, I just clarified mid-teens is the guidance we're giving against Industrial. And as we move into ---+ (Laughter) We can debate that, but let's take the mid-point and go plus or minus 1. How is that. The team has just met over the last few days on the Industrial side and had a fabulous working session. Feedback from it is that the team remains ---+ is confident in the full-year outlook. Clearly, there are some unknowns that may come at us from an overall macroeconomic perspective. But that said, the team remains confident in the full-year outlook, and that's as I just communicated. I am confident in Barnes Group and the ---+ clearly how we're positioning the Business for the long term. As we continue to execute the strategy to change the portfolio towards engineered products and industrial technologies, and you see that already translating into our results to where, as we hit these headwinds from the economy, clearly for us we are ---+ we're weathering them this year far better than we ever would have in the past. So as I think about 2016 in general, I think of it as a low-growth environment continuing to grow but in the low digits. Bingo. Yes. Thank you. Thanks, Ed.

2015_B

2016

PPBI

PPBI #Hello, Andrew. That's a good deal of it, obviously, yes. It's also ---+ when we report originations, those are the commitments as well, so they may not have been fully drawn as well. That ends up in that balance as well. That particular loan was just a little bit over $700,000. Very good. It was $700,000, that's correct. I would say they're between $500,000 and $1 million. It really depends upon the activity that we see on loan payoffs ---+ how quickly some of the lines are drawn. I think from an origination standpoint, we were ahead of where we expected to be. I think as the Security Bank team has been fully integrated and they start to contribute at higher levels throughout the year, that the originations should continue to modestly increase from where we were. But it really depends upon the level of payoffs that we see here throughout the rest of the year. It really depends. I think we have a robust process in place. We certainly had recognized over the years that we're below some of our peers. We continue to be ---+ although when you take into account the credit marks that we have on the portfolio and just the way the portfolio has performed, it's really hard to say exactly where we'll come out. Each quarter we do an in-depth analysis and make the determination where we believe the provision is appropriate. Hello, <UNK>. Most of them we've been able to retain. I think that there's been very modest runoff. And then there's just given the general ebbs and flows that you see with business as they either put that cash to work or they have excess cash. I haven't noticed any material change. I think that both buyers' and sellers' expectations were impacted earlier in the year, just given some of the volatility that we've seen in the equity markets and maybe a move down in some of the stock prices in the banking industry. But I wouldn't say there's been any material change. Sure. I don't have the LTVs in front of me. We can get that for you, <UNK>. As I said, it was very strong debt coverage, which is far more important to us and was one of the key factors that we look at. And just because of those coverage levels, the loan to values were relatively low. <UNK>, do you have the number off the top of your head. We can get that to you, <UNK>. Thank you, Gail, and thanks again, everyone, for joining us this morning. If you have any other questions, please feel free to call me or <UNK> and we'd be happy to chat with you. Have a great day.

2016_PPBI

2016

CTRE

CTRE #Yes, we are firm believers that size really does not determine success on the skilled nursing space. Healthcare is, if there's ever a business that's a local business, it really is skilled nursing. If you take some of the great regional, divisional, executive type people from the bigger companies and they want to start their own business, and they start off small, of course, the chances of success are very, very high with them because they have the sophistication and the knowledge of big company systems that are required to manage the change in environment, but they also have the advantage of having that high-touch local ownership feel that a small company brings to the table for both their employees and then their residents and patients. And their relationships with the hospitals and health plans who are the local decision makers, so I would say we're size agnostic. Big boys can do great if they have the proper talent in place on the local level, but also, the smaller guys, if they come with the talent and knowledge and commitment to quality care, also will do exceptionally well. That's a good question and it really depends on the market. Hospitals are, as you're alluding to, are narrowing their preferred provider networks. What they look at, at their criteria, there's several points that they look at to determine what facilities should be included in their network for a particular hospital. I haven't, we haven't seen yet hospitals that are turning down local operators because they're not affiliated with the large regional or national chain. If you have, as a facility, the data that supports inclusion in that preferred network, those quality outcomes are what's going to drive it, not some arbitrary metric of whether or not you're affiliated with the big chain. For example, if you're a big part of the chain, but your readmission rate to the hospital is 20%, and you have a small local mom and pop whose readmission rate to the hospital is 5%, the hospital can't ignore that. And they are always going to, now more than ever, factor in that data more than other considerations before. Thanks, <UNK>. Hello, <UNK>. Yes. It's about 60/40, SNF to ALF. No, FAD guidance actually decreased by a penny and that's due to the add backs, typically amortization of deferred financing fees as well as amortization of deferred stock. Those numbers stayed the same, but we now have a bigger share count, so it's decreasing that add back. We certainly think about it, but these operators are not new. They are out there; they're around. They're already doing things and for them to move into a new facility, new property with ---+ the first thing you do when you move into new property is install your own people, culture and systems. Addressing CJR, if they are moving into a CJR market, and we have relatively few properties in CJR markets right now, but we expect those programs to expand later. But if you are moving into CJR market, that's just one of the many things that you would be prepared to address. And remember, most of our assets are so Medicaid-heavy they weren't getting the hips and knees from, taking into consideration in our underwriting, so it's not as if we're looking at a Medicare average daily census that we expect to shrink. In fact, there's very little Medicare market share there. So if they move into a CJR market, as <UNK> alluded to, it's about getting the systems in place to be able to take those patients on a go-forward basis. I'll let <UNK> talk about the mix of the star ratings, but just a little bit of color about how our operators view it. We're in the early innings of hospitals using the star ratings for, as a criteria for their preferred networks. There's obviously the three-star cutoff for the CJR, for the three-night qualifying stay waiver, but what that does is it creates a little bit more time in some cases for the two star or below facilities to qualify to be part of those preferred networks. In some cases, hospitals have a pretty clear cutoff. If you aren't three star or above, they are not going to include you, and so it takes some time. It can take one to two to three years to move significantly from one star up to where you want to be. Having said that, I sort of started by saying we're in the early innings because that's such a blunt tool for hospitals to use. It's not effective because it doesn't accurately reflect quality. That's why they added the readmission rates to the quality measures for the star rating, but the way they did that, to us, doesn't seem to, they fold it under the quality measure component and so it's not going to be as potent of a swing measurement, if you will. At the end of the day ---+ so we believe that hospitals will evolve and pay more attention to that readmission rate data than to the less sophisticated star rating, if you will. So as we under-write deals, we look to see what the star rating is and to see if that particular hospital market has a star rating ceiling or floor for their preferred networks and then just how long we think it will take them to get into that market. Yes, <UNK>, this is <UNK>. So just let us give you some perspective on that. In order to move star ratings ---+ star ratings follow a facility for three years and it doesn't matter if the facility has changed hands and has a new operator. If you walk into a one, it can take you up to three years to rack up enough good survey results to get yourself back up into the four and fives. So, and again, part of <UNK>'s point was that if you look at the 108 SNFs in our portfolio right now ---+ if I'm doing the math right, 73 of them are three star or above so we're not worried too much about those at all. And those threes will probably continue to move up toward fours. And then about three dozen of them are in the one and two star, but two-thirds of those ---+ or about a third of those, are facilities that have recently come into the portfolio and are dragging behind them the prior operator survey history. One of the great things that we do is that we find assets that, while they are stable, we think that they are under managed and can be significantly improved merely by the insertion of a great operator who is sophisticated, committed and knows what they are doing. And that's exactly what we've done with those assets, but the Pristine assets have been with us for about six months now and we're just starting to see that movement and the Trillium assets have been with us for a couple of months now and it will be a while before they move up, so that's why we can say that we're pretty happy with the overall distribution. I think, as it sits, the overall distribution of five star ratings in our portfolio is better than most and we know that these things are barely getting started. Yes, so when we go from, when we experienced this at the Ensign Group for all of the time that we were there, as you know, our MO there was to take the stress assets and turn them around, largely Medicaid shops, and turn them into skilled short-term rehab facilities. In this case, as you know, the Pristine buildings were kept ---+ Medicaid shops, but cash flowing really nicely. Nevertheless, the strategy that Pristine is pursuing is to convert those long-term care shops into more short-term rehab facilities. So our pro forma matches our experience at Ensign and Chris' experienced before, and that is that you're going to ramp up a little bit the cost structure on the outset to build the clinical capabilities on your nursing and rehab team and you're going to build a little bit, invest a little bit more in marketing in order for that to happen. While you're doing that, you can still see some modest increases in your skilled mix just by paying attention to it. That's what our model predicted and that, just in general terms is exactly what we're seeing so far with that transition. It was about 140% to 150%. We saw it is somewhere in the 12 to 18 month mark, that he should be somewhere in that range, in the 1.4 to 1.5 times. Because it was going to take, we thought there would be some incremental expense that they would pick up early on. Then we thought, call it, months three through nine, we would expect to see them start to hit their stride and fully bake in all of their transitional expenses and really start to hit their stride on the marketing side. So I would say towards the end of this year, we would expect to see 1.4, 1.5 on an EBITDAR basis. Well, you know, we said we're pretty optimistic about the pipeline and what we think we can do through the rest of the year and into the future. But remember, at our size, quarter-by-quarter, looking at acquisitions, it's going to be a little lumpy. So it would be, while I would love to be able to project that we will replicate Q1 in the other three quarters of the year, or exceed it, I'm not sure that we can do that. But I do think we'll have a much better year than the $233 million in capital deployment year that we had last year and we are optimistic as we look at the pipeline and the kind of deals that are crossing our desk every day, that the opportunities are going to be out there for us. You know, it's a little early to tell on that. I figured we wouldn't have done the deal if we didn't expect that, in time, we would be exercising that. But they just barely started taking deposits and doing lease up, opening that thing. They've scheduled a grand opening, I think, for July, right, <UNK>. End of July. End of July, which will give them some time to get through sort of the, all of the start up stuff, and I think probably over the next couple of quarters, we will get a much clearer picture of how that thing is going to lease up and how it's going to run. We sure like the tenant. We sure like the location. We definitely like the facility. It's beautiful. <UNK> and I were up there not long ago and toured it and it's going to be a great asset and I do think we'll ---+ my expectation is the same as it was. We will exercise that in due course, but we will see what due course is. Our operators haven't expressed that concern to us yet. As we've talked to them about the minimum wage initiatives in their states, they have reassured us that they feel comfortable with their cost structures and being able to absorb that. In the skilled nursing space, there's not a lot of the labor that's in that minimum wage amount as it stands today anyway. And there's some optimism in California, for example, that the very strong state association there will be able to help those providers to make up that different as that rolls out over time. Yes, they have for the present, <UNK>. The deals that we have in the pipeline now reflect ---+ and then the deals that we did in Q1 were really deals that we made in Q3 and Q4, those deals we closed in Q1. The deals that we have in the pipeline now that would be our Q3 and Q4 deals this year do reflect the increased underwriting standards that we imposed at the end of 2015. Whether that holds or not is a question mark. I think we're going to see some of the buyers who have been absent from the market for the past three or four months start to return now and we'll just have to see if most of them have been expressed the same thing we have that they think that cap rates should tick up a little bit, but we'll see if that discipline holds. Yes, but we aren't pursuing them. No, our expectations haven't changed, but remember that our view seems to be slightly different from some of the others. Whereas there tends to be a prevailing view amongst healthcare REITs that when you see an asset that's new and beautiful and 98% occupied and has a 60% skilled mix and is hitting on all cylinders, that's the asset that you want to go out and pay top dollar for, pay a premium for. And in our view, that asset really, and you may skim your coverage down for that and we've seen a lot of folks do that historically. We don't like that. We think that, that asset has no place to go but down, so if it's already at 98% occupancy and 60% skill mix, we darn well better get 1-5 coverage on that asset, and in that environment, we tend to be not competitive on price. The assets that we like are the ones that are 80% occupied, but stabilized and cash flowing, that have some upside left in them; there's some meat on the bone there for a new operator coming in that we would be bringing. We can get those at a much better price. We'd actually skinny the coverage on that one before we'd skinny the coverage on the first one with the premium price, because if we know the operator, we know their business plan, and we, with our background and perspective as operators, can say yes, that's very likely to work. That's one that we might stretch for and skinny our coverage down on a tad to keep our yield up and let them grow into that coverage, which they would typically do in our underwriting within 12 to 24 months. So we might skinny that coverage down to 1-4 or even a little below that on an asset that we view as stable with great upside. Every tenant could be audited, <UNK>, but we don't expect any disruption from RAC audits. RAC audits have been around for a long, long time and the only reason they have been in the news lately is that the CMS sort of alerted RAC auditors about some new things that they thought they ought to look for. But those new things aren't really the kinds of things that our tenants are typically dealing with, so no, the short answer to your question is no. We don't see a big issue there. We're just staring at it for a minute. There's a couple new tenants in there in the existing pipe. Out of eight or nine deals, six or seven of them are going to go to exiting tenants, should we close them, and then the rest would be new folks coming in. Yes, this is <UNK>. I can give some color on that since it's my responsibility. In building out our reporting calendar for this quarter, I incorrectly assumed that we were still a non-accelerator filer. We actually became an accelerated filer at year-end. A non-accelerated allows for 45 days, whereas accelerated filer is 40 days and we reported on day 41, so technically, we were non-timely, which required us to file the Form 12b-25. Yes, that's a great question. So what we've said from the beginning was that we were going to not try and get our leverage metrics down to where we want them to be all in one jump, that we would ratchet those down, do deals, raise equity, do deals, raise debt equity and try and be smart about it and we have. That's exactly what we've done, is ratcheted down and so our target range on a debt to EBITDA basis is about 4.5 to 5.5 times. We might float a little bit above that. We have the debt capacity to do that on a revolver, to make acquisitions, but we would then want to bring that back down again. And if we can keep the debt to enterprise in the 30% to 40% range, we believe that's optimal for us and that's where investors would like us to be as well. So we will not be willing to go too high above those ranges and we will always seek deals that are accretive and worth whatever we're paying for them to make sure that we return value to shareholders when we do. So we met with them a couple of weeks ago when we also met with S&P and they're just looking, they wanted to see the transition of Pristine into our portfolio and see these first-quarter numbers. So now that we've reported, I'll be circling back with them and getting a better feel for where they are at. But when we presented, they had, when they originally came out with their rating, they had given us like five targets, what could change our rating up. And when we went in and presented the numbers, we felt we checked each one of those five criteria. So it is the hope that they will see that as well and see the progress that we've made, like S&P did, and give us an upgrade, a notch upgrade as well this year. Thank you. Thanks, everybody. We appreciate you being with us and we welcome you to give us a ring any time you have any other questions. Thanks, Sabrina, and everyone else.

2016_CTRE

2017

MMM

MMM #Thanks, <UNK>, and good morning, everyone I'll start on slide 7 with a recap of our first quarter sales performance As <UNK> mentioned, we posted strong organic growth in the quarter of 4.6%, with volumes up 4.5% and selling prices up 0.1% Divestitures of non-strategic businesses reduced sales by 0.4 percentage points, and foreign currency translation decreased sales by another 50 basis points As a result, total first quarter sales in U.S dollars increased 3.7% versus last year As you can see on the right side of the slide, growth was broad-based across all geographic areas Let me start with the U.S , where organic growth was 1.4%, led by mid-single-digit increases in both Industrial and Safety & Graphics Our Electronics & Energy and Health Care businesses also delivered solid growth in the quarter The Consumer business declined mid-single digits organically in Q1, impacted by channel adjustments in the office market, as <UNK> mentioned Asia-Pacific led the company with organic growth of 10.1% All business groups posted strong growth in the quarter, led by a double-digit increase in Electronics & Energy We also had strong growth in Industrial, Health Care, and Consumer Looking at key countries within Asia-Pacific, organic growth increased 13% in both China/Hong Kong and Japan Excluding our Electronics businesses, China/Hong Kong grew 12%, and Japan was up 2% Moving to EMEA, organic growth increased 4% in Q1. West Europe was up 5% organically, with sales growth led by Industrial and Safety & Graphics Central/East Europe and Middle East/Africa grew nearly 2% Finally, organic growth in Latin America/Canada increased 2.3%, led by a high single-digit growth in Health Care, along with solid growth in Consumer and Safety & Graphics At a country level, Mexico continued to deliver strong growth, at 8% Canada was up 3%, while Brazil declined 3% Please turn to slide 8 for the first quarter P&L highlights Company-wide, first quarter sales were $7.7 billion, and net income increased 3.7% to $1.3 billion GAAP operating margins were 23.1%, down 100 basis points versus last year's Q1. Earlier, you heard <UNK> mention the additional $136 million of strategic investments we made in Q1 to strengthen 3M for the future, in terms of both growth and productivity Excluding the impact of these investments, margins were up 80 basis points year over year, driven by strong organic growth and solid operational performance Let's take a closer look at the various components of our margin performance in the first quarter Organic growth, along with improved productivity, contributed 120 basis points to margins Lower raw material costs, net of selling price changes, added another 50 basis points Raw material prices remained favorable to start the year, as our global businesses again delivered savings in excess of market price changes We expect raw material benefits to moderate as the year progresses, but still remain positive for the full year Turning to headwinds, foreign currency, net of hedge gains, brought margins down 40 basis points in the quarter As previously discussed, strategic investments impacted margins by 180 basis points, and higher pension and OPEB expense decreased margins by 30 basis points year on year Finally, lower year-on-year gains from divestitures reduced margins by an additional 20 basis points Let's now turn to slide 9 for a closer look at earnings per share First quarter GAAP earnings increased 5.4%, to $2.16 per share The combination of organic growth and productivity contributed $0.22 per share to Q1 earnings Business transformation is having a positive impact on our productivity efforts The year-on-year impact from divestitures reduced earnings by $0.03 per share Foreign currency, net of hedging, reduced pre-tax earnings by $0.04 a share, while strategic investments were a $0.16 impact The first quarter tax rate was 23.7%, versus 26.8% in the comparable quarter, which increased earnings by $0.09 per share The lower year-on-year tax rate was driven by favorable geographic profit mix, increased tax benefits from employee equity-based compensation, and ongoing strategic tax initiatives In light of the first quarter performance, we now expect our 2017 full-year tax rate to be in the range of 26% to 27.5% Finally, average diluted shares outstanding declined nearly 2% year on year, which added $0.03 to Q1 earnings per share Please turn to slide 10 for a look at cash flow We continue to generate solid operating cash flow as a company, which allows us to consistently invest in the business and also return cash back to shareholders First quarter free cash flow was $701 million, down $245 million year on year, largely due to the timing of pension contributions Full-year 2017 pension contributions are expected to remain in the range of $300 million to $500 million, similar to 2016. Free cash flow conversion was 53%, and for the full year, we continue to anticipate free cash flow conversion to be in the range of 95% to 105% Recall that Q1 is typically our lowest conversion rate of the year First quarter capital expenditures were $287 million, in line with our expectations heading into the quarter For the full year, we continue to anticipate CapEx investments in the range of $1.3 billion to $1.5 billion As you heard earlier, we increased our first quarter per share dividend by 6%, resulting in $702 million in cash dividends paid to shareholders during the quarter We also returned $690 million to shareholders through gross share repurchases We continue to expect full-year repurchases in the range of $2.5 billion to $4.5 billion Let's now review our performance by business group, staring with Industrial on slide 11. Industrial continued its strong growth momentum from Q4, delivering first quarter sales of $2.7 billion, up 5.7% organically Industrial's growth was broad-based, across all businesses and geographic areas Our automotive OEM business continued to lead sales growth within Industrial, increasing double digits organically Growth in this business outpaced the rate of global car and light truck builds by more than 400 basis points Advanced materials also had a strong start to the year, up high single digits Our Heartland businesses within Industrial, abrasives, industrial adhesives and tapes, and automotive aftermarket, each increased mid-single digits organically On a geographic basis, organic growth was led by Asia-Pacific, up high single digits, while the U.S and EMEA increased mid-single digits Industrial delivered first quarter operating income of $625 million, with operating margins of 23.1% Operating margins were down 80 basis points year on year, or up 40 basis points adjusting for a Q1 2016 divestiture gain As you can see, Industrial is off to a strong start to 2017. For the full year, we now expect organic growth in the range of 2% to 5% versus our prior estimate of 1% to 3% Please turn to slide 12. First quarter sales in Safety & Graphics were up 4.8% organically to $1.5 billion Personal safety, another Heartland business, delivered strong organic growth in the high single digits, with particular strength in Asia-Pacific and the U.S The roofing granules business continued to perform well in the first quarter, posting double-digit organic growth, as demand remained strong in the replacement shingle market Geographically, Safety & Graphics grew organically in all areas, led by mid-single-digit increases in EMEA, Asia-Pacific, and the U.S Operating income for the business group was $399 million, and operating margins increased 180 basis points to 26.1% Adjusting for acquisition and divestiture activity in this year and last, operating margins were up 80 basis points As with Industrial, Safety & Graphics is off to a strong start, and growth is better than we anticipated entering the year We now expect organic growth for this business to be between 2% and 5% versus a prior estimate of 1% to 3% Please turn to slide 13. Our Health Care business generated first quarter sales of $1.4 billion Organic growth was 3.1% year on year, in line with our full-year expectations of 3% to 5% Growth was led by a double-digit increase in both drug delivery systems and food safety Our medical consumables businesses, which represent the largest segment within Health Care, posted good growth in Q1. Oral care delivered mid-single-digit organic growth in the first quarter, a marked improvement from the second half of 2016. Our health information systems business was down low single digits organically We expect the business to improve throughout the year Geographically, organic growth in Health Care was positive in all areas, led by high single-digit growth in Latin America/Canada and Asia-Pacific We saw notable strength in China/Hong Kong, which was up double digits in the quarter Health Care's operating income was $434 million, and margins remained strong at 30.5% Importantly, we generated these returns while investing an additional $21 million to enhance growth in core platforms across the business Please turn to slide 14. Electronics & Energy led our company with organic growth of 11.5% in the first quarter Sales were $1.2 billion The Electronics side of the business grew 18% organically, as our team successfully drove increased penetration on a number of OEM platforms Demand strengthened across most market segments in consumer electronics, which also boosted our growth rate, and we benefited from favorable year-on-year comps Our Energy-related businesses were up 1% organically, with low single-digit growth in electrical markets, while telecom was flat On a geographic basis, organic growth was up double digits in Asia-Pacific, where our Electronics business is concentrated First quarter operating income for Electronics & Energy was $225 million, with margins of 18.6%, up 70 basis points Adjusting for first quarter portfolio actions, margins were nearly 24%, up 600 basis points year on year As you can see, Q1 organic growth was very robust for Electronics & Energy As a result, we are updating our full-year growth expectations for this business to a range of up 1% to 6% versus a prior range of down 3% to up 1% The first half of the year is expected to be stronger than the second half, largely driven by year-on-year comps Please turn to slide 15. First quarter sales in Consumer were $1 billion, and organic growth declined 1.2% year on year Three of our four businesses within Consumer grew organically, again led by home improvement followed by consumer health care and home care Within the home improvement business, our Command damage-free mounting products posted strong double-digit growth, as accelerated investments continue to pay off Filtrete filters also delivered strong growth in the quarter More than offsetting this growth was a year-on-year decline in our stationery and office supplies business, which was impacted by continued channel inventory reductions, primarily in the U.S office retail and wholesale Geographically, organic growth in Consumer was led by Asia-Pacific and Latin America/Canada, which was more than offset by a decline in the U.S Operating income was $222 million, with operating margins of 21.3% Looking at the full year, we expect organic growth for Consumer to be in the range of 1% to 3% versus a prior estimate of 2% to 4% We also expect to see growth improve as the year progresses Please turn to slide 16. Before I turn it back to <UNK>, let me address a few items that we anticipate will happen over the remainder of 2017. The net impact of these items is factored into our EPS guidance today First, as you may recall, in December we announced the divestiture of our Identity Management business within Safety & Graphics The sale of this business, which has annual sales of approximately $205 million, is expected to close during the second quarter Upon completion, we expect to record a gain on sale of approximately $0.55 per share, partially offset by the profit that will go with the business in 2017 after the divestiture is closed In addition, recall at our Investor Meeting in March 2016, we introduced a plan to better optimize our portfolio and supply chain footprint We expect to make significant progress on that plan in 2017, with associated costs in the range of $0.40 to $0.45 per share over the remainder of the year We anticipate $0.20 to $0.30 per share will incur in Q2. In total, the net impact of these items is expected to add between $0.05 and $0.10 to 2017 earnings per share Again, this impacted is reflected in our full-year updated guidance, which <UNK> will now cover on slide 17. <UNK>? Good morning, Andy Andy, thanks for the question You covered quite a few things there Just from an overall theme standpoint, Andy, we're always looking for opportunities to enhance the value of the enterprise, and that's really part of our business model What you see in the first quarter for incremental investments, some of that was investments we were taking to accelerate growth And that was really lined up with what we had shared last December of the incremental $100 million over the course of 2017 to deliver accelerated growth throughout the year The other context I'd share with you in thinking about this step up in strategic investments, if you think back to last March at our investor meeting when we laid out our five-year plan, we shared plans for optimizing our portfolio and supply chain footprint with at that time what we described a total of between $500 million and $600 million of investments, and ultimately that we expected that by 2020 to be creating $125 million to $175 million of annualized benefit, operating income benefit What you're seeing in this step up of accelerated strategic investments both for the quarter and for the year is us taking more action related to what we laid out last year for the optimized actions on our supply chain footprint Yeah, Joe, as the quarter went on, it was consistent strength across the quarter, all three months of the quarter And I'd further add, we're seeing April, the start of April, tracking very much in line with what we've been seeing for the first quarter, so really no intra-quarter trend changes to note Yes, <UNK>, we're not fundamentally seeing any change in our pricing power That remains strong We do continue to look for targeted places where we can use price to help drive organic volume growth If I look out over total 2017, we're expecting U.S price growth to be approximately flat If I expand it to the total globe, if I pull out the FX impact, we expect pricing to be up slightly Our normal range is 30 to 50 basis points of core price growth I think it will be somewhere between there and flat for total 2017. Yes, of the $136 million in strategic investments in the first quarter, <UNK>, a little less than half of that is investments that we see having a fairly short-term return in 2017 and into early 2018. And those are primarily growth-oriented investments, and those growth-oriented investments were factored into the guidance we set out for the year The remainder of the strategic investments, those relate to our portfolio, supply chain footprint And that's really laid out aligned closely with the plan that we put forward a year ago in March No, <UNK> Yes, so in December when we laid out our guidance, EPS guidance for the year, strategic investments we had incrementally in a $0.05 to $0.10 range That was aligned primarily – or almost exclusively with our growth investments Now what you're seeing, we're seeing the growth investments play out exactly as we guided, still in that $0.05 to $0.10 range for the total year What we're layering on top of that is additional footprint actions and portfolio actions that we're taking throughout 2017. So on top of the growth investments, there's roughly an incremental $0.10 of supply chain and portfolio actions that we took in the first quarter of 2017. And then in terms of the guidance for the balance of this year, for Q2, Q3, and Q4, there's an extra $0.40 to $0.45 on top of that that was not part of our initial guidance So all in, the growth investments, the incremental $0.10 that we took in the first quarter plus what we're expecting Q2 through Q4, it's now in the range of $0.55 to $0.65 for the total year <UNK>, we're always, as I said earlier, we're always looking for opportunities The level that we were investing in Q1 in strategic investments around growth, no pull forward there That's coming exactly as we had planned The increased strategic investments around portfolio actions and the supply chain footprint, that's aligned with our longer-term vision The exact timing of when we were going to do that we did not have clarity on until we started pulling the trigger on some of those actions in the first quarter and some that we expect to have happen over the next three quarters So I'm not sure I'd characterize it as a pull forward as much as it would be now is the time that it looked like the right time for us to pull the trigger on actions that we had laid out last March No, the $0.40 to $0.45 does not include anything for <UNK> Safety At the time that closes, we will update guidance to take into account any impact that will have on our 2017 earnings Yes, first of all, you heard <UNK> talked about some of the channel impacts in our office retail and wholesale channel In addition, in our Industrial channel, we are seeing increased confidence in the channel, which we're seeing good sell-out of our product We're seeing even stronger sell-in to the industrial channel, primarily in the U.S So that is one place where we're attributing it to higher confidence amongst that channel and seeing what appears to be some restocking of depleted channel levels that we've seen in the past Jeff, to your first question on the tax rate for what we're now seeing for total 2017, there are a few dynamics going on First of all, we are seeing a favorable geographic profit mix for us that is helping us in our tax rate It's been a headwind for us the last couple years, and that's switching over to a tailwind for us this year We're also seeing some of the benefits, as you'd expect, from some of our tax planning But one of the more significant items just in the first quarter is the benefit we're getting from the accounting standard change that came into effect last year for the excess tax benefits from stock-based compensation From a year-on-year basis, that's about a $0.04 benefit versus what we had a year ago And, Jeff, I'd say that's the wildcard Other things are going very much as we had planned, to get to the 27% tax rate by 2020. But with the added variability from what happens with this excess tax benefit from stock-based compensation, there will be some quarters that's a benefit, and some quarters we won't see any benefit at all All in, we're well on track for hitting the 27% in 2020, possibly even lower than that But when we have better clarity on that, we'll give a revised number of, can that go even lower than the 27% To the second point on the strategic investments, the $136 million, of the growth-related investments, you're correct Health Care had the majority of that There were small amounts, single digits of millions of dollars, low to mid-single digits in millions of dollars, in the other four business groups And then, from a portfolio and supply chain footprint optimization, the vast majority of that is impacting the Electronics & Energy business, with a little of that hitting the consumer and office business, the Consumer business group Rob, as far as the automation portion of our CapEx spending, a year ago at our investor meeting, we laid out that we expected that to be a noticeable part of our CapEx investments What we're seeing is, that's playing out exactly as we laid out a year ago, that we're seeing continued opportunities for automation investments within our CapEx plans And I wouldn't call it an uptick, but I'd say it's playing out exactly as we laid out <UNK>, the increase in the strategic investments from what we originally guided is really around supply chain and portfolio optimization and much less around growth If we see growth even higher than what we're currently expecting, could our growth investments tick up some? I think the short answer is yes It could tick up some, but I don't think on a material basis I think we're now talking single digits of pennies at that point Good morning, Steve Steve, thanks for the question Part of what we talked about a little over a year ago at our outlook meeting, for the five-year outlook meeting, is the number of manufacturing sites we have around the world and looking at the productivity in those sites and the opportunity we have through rationalizing the number of those sites, increasing capital into some of our more productive sites, the opportunity to reduce the total footprint of our manufacturing and supply chain sites over the course of the next four years So that's what we mean when we talk about it when we laid out a $500 million to $600 million investment that we expect to take, the resulting productivity from that, that by the time we get to 2020 we think that will add another $125 million to $175 million of added operating income through that productivity we can get through rationalizing our supply chain footprint If I look at this globally, Steve, we had positive though very small price in all businesses except for Health Care, where we were flat <UNK>, to the first question on business, and I'll go further in geography, we expect that this action that we're taking in the second quarter and in the third and fourth quarter will impact all businesses and all geographies, that it will be broad As far as the specific details of each business, we're still working through those details We're not ready to be sharing that yet, <UNK> And then as far as 2017 to 2018, some of these actions will have a tail into 2018, where there will be residual cost impacts hitting us in 2018, though I expect it will not – I very much expect it will be a decline from the level that we're projecting now for 2017.

2017_MMM

2017

ITRI

ITRI #Thanks. Actually, both of those are the case. We discussed Public Service in New Mexico as an example specifically, because that award was relatively late, and it is in the process of obtaining regulatory approval at this point. The other significant announcement that we have made that is not yet obtained regulatory approval is National Grid Massachusetts, in which the selection was announced, but the approval is not complete, and therefore we do not place it into backlog. So those are the two largest examples. We're not providing guidance specifically on EBITDA, but I think you can assume that we are going to see continued improvement in our EBITDA margins as we move from 2016 to 2017. So, let me leave it there. We're not at our mid-teens target yet, but we're getting closer. Yes, <UNK>, thanks. I would reiterate the statement I made on prior calls, which is that we absolutely aspire ---+ by the way, this is not our final state, but I think an achievable one ---+ to get to $500 million in software and services, and to have that segment not only grow faster than the historical hardware business, but also at a higher level of profitability. We're doing that through an increase that we saw in 2016 of increasing focus on managed services and analytic outcomes. We've commented before that we've increased the number of managed services customers significantly in 2016, going from 300 to 375, or a bit more than that. And through doing that, we have the opportunity to provide an extended range of analytics solutions. A number of the opportunities that I discussed on recent wins involve solutions outcomes that we're providing. Talk about Itron Total Solutions ---+ we're managing not only the data collection, but also even analyzing the data and moving beyond the revenue cycle. So we see a range of organic opportunities there. You have seen and did see at DistribuTECH a wide partner ecosystem with whom we're working to extend offerings there, and then again are looking for opportunities, both organically and inorganically, to continue our growth in that area. There's a tremendous opportunity for us there. You're Welcome. Thank you. Sure. We have, as an example, in water, a acoustic leak center that we provide in addition to a metering solution on the waterside, in which we are listening for leaks in pipes, and giving the ability to triangulate on very significant amounts of water loss. So there are sensing solutions such as those that we are directly providing. The gas PACE cathodic protection pressure sensing, methane sensing, kind of solutions where we may be the provider of the sensor or a partner may provide that sensor. But we would provide integrated communications for that solution. We're demonstrating the Itron Riva communications embedded in streetlights, charging stations, solar inverters: there are a wide range of opportunities there. I mentioned smart city opportunities. These are generally the use of large-scale networks for these types of extended canopies and extended sensing devices. So Itron intends to both provide some of its own extended sensors, in the case of the leak senor, and partner with others to embed communications. We're making that very easy to do with a Itron Riva partner community website and developers' kit. Willing is not the way I would characterize this. The reason that we made a very conscious effort to strongly partner with Cisco is we believe that the Internet of Things is going to be powered by the world's largest networking company and others in the networking space who are embracing open standards. And so we actively embrace the notion of multi-tenant open systems, because we believe that this is going to promote more value for our customers and ultimately more value for us by changing the competitive paradigm. And we have really worked diligently with our Riva offering to offer a truly open and standards-based system. (Laughter) That's fine. Well, the first is to get integrated electricity, gas, and water networks ---+ to extend those networks I mentioned on the gas, in the waterside leak sensing and other telemetry devices on gas. Again, pressure, cathodic, methane sensing. On the electric side, we've demonstrated streetlights charging and solar. But we are exploring a wide range of other embedded devices. <UNK>, what I would say is that we are being selective in the revenue that we're taking. As you see double-digit earnings growth ---+ it's a great question, that we are targeting the opportunities that we are pursuing with higher profitability in mind. So it's not necessarily a headwind faced from past actions that we taken. This is becoming a standard part of our operating model, that we are being selective and very disciplined about revenue opportunities that we're looking at. That being said, the way we're approaching that is by relentless cost reduction in operational efficiency to give us the broadest opportunity to bid on business that we possibly can. But there is a tension there and the order of predictability, profitability, and growth is listed in that sequence on purpose, because we're focusing on profitability. Which is not to say growth is not also very important. We are absolutely looking at those opportunities, and I think have quite a lot of 9% growth last year and a number of significant competitive wins and opportunities here to drive significant additional growth. But growth with a good focus on profitability, and continuing to focus on that mid-teens EBITDA target and beyond. <UNK>, I'll just add ---+ you'll remember that a couple of years ago, we mentioned specifically that we were exiting $40 million to $50 million of basic metering business in the electricity segment. There's not another announcement like that coming here. But as <UNK> says, the ongoing strategy of the business is to focus on the higher-margin smart metering and network and solutions businesses. So there is sort of a tail to that strategy that we rolled out a couple of years ago. Yes, well, you're right on. I'm glad you raised that question because we feel good about it, that the implementation of our Oracle ERP system is largely behind us. We still have Asia-Pacific to do, and that will be implemented in 2017. But there isn't a whole lot of cost associated with that, it's nothing like we've experienced in prior years. And the implementation of our global business services business, which is located in Cork, Ireland, we've now got the automation ---+ a good part of the automation, not all, but a good part of the automation now is implemented. Though it's now hit its stride, and it's contributing positive results in business. So, this is what we said would happen a couple years ago, that it would take some time to get new systems implemented, the automation underpinning them to embed the processes. And while that's not all completely done, we're certainly seeing the benefits of it now. Thanks, <UNK>. Thank you. I had the opportunity to say a couple of times already how pleased we are about 2016. I would point out that 2017, with double-digit earnings growth, we continue on in this operational improvement side, but are not neglecting growth in any way, shape, or form. We have tremendous backlog opportunity, a high degree of deal activity, strong products that we're bringing to market in order to drive future growth and continue to develop our software and services offering. We're energized and excited about our opportunity in 2017, and look forward to giving you an update here in the next quarter. Thanks very much, everyone.

2017_ITRI

2015

LLL

LLL #Good morning, Rich. The process that we go through and other companies go through with respect to credit rating agencies are, that you meet with them on a periodic basis, usually annually, and based upon those meetings and the way a company's results have been trending, I'm talking about the credit ratios and credit metrics in this instance here, and they look at what we've been doing. Clearly, we have employed a lot of debt in our capital structure, which for our investment-grade credit ratings are near or above the limit in terms of what the rating agencies like to see, and that's what's being reflected in their outlook changes from stable to negative. In both instances, the end of February and just yesterday, S&P, end of February was Moody's, they both reaffirmed our ratings, and they're essentially telling us they don't want to see any further deterioration in the credit metrics, and in some cases, some improvement. We're mindful of that. We think we have adequate cash flow and cash to continue to do what we're doing with the capital allocation in terms of the dividends and the share buybacks, and also manage the credit ratings effectively. The way you do that is, if we make some acquisitions, and to the extent that we did, they would be profitable businesses, which would improve our EBITDA and lower the leverage. That's one way to improve the credit metrics. The second way is that we expect that we're going to have natural organic improvement in our business the next year or so, as we come out of the downturn, particularly with the DOD budgets. And lastly, we could also repay some debt. So we have the ability to use any of those items in order to manage the credit ratings, and that's how we're considering it. Thanks, Rich. Hello, Rob. I think you said it. It's going to [go through] this year and next year, but pretty much, I would say, the latter part of this year rolling into next year. A lot of the ---+ the wild card there is to what goes into the OCO account, which is being driven by some of the geopolitical events that you see every day. There is continued demand for ISR assets, whether they're aircraft, the Data Links or cameras that go on them, and as well as support on the ground, whether it be SOCOM or our Night Vision products and the like. Certainly communication products, very strong demand. So we have the event-driven growth. We have the fact that the budget request is an improvement from where we've been, and the fact that we see real growth starting in 2016; even with sequestration there, there's growth. The trends are changing as we look out. I don't think it will happen overnight, but it should gradually improve over the next 18 months, is our view. I'm sorry. Our overall market share. They're in a lot of different spaces so I don't think there's one composite number that can answer that question, whether it's cyber, intel support, IT support. I don't know that we can give you a very clean, discrete number there that makes a lot of sense. But Rob, clearly the federal government technical services market is several billions of dollars each year. Multiple billion. Multiple billion dollars. So we have a small market share, which is the case for most companies, even the ones that are a lot larger than NSS. There's no dominant player in federal services that we can discern. I'm not sure if we're answering your question or where exactly you're going with the question, but is that what you're asking. No, we're not necessarily walking away from work. In fact, last year, we won virtually every recompete that we participated in, and they've done a very good job in the proposal process in winning business against bigger players that are bigger players, period. The performance or the contract execution has been very good. Their CPARS or their ratings have been outstanding. The hesitancy on this side, which I'm sure you read, is that in the world that we're in, where there seems to be a cyber element in everything, whether it's a communication systems contract or, of course, anything in the IT domain, in many of the places [for the] diversified defense company wouldn't prudent to not after cyber element within the Company. So that's something that we are paying a lot of attention to. Since we do have some significant capability in that space, you just look at some of the recent wins that we've had with the NSA and other customers, they're well thought of and they do have a unique offering with a very dedicated, skilled workforce. So they do well. I've thought about in terms of Management, can we take more costs out. We really are running a lean operation, and I attribute it more to the space that they're in and the dynamics in that space, more recompetitions, breaking contracts into smaller pieces, and the fact that there are just a lot of players there that are all scrapping for some top-line growth, and they're willing to bid lower and lower numbers. And better buying power encourages that and the like, so it's a question of the space they're in right now. You could look at this as a cycle also that this, too, will turn, because I don't know that going to the lowest priced bidder will save the day every time on the customer side. It will probably be the most qualified bidder. And we've been trying to gradually move to higher-margin work, and when you say walk away, yes, we would walk away from work at 3% or 4%, 2% or 3%, if we had to, but we'd like to still get in the DOD focused area of best value, which means putting out best proposal, if you will, or the best quality at the best price. There's still time to be played out here in terms of whether this trend will change and we could see some improvement in the margins, but having a flat top line or a shrinking top line and shrinking margins at the same time is not a type of business that we would like to participate in. So if that continues, you could assume what our answer is going to be. Okay, Rob, thank you. Hi, <UNK>. I talked about the additional sales on Liberty, that's about $50 million. So we have $50 million there that I put in the realized category, and now in the guidance update. And your question of the timing of award fees at NSS, we're going to have our biggest award fee quarters in the third and fourth quarter, and on average, there's about $3 million more of profit in each of those quarters compared to Q1 and Q2. Okay. Okay. To wrap up, we are confident that, as the DOD budget stabilizes, we are well-positioned to take advantage of the growth opportunities that will present. Our strategy of expanding our international and commercial businesses will continue to dampen the effect of the DOD budget uncertainties. Our operational agility and commitment of delivering value are the backbone of our performance. We will continue to offer affordable and innovative solutions to address customer priorities. We are making strategic investments that promote growth, while optimizing efficiencies, and we believe our business model is stable and well aligned with the current environment. With that, we look forward to speaking with you again in July. Thank you.

2015_LLL

2016

BHE

BHE #Thank you. I think it would be flat to slightly up, overall. And again, as you point out, we feel that that is strong given the current marketplace, but again we are not giving guidance for the full year. But noting the overall environment and the soft demand environments that our customers see, growth from new products. And it's a matter of trying to identify what your belief is about the longer-term macro environment. And, again, I will point out that we have maintained customer relationships. It's not the departure of a customer. It's the departure of volume for customers that will drive whether, in the macro environment, that will drive whether that is substantial, moderate or no or slow growth in our core base of business. Let me take it the other way and see if this helps answer. If you go back a couple of years when we had a greater portion of our business associated with telco and computing, you would see a stronger boost in Q4 and then a fall off that was more substantial in Q1. So, I believe, it was two years ago we saw about a 16% quarter-over-quarter decline. Last year, it would've been like a 12% and this year it's about 8%. So that's an all-in number for all of our business and all of our guidance. It does have the seasonal impact in there. It also has the shift in business. It's what we see across our customer base which is, as you said, it's product; it's geography; it's customers. So we don't see it isolated to a specific subsegment. And I believe some of it, again, is probably timing related and some of it probably is related to geographic. Yes, good morning <UNK>. <UNK>, let me answer it this way. I think if you look at our higher value versus our traditional side, as we stated in our comments, we believe the higher-value portion of our business will have about 10% growth. Now flipping that over to your traditional side, the wild card in there is, how well is telco going to perform. Certainly Q4 was the low point of the year; we are expecting further declines into Q1. It's how fast do the new programs, that <UNK> alluded to earlier, do those ramp in the telco sector is really going to drive what 2016 looks like. And <UNK>, one thing that I might add to what Don indicated, that, make no mistake, we don't see this through rose-colored glasses. We don't see a different overall macro environment than what others see. I truly believe that it's rough and rocky times out there across a lot of the markets we serve, if not all of them. So the end-market softness and how that impacts us will be what it is. But what we are excited about, and the positive tone you hear in our voice and hear in our comments, is that we feel probably better than ever, about what we're doing and the team and the actions we have in place to manage through this. And once again, we are positioned for solid growth. We have focused attack plans for each of our segments. And importantly, we have diversified. So we have behind us some of the challenges, that concentration or some of the technology that is not as leading edge may have in the marketplace. Those are in the rear-view mirror, and that gives us a positive look going forward. It will be modestly down for the quarter. We finished at 50.9 million, probably 200,000 lower than that. Well, first the rate is going to be driven by the geographic mix of where the profits are generated. You couple that with the fact that we just added Secure which is exclusively in the United States. That's going to have an increasing impact on the tax rate. Okay. All right, fair enough. Thanks, folks. Yes. I think again, you see probably a mixture of both. I don't think it's one-size-fits-all. It really is based on the scenario that each OEM has in their own environment. So, I would say, any of us in our industry would be wrong to say that we only see one or the other. But clearly, what allows OEM to take fixed costs out of their model is to outsource. And so, while there may be a stepping stone, where a number of OEMs may collect a certain amount of their manufacturing and bring it under one or a few operating units that exist, that's generally a stepping stone. And if they have further, or additional needs, for improvement, then that's when they consider outsourcing. So I don't ever consider it to be a final decision, but it may be a logical decision for some OEMs to take a step function improvement in consolidating some of their manufacturing. We want to thank everyone for joining us on the call today and look forward to speaking with many of you with follow-up calls and appreciate your time. Have a great day.

2016_BHE

2018

BKH

BKH #Thank you, <UNK>, and good morning, everyone. I will be starting my comments on Slide 3 of the webcast deck for those of you following along. We'll have a format similar to past quarters. I will give a quick update on the quarter. Rich <UNK>, our CFO, will give the financial update for the quarter. I'll cover forward strategy, and then we'll address questions. You may have noticed, or will notice as we go through the process this morning, that we've made a few changes to our presentation format. Notably, we've added some more detail to our forecasted capital spending, which should improve some visibility into our future earnings growth. We expect to further enhance those disclosures as the year progresses. Moving on to Slide 5, first quarter 2018 highlights for our utilities. On the 25th of April, our Colorado Electric utility received approval from the PUC in Colorado to contract with our own IPP subsidiary, Black Hills Generation, to purchase 60 megawatts of wind energy through a 25-year power purchase agreement. That agreement will provide the final amount of renewable resource we need to meet the state's renewable energy standard of 30% by the year 2020. On April 26, Rocky Mountain Natural Gas, which is our intrastate gas pipeline in Colorado, received a recommended decision from the Colorado Administrative Law Judge, approving a settlement for the rate review it filed in October of last year. That settlement, which is subject to final approval from the Colorado PUC, includes: a $1.1 million increase in annual revenue; importantly, an extension of our safety, system and integrity rider to cover investments that will be made this year through 2021; it includes an authorized return on equity of 9.9%; and a capital structure that's 46.6% equity. We expect new rates to be effective June 1, again, pending final approval from the commission. Moving on to Slide 6, continuing with utilities highlights. During the quarter, our South Dakota Electric utility commenced construction on a $70 million, 175-mile transmission line from Rapid City, South Dakota, to Stegall, Nebraska. That project will be constructed in 2 segments. The first should be placed in service by the end of this year and the second segment by the end of 2019. Also during the quarter, we continued our efforts to simplify our utility organizational structure by restructuring several of the legal entities that we acquired in 2016 through the SourceGas acquisition. That restructuring resulted in a $49 million tax benefit associated with goodwill that is now amortizable for tax purposes. Highlights for our Power Generation segment for the quarter. I already noted on April 25, our electric generation subsidiary was selected to provide 60 megawatts of wind to our Colorado Electric utility. That $71 million Busch Ranch II wind project should be constructed and in service prior to the end of 2019. Moving on to Slide 7, corporate highlights for the quarter. On April 23, our board declared a quarterly dividend of $0.475 a share, which is equivalent to an annual dividend rate of $1.90 per share. That $1.90 per share equivalent rate represents our 48th consecutive annual dividend increase. On March 8, S&P affirmed its corporate credit rating for Black Hills Corporation at BBB flat, but revised its outlook to positive from stable, which we found encouraging. Finally, related to discontinued operations, which is our Oil and Gas segment. As of yesterday, we'd executed agreements to sell ---+ or had closed on sales transactions for about 96% of our oil and gas properties, as measured by gross well count. Now we expect to sell our remaining assets prior to the end of the quarter. Slide 8 provides a reconciliation of first quarter, net income from continuing operations as adjusted compared to the first quarter of 2017. The most notable change being improved performance at our Gas Utilities. Rich will provide more detail in his financial update, which I'll turn it over to Rich to cover financials. Very good. Thanks, <UNK>, and good morning, everyone. As <UNK> touched on, we delivered solid first quarter financial performance. With help from favorable weather, year-over-year, our natural gas utilities delivered strong financial results in Q1, demonstrating the benefits of our diversified utility portfolio and the 2016 SourceGas acquisition. I'll jump in on Slide 10, where we reconciled GAAP earnings to earnings as adjusted, a non-GAAP measure. We do this to isolate special items and communicate earnings to better represent our ongoing performance. This slide displays the last 5 quarters and trailing 12 months as of March 31, 2018 and 2017. As detailed on the slide, we experienced special items not reflective of our ongoing performance in each of the past 5 quarters. The first special item is acquisition-related expenses associated with the SourceGas acquisition and integration. We completed our integration work in 2017 and don't have that adjustment in 2018 or forward. The second special item relates to income taxes and is predominantly the result of federal income tax reform. The corporate tax rate change from 35% to 21% beginning in 2018 required a revaluation of our deferred asset ---+ deferred tax assets and liabilities on December 31, 2017, resulting in a $0.21 EPS benefit in the fourth quarter of 2017. Given additional information in Q1, certain estimates impacting the revaluation have been updated, resulting in a Q1 charge of $2.3 million or $0.04 of EPS. The largest special item in Q1 2018, also related to income taxes. As <UNK> noted, as part of our effort to simplify our legal organization, in Q1, we restructured certain entities as part of the 2016 SourceGas acquisition. The restructuring increased goodwill that is amortizable for tax purposes, resulting in an associated deferred tax benefit of $49 million or $0.91 of EPS. These items are not indicative of our ongoing performance and, accordingly, we reflect them on an as-adjusted basis. Our first quarter as-adjusted EPS was $1.63 compared to $1.44 for the first quarter last year. The earnings uplift comparing Q1 this year to Q1 last year was primarily driven by a colder winter heating season at our Gas and Electric Utilities compared to a mild winter last year. We estimate mild weather last year, as compared to normal, negatively impacted Q1 2017 EPS by $0.09. This year, we estimate that colder weather, compared to normal, positively impacted Q1 2018 EPS by $0.05. Slide 11 is a new slide we've added to our investor materials to provide additional transparency related to year-over-year comparisons. The waterfall chart illustrates major drivers that comprise the differences from Q1 2017 to Q1 2018. All amounts on the chart are net of tax. Again, you'll note weather was a large positive driver year-over-year, especially at the Gas Utilities. We recorded a revenue reserve in Q1 2018 at the Gas and Electric Utilities due to tax reform as we expect to pass the benefit of the lower corporate tax rate on to customers through reduced bills. However, this has no impact on net earnings due to the lower income tax rate as a result of tax reform. <UNK> will touch on this more in a bit, but in short, we continue to work with our regulators in each of our states to pass the tax benefit from tax reform to our utility customers. You can also see we did a good job managing O&M on a consolidated basis, with limited O&M increases year-over-year. Slide 12 displays our first quarter income statement. Gross margin was flat year-over-year despite the revenue reduction related to tax reform that I noted a moment ago. Operating expenses and DD&A increased modestly comparing Q1 2018 to Q1 2017, primarily due to typical operating expense increases and incremental plant investments. Operating income was down for the quarter compared to the prior year, again, mainly due to revenue reserves related to tax reform, which is offset by reduced income tax expense below the operating income line. Moving below the operating income line. Interest expense increased slightly year-over-year due to higher interest rates on our variable-rate short-term debt. The most significant change, comparing Q1 2018 to Q1 2017, is on the income tax line. You'll note the $26 million income tax benefit recorded in Q1 2018 despite $113 million of pretax income. This resulted from the legal reorganization we mentioned already. The effective tax rate, after adjusting out the special items I noted on Slide 10, is 18.9% in Q1 2018 compared to 29.6% in Q1 2017. The lower effective rate this year was driven by tax reforms corporate rate reduction. Moving to the as-adjusted income from continuing operations line, we generated $88 million for the quarter compared to $79 million for the same quarter last year, a 12% increase. You'll note our Q1 2018 diluted share count decreased compared to Q1 2017. This was due to the application of the treasury stock method related to the unit mandatory securities we issued in late 2015 to help fund the SourceGas acquisition. Until these securities convert to equity in November of this year, we're required to apply the treasury method of accounting, whereby we include a portion of the shares in our diluted share count. The number of shares we include is based on the average daily closing price of our stock during the reporting period. Our average share price was lower in Q1 2018 compared to Q1 2017. So in Q1 2018, we added approximately 700,000 shares to our diluted share count, compared to approximately 1.6 million additional shares in Q1 2017. As I noted in our year-end earnings call on February 2, we're assuming approximately 56 million weighted average shares in our full year 2018 guidance, as we will have approximately 60 million diluted shares beginning November 1, after the conversion occurs. Considering the increase in as-adjusted net income and reduced share count, as-adjusted EPS grew $0.19 or 13% from the same quarter last year. I'll now discuss each business segment. Slide 13 compares our Electric and Gas Utility segment's Q1 2018 gross margin and operating income compared to Q1 2017. Our Electric Utilities operating income decreased $7.3 million in the first quarter of 2018 compared to first quarter 2017. Electric Utilities gross margin decreased $1.4 million quarter-over-quarter, driven by a $6.1 million revenue reserve related to tax reform, partially offset by higher margins from investments in transmission, favorable weather and higher non-energy revenues. Operating expenses, including depreciation, were $5.9 million higher for the first quarter of 2018 compared to the first quarter of 2017, as a result of increased vegetation management and outage-related expenses as well as increased property taxes and depreciation associated with rate base investments. Moving to the right slide of Slide 13. Our Gas Utilities reported an increase of $3.4 million in operating income comparing Q1 2018 to Q1 2017. Gross margins were favorable by $4.2 million quarter-over-quarter, as cold weather added $9 million of incremental margin year-over-year. Heating degree days were 2% higher than normal in Q1 2018 compared to 13% below normal for Q1 2017. Customer growth and capital recovery rider mechanisms added approximately $4 million to margins year-over-year. These increases were partially offset by tax reform-related revenue reserves of $9 million. Operating expenses were nominally higher compared to the prior year, reflecting strong cost management of the Gas Utilities. As I noted earlier, the unfavorable impact of operating income ---+ to operating income from tax reform at both the Electric and Gas Utilities is offset by lower income tax expense and is earnings neutral. On Slide 14, you see that Power Generation operating income increased $400,000 comparing Q1 2018 to Q1 2017, primarily from reduced sales volume under our power purchase agreements. The Power Generation segment continued to realize strong contract availability from its generating units and continued its strong earnings and cash flow contributions. Also on Slide 14, you'll see in the first quarter of 2018, our Mining segment had a $1 million operating income increase compared to first quarter 2017. For the quarter, revenue was $600,000 higher, primarily from higher tons sold in 2018. On the O&M side, we decreased cost by $400,000. Our mine continues to perform at a high level, with sales almost entirely to on-site [9-mile plants] and roughly half our sales based on a cost-plus pricing methodology. Slide 15 shows our capitalization. At March 31, our net debt-to-capitalization ratio was 64.1%, a decrease of 190 basis points from year-end. This reduction was driven by the increase in retained earnings due to our solid first quarter earnings as well as by strong first quarter cash flows that allowed us to reduce our total debt from year-end. Our $299 million of unit mandatory securities are reflected as debt on our balance sheet until the units convert to equity on November 1 this year. After conversion, we expect our debt ---+ net debt-to-capitalization ratio to decline below 60%. While we may need to increase our short-term borrowings from time-to-time over the course of 2018 and 2019 to fund our currently forecasted capital expenditures, we don't anticipate the need to issue any equity to fund these activities. If additional capital investment opportunities emerge, we have our At-the-Market equity program available if the need to issue any equity arises. Slide 16 shows our debt maturity schedule. The unit mandatories require us to remarket the debt noted as a 2028 maturity on the schedule, which we will do during the second half of this year. We're also evaluating options for the 2019 and 2020 maturities. Slide 17 shows our investment-grade credit rating. As <UNK> noted, during the first quarter, S&P affirmed our BBB credit rating and upgraded the outlook to positive. We're committed to maintaining our strong investment-grade credit ratings, and our forward forecasted metrics support those ratings. On Slide 18, we're reaffirming our 2018 earnings guidance of $3.30 to $3.50 per share based on the assumptions previously provided on February 2, 2018. I'll turn it back to <UNK> now for his strategic overview. All right. Thank you, Rich. Moving on to Slide 20. We group our strategic goals into 4 major categories: profitable growth, valued service, better every day and great workplace, with the overall objective of being an industry leader in all we do. On Slide 21. From a strategy execution perspective, we're focused on delivering strong long-term total shareholder returns. We plan to accomplish that by achieving a long-term EPS growth rate that's above the industry average, targeting a 50% to 60% dividend payout ratio, while still retaining the flexibility to increase that dividend during periods of slower EPS growth and continuing our track record of 48 consecutive annual dividend increases. On Slide 22. We're currently in the process of transitioning our earnings growth drivers, from a largely acquisition- and integration-focused strategy over the last year or so with the SourceGas acquisition, back to a more traditional utility growth approach. In the near term, this year and next year, we expect slower earnings growth since we're entering test years in preparation for rate review filings or actually commencing those rate review filings in some of our jurisdictions. We do have 3 active rate review processes currently in process right now. Over the long term, starting in 2020 and beyond, we expect higher earnings growth expectations, driven by strong capital investments to meet our customer needs, continued focus on standardization and efficiency improvements and back to more regular rate review filings. Slide 23. As we focus on delivering long-term shareholder value, our fuel and service territory diversity reduces our business risk and drives more predictable earnings. Slide 24. Our utility acquisitions over the years have created a much larger transmission and distribution system network, both on the electric and the gas side of the business. With that increase in size comes increased opportunity for investment to serve a much larger customer base. Moving on to Slide 25. Strong capital spending has in the past and will continue to drive much of our earnings growth. We plan to invest almost $2.3 billion over the next 5 years to better serve our 1.25 million utility customers. And that level of investment far exceeds depreciation contributing to earnings growth. Slide 26, which is a new look, provides a detailed capital spending forecast for our Gas Utilities, including breakouts by state, investment type and recovery mechanisms for a full 5 years compared to the 3 years that we previously disclosed. Slide 27 provides a similar capital spending detail for our Electric Utilities. Moving on to Slide 28. This slide provides a regulatory update for our utilities, highlighting the status of our active rate review filings and our federal income tax reform dockets by state. You'll notice that we've completed the process of determining customer benefits for federal income tax reform in both Iowa and Kansas, and either have started to reflect those changes on customer bills, as is the case in Iowa, or are planning to beginning in ---+ or Kansas, I'm sorry, and then planning to do that beginning in July for the state of Iowa. I've already noted the other key regulatory updates, with one exception. And that is on April 30, we received an order from the Denver District Court regarding our appeal of the Colorado Public Utility Commission's prior decision on our 2016 rate review for Colorado Electric. There are several issues addressed in the ruling, some positive and some negative for Black Hills. Most notably, we're very disappointed that the court affirmed the commission's decision related to the rate treatment of the new gas turbine generator we constructed in Colorado. The PUC in that 2016 rate decision assigned a lower return on investment for that turbine than for any of our other utility assets in Colorado. The turbine was built in response to the Colorado Clean Air-Clean Jobs Act, a law passed in Colorado that was intended to provide an incentive to utilities to retire their coal fire generation before the end of its useful life and replace it with cleaner, more modern generation. Now for the commission to assign a lower return on investment for the new generation, after we built it in good faith and in compliance with the Clean Air-Clean Jobs Act, this is very troubling, and the fact that the court upheld that is even more troubling. And frankly, we feel it's contrary to the intent of the Colorado Clean Air-Clean Jobs Act. We're currently evaluating the impacts of the court order on our business and considering our next steps in the legal process. Moving on to Slide 29. Now we're extremely proud of our track record of annual dividend increases that I mentioned earlier, including stronger increases the past several years, reflecting our confidence in strong future earnings growth and cash flows. As I noted earlier, we have the flexibility to use larger dividend increases during periods of slower earnings growth to help deliver solid total shareholder returns. Even after relatively strong dividend increases during the past few years, we're still well within our targeted 50% to 60% dividend payout ratio range. Moving on to Slide 30. Now we focus every day on operational excellence. We continue to make great progress, improving our safety performance, and also continued to consistently demonstrate our power plant availabilities, which are among some of the best in the industry. On Slide 31, we note that we've created a new corporate responsibility report, which is available on our website. We encourage you to check that out. And finally, on Slide 32. This is our scorecard for 2018. This is our way of holding ourselves accountable to you, our shareholders, for our accomplishments in our key strategic objectives. Now that concludes our remarks. We'd be happy to entertain any questions. Yes. I would categorize this one. Obviously, this is an investment from our IPP subsidiary. I would categorize the earnings from that as probably consistent with how you would look at an IPP project, that is, it's financed with a little more debt than you would expect from a utility capital structure. And then also, the returns would be consistent with an IPP-like return. As far as whether we would do this outside of our existing service territories, they're not ---+ I would say, the answer is yes, but on a limited basis. I think there would have to be a very compelling strategic reason for us to do so, whether that's a relationship with an existing wholesale customer or something like that. We don't have any aspirations of running out and being a full-blown competitor in the IPP business. That's not our strength. But I do think there are certain circumstances where it may make sense for us to do this to for others. They will be fairly few and far between, however. Well, I think the return would be probably comparable, but the capital structure's significantly different with less equity, right. And then as ---+ consistent with wind projects and other renewable projects, a lot of the earnings are really driven by production tax credits, so they show up below the operating income line. And I'd add one thing to that, <UNK>. That was a competitive process, and there were a lot of bids. It was vigorously competitive so we did have to be aggressive to win that bid. Yes. From Q1 to Q2, you can see the difference in our CapEx schedule is the additional wind project. We added $11 million to this year's capital and $60 million the next year. We're still comfortable that after the convert, we're going to be well below 60%. When that converts, that'll get our debt-to-total cap down below 60%, and our cash flow should keep us there through the end of 2019. And then if you look post 2019 at that CapEx schedule, we should remain comfortably there. If additional large projects come up, we may need to issue some equity. That's where I'd leave that, <UNK>. Yes. And I'd say that story is consistent with what we've talked about in the past, <UNK>. We've said we have fairly aggressive capital spending outlook going forward, but we expect to finance that with internal cash flows and debt, absent any big special projects that might get added. And that is why we have kept our At-the-Market equity issuance program active, just in case we may have one of those projects. But we would only use that in the event that we'd have some additional CapEx that is not on our current schedule. Well, there are several in the works, but not mature enough to the point that we're ready to talk about specific projects. I mean, we're always looking at some renewable projects for our Electric Utilities, pipelines for our Gas Utilities, transmission lines we've talked about, things like that. And we have several of those that we're looking at and studying and, potentially, would integrate into our forward plans, just not mature enough to actually file a certificate of public convenience in necessity or something that would say we're really ready to propose yet. Yes. We've got several options and we're evaluating all those. One is, of course, another level of appeal, which we certainly could do. The other one is we could basically elect to either go back and ask the commission to rehear that or frankly, include it in another rate case. All those options are on the table. And frankly, having just received that ruling earlier this week, we're still in the process of discussing what those options are and which ones would be the best to pursue at this point in time. But they're all on the table. It's really hard to say and hard to speculate. I think we've been pleased working in relationship with the commission recently and we hope that continues. Well, they're all in various states of process. So the Colorado Rocky Mountain Natural Gas pipeline, that settlement includes the impacts of tax reform. Our active rate reviews in Northwest Wyoming and in Arkansas, when they get completed, will include the results of tax reform. And then all of the others are at various stages in the process, from very early to well underway. Our tact in most of those ---+ and it's going to be a commission-dependent decision state-by-state, but we've taken the position that we think it's best for customers to go back to their most recent rate case and just compute the difference on the tax rate and start collecting ---+ or stop collecting that difference from customers going forward and, of course, refund it back to the effective date of the tax rate change. That's not going to happen in every state, we don't think. Some of them are asking us to look at what's the current impact rather than the impact back to the most previous rate case. But all are progressing, and we're comfortable and happy, frankly, with the progress we're making. Some will be a little slower, though. All right. Thank you. Well, thanks for your time and attention this morning, everyone. We appreciate you attending our Q1 earnings call. And for those of you who are going to be at the AGA Financial Forum, we look forward to visiting with you there. Have a great day and a great weekend.

2018_BKH

2016

ILMN

ILMN #Sure. Let's talk about both. In terms of our guidance for the year, the reason we feel confident with 12%, even though I said that we're looking at the big deals in Europe and applying a probability-based view on them is that we are seeing slightly stronger than expected pipelines coming out of both the Americas and forecast coming out of both the Americas and Asia. We in general do apply some probability weighting to deals across the globe, but we have leaders that have been in place longer in EMEA and in APAC, and so we feel like we have a much better handle on where those deals are, and what their likelihood of closing is. We applied a little bit of a heavier weighting, probability weighting in Europe than we do right now in the Americas and in APAC, until we have the team on the ground and have some track record behind us, in terms of the forecasting there. But the strength in Asia and Americas, they more than compensate for that, from our perspective. In terms of Helix and the consumer business, the way we set Helix up is that Helix goes out and recruits direct to consumer businesses, to build on the Helix platform. The intent is that anybody who is looking to set up a direct to consumer genomics business will go talk to Helix. And there are incredibly compelling reasons about why you would want to go to Helix and get set up with Helix, rather than set up your own sequencing lab environment, your own informatics pipeline, your own operation. If, however, a customer feels like Helix is not the right fit for them, and they can certainly buy from us equipment and consumables. We do have customers that are outside Helix, that are direct to consumer. They are terrific customers, and we're going to continue to support them going forward. I don't think there's really any direct channel conflict because of the segmentation. Customers that have an array-based genotyping panel that they want to continue with, clearly we can service that, but any customer who wants to take advantage of not just the infrastructure point that <UNK> made, but also the opportunity to do Exome plus, would clearly be directed to Helix. So it's segmented, based on the actual product. Yes. Good question, because China is emerging as one of our top country markets, already, and is driving strong growth for us. If we look at the dynamics play out in that market, the market in China is primarily a clinical market, and so we look at where the demand is coming from. There is a lot of demand from customers looking to set up NIPT operations in China. We expected that to continue to be a growing segment for us. We're also seeing some of those customers also enter the oncology space, but are also seeing pure play oncology providers that are emerging as customers of ours. By and large, these are private companies, they are not necessarily government entities, that are being formed to go after those market opportunities. In the last, in the recent past, we have seen the emergence of organizations that in some cases are primarily targeting work coming out of the Chinese PMI. And those of the customers that are driving some of the X demand that we are seeing. The oncology and NIPT customers are more likely to be buying the NextSeq from us, for example. And we're seeing this new segment emerge around customers that are targeting projects from the Chinese PMI. That question is a great one, because right now we are seeing as our business expands, we're getting requests across the board. There are still segments of the market that want to continue to see us drive the costs of sequencing down, drive the throughput up, shorten turnaround time, and so there's still an elasticity in the market that customers want us to enable them to access. And so, clearly, part of our portfolio is always going to be around delivering the world's best sequencing offering. We're getting, though, requests from customers that are saying, that is not the whole problem for them. Increasingly, we're seeing our clinical customers ask us to focus on helping them, for example, on the clinical reporting side. And so as we look to how we want to evolve our portfolio over time, there are segments of the market where we're looking to provide the complete sample to answer solution, all the way down to potentially validate a clinical report. And so for some segments, that's going to be the key enabling component of that segment. And then in a bunch of cases, the enablers are things that we can influence indirectly. And so working with the regulators, working with the payers on reimbursement, driving the data needed to demonstrate analytical clinical validity, and clinical utility, so those are things that are enabling to the market, that are not maybe directly driving our business today, but an area where we feel be can be productively involved, to help catalyze certain markets. So, as our business has gotten bigger, there are a number of strategic levers that we're focused on, to drive the adoption of genomics in the various markets we're in. Yes. If we look at what's driving that business, with all the puts and takes, but some of the dynamics like the Chinese PMI that we said really drove a significant chunk of the X demand, we expect net-net those dynamics to be positive exiting 2016, and to continue to drive that level of orders as we exit the year. As we look forward I think that we feel that the pull-throughs will remain in the ranges that we talked about. As we look at the instruments we've placed, we have new instruments that are coming online, and those obviously will take a little while to ramp up, depending on which instrument you're buying. But we're also seeing instruments that are moving towards the high-end of the utilization across our portfolio. And so I expect that range to be fairly stable, going forward. I guess the only caveat that we talked about is that there's some volatility associated with the X pull-through, depending on how a single order coming in a quarter can move that number one way or another, and so we expanded the range a little bit. But other than that, we expect those ranges to stay stable. <UNK> you specifically expressed a couple year time frame. I think if you think out beyond that, the only potential dynamic that could move in the positive direction would be population sequencing projects layering on top of each other. But that's not in the time frame you specified. Yes. During the quarter, we actually did see the revenue from Japan increase slightly compared to the prior year, but we still think that, I'll start by saying that Japan is not a big part of our revenue today. I think it's about 3% of our revenue today. So it's a small part of our revenue, and it's unlikely to move the needle one way or another. We see a gradual strengthening of the environment there, but it is gradual. Yes, <UNK>, so, obviously we don't guide to specific levels generally, specific segments generally. But we feel that given the trend that we're seeing now in arrays, we would give that perspective to you, that double-digit. We've been seeing that start to form. We mentioned it last quarter. We said it was an emerging bright spot, but we need to see a little bit more of a trend. With the orders that we saw last quarter and the quarter before, and the products this year, we had already been contemplating this potential array growth, we just didn't want to provide a number until we felt more comfortable, so it doesn't really change our guidance. And it doesn't offset necessarily on the sequencing side. Is been contemplated for ---+ Sure. There are a few parts to how we think growth is going to come out of the instrument market. One is over, and we seen this before, one of the big drivers of growth there is the upgrade cycle. If you look at our entire portfolio, over time, each of those instruments needs to be upgraded, and whenever we can drive a big upgrade cycle, that contributes to growth. Now, in previous years where we've had one instrument, you would have a single big upgrade cycle that would drive a lot of growth. Clearly now, we have a much bigger portfolio, and so while any one upgrade cycle will drive growth, that will play out over multiple instruments, rather than a single big upgrade cycle. There is, we believe, opportunity, further opportunity in placing clinical boxes, and so you'll see us continue to look to get clearance in the various markets around the world. We are very optimistic on the clinical market being a driver of purchases of ---+ new purchase of our instruments. And then in the longer-term, we do expect to see the low end of the market to drive instrument growth. And so we talked about Firefly and the instrument we are launching at the end of next year. We believe that there are a number of segments that will be new to sequencing, that will be opened up by Firefly. So there are tens of thousands of labs, for example around the world, that the majority, the vast majority of which don't use sequencing at all, and they are capital constrained, and in some cases, they are sample constrained, so that a purchase of even a MiniSeq or a MiSeq really doesn't make sense for them today, but Firefly would be perfect for that market. So, we see a number of markets that we think a low end sequencer would be very attractive for, and that would all be incremental instrument revenue. Yes, the GRAIL team is making really good progress. They continue to build out their team, so as you remember, a nucleus of people moved over from Illumina to GRAIL, and that team has done a really good job adding really world-class talent in addition to that team. They've made really good progress, and are continuing to make good progress in developing the assay, and are on track to have that done by the end of this year. And the team is hard at work on designing their clinical trial. We don't have any new updates to provide right now, and we will make sure we get it out as we do. Yes. So the way that market is playing out is, in a number of cases, what we do is, when we sign up a new customer, we allow them to market their services, even before they have their lab set up. And we will process the samples for them in our Korea lab. And for that, we charge them a test send out fee, and that drives test send out revenue for us. That's good revenue, but it is an on-ramp for them to have their own lab. And while we are processing their samples, a lot of these customers are actively building out their own lab, and over time, the intent is to move the samples from being processed by us to being run by the customers themselves in their own labs. To do that, they obviously have to buy instruments as well as consumables from us, and so that's what you see playing out in that market. In addition to instrument purchases and consumable purchases, they pay us a test fee associated with getting access to the intellectual property we have around NIPT. And so the way you see that market working then is we'll sign up a customer. You will see a test send out revenue stream show up to us, and over time that gets replaced by instrument, consumable and test fees. And the way that plays out in gross margin is it generally only has an impact when we have underutilization in our services labs, which we did see a little bit of a headwind for that this quarter, as customers migrated the tests to in-house, and we have overcapacity for a while, which it takes a while to fill and therefore under absorption of overhead. And that's what you see a little gross margin headwind, but it's not that significant this quarter. Yes. I will help you take that one as well. They are both growing businesses, so they are both going to ramp during the rest of this year. That's partially offset by a higher non-controlling interest charge on GRAIL because of the recent restructuring of the shares, so no change there, in terms of our forward-looking perspective on the dilution from Helix and GRAIL together. I do think was there another part of the question. There was a part for this year, and on a go-forward basis. Yes. And on a going forward basis, we haven't provided any official guidance on that yet. Directionally we've talked about a couple of options, and we'll come back when we've completed our budgeting, with more detail on that. The GRAIL and Helix are both tied into the overall Illumina budgeting cycle, and so we're starting to get into the thick of that right now. Yes. So, a little bit of all of the above. Typically, the people buying HiSeqs are not new to Illumina customers. Typically, we have been working with a lot of these customers already. We understand their business, and the demands on their business, and that's what allows us to project when we think they'll be needing instruments and work with them, on when they will need instruments. So, in some cases, it's grant applications that are in. In some cases, it's people that are looking at their budgets for the year and using their end of year budgets to buy HiSeqs. In some cases, they are just ramping up their business, and that's when they'll need the new instruments. But in the majority of cases, these are customers that are already customers of ours, and that we have been working with for a while. Actually it doesn't really matter as long as they are replacing those older HiSeqs with newer instruments. And so as <UNK> mentioned earlier, with respect to the utilization analysis we do, that we've seen an uptick in the available capacity, and so that's net of those reductions in older instruments. Even with that, we're seeing the capacity going up as customers buy the new higher throughput instruments. So, it's probably not fruitful to try to predict where that's going, to that's why it doesn't matter as long as it's replacement. Which is generally is. Thank you, operator. As a reminder, a replay of this call will be available as a webcast in the investor section of our website, as well as through the dial-in instructions contained in today's earnings release. Thank you for joining us today. This concludes our call, and we look forward to our next update following the close of the third fiscal quarter.

2016_ILMN

2016

JNJ

JNJ #Well, <UNK>, as a broadly based Company in human health care, we have an equal amount of interest across each of the businesses. And the way we compensate for that is basically looking at an appropriate risk-adjusted return for the particular assets that we're interested in. And that is the same, even regardless of size. Obviously size matters for a couple reasons. One is that the asset may be well understood, the business may be well penetrated, the premium required for the asset may be excessive and, therefore, to generate value for our shareholders would be a challenge. But it doesn't mean we wouldn't try to do that or we wouldn't look for areas where that may in fact be available for us. So that would be across any of the businesses. Within Consumer and Medical Devices, in particular, Consumer, just like we have in Pharma, we have specific areas of focus. We have 11 need states. The primary focus for us is growing internationally in emerging markets. So, strong brands in emerging markets, a focus on over-the-counter medications, and the beauty space, particularly in Asia, are of interest to us. We just did a recent transaction with Dr. Ci:Labo in Japan, where we have an interest in that Asian marketplace and utilizing that brand throughout ---+ broader throughout Asia, beyond Japan, where it's currently marketed, just as an example of one. And the Medical Devices, as you know, we have a very strong presence in Orthopaedics and in General Surgery. We keep looking for additional bolt-on acquisitions there, and we have a very strong Electrophysiology business in Cardiovascular. But there are other areas within Cardiovascular that seem attractive in Structural Heart and other areas. But the valuation would be something we would always consider. So we'd also be very disciplined about doing a transaction where the valuations seem pretty high, which is what they are today. Thank you. That concludes the Q&A. I'll now turn the discussion back over to <UNK> for some closing remarks. Okay, thanks, <UNK>. Well, as I noted earlier, we're very pleased with our overall performance this quarter, and we're tracking well through the second half of the year. I'd like to thank <UNK> and <UNK> for their outstanding leadership and for the great presentation they gave this morning about the continued progress we are making in our Pharmaceutical business. I would also like to thank all of our colleagues around the world for their extraordinary achievements and dedication to the success of Johnson & Johnson. Thank you for your time today, and I look forward to updating you on our full-year results in January. Have a great day.

2016_JNJ

2017

PRAA

PRAA #Thank you, <UNK>, and good afternoon, everyone. Thank you for joining us on our 2017 third quarter earnings conference call. PRA Group had an exciting third quarter. We produced good cash results, increasing collections 3%. We invested significant capital of $211 million, up 31% versus the third quarter of last year, increased estimated remaining collections by $174 million, executed well operationally, and expanded capacity for collectors in multiple locations. We're well underway with construction of our new call centers in Henderson, Nevada, and Burlington, North Carolina. And we have additionally expanded in new space near our corporate headquarters in Norfolk and in our Hampton locations. In each of these expansion areas, we have already began hiring and training, and we will continue to hire and train in Q4 with a goal of preparing all new employees to be productive and ready for the first quarter of 2018, which has seasonally strong cash collections. Portfolio purchases in the quarter across all geographies were $211 million as we continue to see good product flow especially in United States. Over the next 12 months, across all geographies, we have committed maximum forward-flow invested amounts of $414 million. In core Americas, we invested $116 million during the quarter and year-to-date, we have invested $376 million. Since the beginning of PRA, we believe that our commitment to compliance in the customer journey has made us a better choice for sellers, especially when they compare the customer experience of selling to sophisticated buyers with that of cycling accounts through rounds and rounds of contingency debt collection agencies, commonly referred to as DCAs. In U.S. PRA doesn't sell accounts. We don't outsource call center collections, and we are patient collectors. We want to work with our customers to develop a plan that fits their needs and helps them resolve their debt. We hope to promote that narrative through our day-to-day actions, our branding efforts, our public website presence, and the TV commercials we've started to run. We believe that sellers are starting to realize the full economic lift and customer-experience benefit of what we offer. As a result, we've begun to see a shortening of the DCA, again, debt collection agency, pipelines and fresher paper coming to market. That, coupled with increased charge-off rates and historically high U.S. credit outstanding, makes us believe that supply will continue to increase in availability, and will fuel our ability to grow our investments in the MPL market in the United States. Global Insolvency had a third straight quarter of excellent investment volume, investing $73 million in the Americas and $7 million in Europe. U.S. Insolvency continues to be a bright spot, although, we still don't have enough insight or confidence to say this is a sustainable trend. This quarter, once again, we benefited from winning a large portfolio from a single seller. Year-to-date, we've purchased $262 million, an increase of 135% or $150 million in the first 9 months of 2016 (sic) [2017] . Europe Core remains highly competitive and that effect, combined with a seasonally light third quarter for debt sales, contributed to our purchasing volume of $15 million. Let me be clear, however, we still see good seasonally adjusted flow broadly across Europe, but we continue to believe that there is a material portion of sales in Europe transacting at irrational pricing levels. However, the more mature markets, especially from a regulatory perspective, such as the U.K., continued to be places where we find less irrational pricing. And we are buying deals that makes sense from our term perspective. For all asset classes in all geographies, we see ourselves as a partner to banks and credit originators. I have heard it directly from sellers in the U.S. and Europe that they need real solutions for their delinquent debt, solutions that are compliant and reliable. This is consistent with our founding principles and has been a focus of ours since day 1. In Americas Core, our collector headcount was consistent with that of last quarter since we are at capacity in our current sites. However, our new sites in North Carolina and Nevada, coupled with the expansion in Virginia together, will give us capacity for almost 1,000 new collectors. We plan to use that capacity as our growth in volumes and efficiency dictates. We believe, it's important to have U.S.-based collectors calling our domestic portfolios, and we're excited to be working with officials in these markets to bring hundreds of new jobs to the United States. Ramping up these sites in Q4 will create additional costs, especially in the form of compensation and employee services and without a full quarter of collections to offset them. However, as I've mentioned previously, we are making quick progress because it's very important for us to have these sites operating by the first quarter of 2018 when cash collections are seasonally strong. Cash collections in core Americas continue to increase versus last year's results. In our U.S. call center, collections were up 7% in Q3. This is the result of increases in our collector headcount, along with growth in portfolio purchases. Internal and external legal cash collections were down 4%, year-over-year, as we have sent fewer accounts in the legal channel, primarily due to decline in overall average account balances. However, we are starting to see the composition of our portfolios, once again, begin to change. Beginning in late Q2 and continuing into Q3, we've started to see balances increasing. If this trend continues, we will see growth in our investment and legal collection costs and then, a corresponding increase in legal cash collections later. But as always, the effect will remain dependent on the mix of portfolios we purchase. We will keep you apprised as these dynamics shift, so you can adjust in your models accordingly. Global Insolvency cash collections increased 2% versus the same quarter last year and like last quarter, grew sequentially, up 13% versus the second quarter of 2017. Additionally, this marks the first quarter in 3.5 years that Americas Insolvency cash collections have grown year-over-year. The most exciting part of seeing an increase in cash collections with Insolvency is that we're no longer dealing with a significant headwind that Insolvency has faced recently. Our average annual headwind over the last 2 years has been a decline in excess of $100 million. Another exciting aspect of Insolvency is seeing the benefits from our long-term planning. Back in December of 2012, we acquired a company, which gave us an increased capability to buy Chapter 13 secured paper. The addressable market in secured Chapter 13s is around $30 billion in face value, almost 3x the unsecured market where we had historically purchased. However, very little of that market has traded in the past. Because we've long-term focus, we're able to see the potential of the market and willing to work hard to realize it. Much of the additional volume we purchased this year was Chapter 13 secured. We'll continue to focus on unlocking the potential in the market and hope it will be a driver of growth for us in the future. Moving onto Europe. In Europe, many of the operational improvements we've made are continuing to bear fruit. We began investing in the legal process back in early 2016, because prior to that the legal channel had not been a significant part of our collection strategy. We invested in countries that made the most sense, such as the U.K., Spain, and Italy, and started to see this contributing to cash collections. Europe legal cash collections in the third quarter of 2017 have increased 17% versus the third quarter of 2016. Additionally, we've often talked about making other operational improvements, including increased scoring, moving more collections in-house, and stepping up our technology. Our main focus continues to be on purchasing the portfolios that make sense, given the market, developing SME, and continuing to improve our operations. We're seeing good results from improvements we've implemented, but we definitely have more runway, and we intend to push the envelope even further. Now I'd like to turn things over to Pete to go through our financial results. Thanks, <UNK>. Total cash collections for the quarter were $382 million, an increase of $10 million compared to the prior year. The increase was driven by growth in U.S. call centers and Europe Core cash collections. This was partially offset by decreases in Americas Core legal cash collections. Americas Core collections increased to $213 million, up $2 million versus the third quarter of 2016. This was driven by an increase of $8 million in U.S. call center cash collections, primarily from increased staffing and portfolio acquisitions. The previously purchased U.S. core portfolios have been benefited from the increased staffing levels. And as a result, we raised yields on 2015 and 2016 vintages. Europe Core cash collections were $103 million, up $7 million from the previous year. As <UNK> mentioned, we've made operational improvements in Europe, including legal capabilities, scoring methodologies, in-house collections, and technology. As a result, we started to see overperformance in the curves. We monitored the cash collections to determine whether the overperformance was acceleration or ---+ based on sustained overperformance for several quarters, we feel confident that these operational enhancements are indeed driving improvement in the curves. And as a result, we increased yields on pools in the U.K., Spain and several other countries. Global Insolvency cash collections increased $1 million versus the third quarter of 2016. Americas Insolvency grew slightly year-over-year and grew dramatically, 14% or $7 million, from the second quarter of 2017. These cash indications are extremely encouraging, as this is the first quarter since 2014 that insolvency collections grew year-over-year. And the continued sequential quarter growth is a good trend. The large portfolio purchases for each of the last 3 quarters is driving this increase in insolvency cash collections. Net allowances remain at maintenance levels and were $3.4 million in the quarter, $2.4 million in the Americas, and [net] $1 million in Europe, including a $400,000 reversal. The other component of cash receipts is fee income, which was $2.6 million in the third quarter, a significant decline from the prior year due to the disposition of government services and PLS. Going forward, there are 2 main contributors of fee income: servicing income, which is a relatively stable and averages about $6 million annually; and CCB fee revenue, which is more volatile and has averaged about $8.5 million annually over the last 3 years, but with significant variability based on the timing of the claim settlements. Operating expenses were $147 million, down $8 million from the previous year. Expected increases in compensation expenses due to higher collector staffing levels were more than offset by lower legal collection expenses for the reasons I highlighted previously as well as expense reductions resulting from the sale of government services and PLS. The impact from the disposed businesses are reflected primarily in the compensation, agency fees and depreciation line items. Our cash efficiency ratio was 61.8% in the quarter versus 61% for the full year 2016. The fourth quarter will reflect hiring in new sites with little to no corresponding cash collections as we'll be training during this time. Additionally, as mentioned previously, we've been seeing an increase in average balance from sellers and these higher balance and pressure accounts will likely lead to an increase in number of accounts eligible for the legal collections channel. If this trend continues, you'll see a rebound in our legal investment before you see the collections. This means, we will potentially see downward pressure on the cash efficiency ratio in the fourth quarter and expect it to be around 61% for the full year. Below the operating income line, we saw an increase in interest expense of almost $7 million. This was primarily the result of the capital raise we completed late in the second quarter to provide capacity for investment growth in the U.S. market. We've enhanced our disclosure in the 10-Q and press release to provide transparency to the components of interest expense, including the stated coupon, amortization of the bond discount and issuance costs, and the impact of interest rates swap agreements. Net noncash interest expense, which includes these items, was $4.3 million. Estimated remaining collections totaled $5.4 billion at quarter end, with 56% in the U.S. and 41% in Europe. The remainder being other Americas. ERC increased almost $100 million sequentially, and we continue to be focused on building ERC at returns that meet our expectations. We have capital available for portfolio purchases of $550 million in the Americas and $540 million in Europe for a total of $1.1 billion worldwide. In addition to that, the business generates substantial cash flow. We stand ready and committed to helping sellers manage their charged-off debt. Last quarter, we provided a revenue model, which produced a base revenue estimate on currently-owned portfolio of $187.1 million. I want to take a moment to bridge for you that estimate to the actual reported NFR revenue of $197.2 million. You'll recall that I highlighted 4 items that can impact the base estimate: Revenue from portfolio purchases in the quarter; cash on fully amortized pools; allowance charges or reversals and yield increases. This quarter, there were 2 primary drivers for the $10 million difference. The first was, revenue on portfolios purchased in the quarter and the second, cash collections on fully amortized pools, since the 2012 vintage of Americas Insolvency amortized fully during the quarter. Our final slide is the model updated for fourth quarter with a base estimate for NFR revenue of $191.1 million. Operator, we're now ready for questions. That's correct. Thanks, <UNK>. We do get that question from time to time. So let me address it, kind of, in backwards order. We do continue to see good pricing in the United States. We've been talking about that for some time. We're buying better yields today than we have over the past few years. That really hasn't changed. And I think it's all kind of very understandable in terms of increasing charge-off rates, high balances in terms of consumer credit, and then some of the stuff I talked about in terms of banks choosing to sell versus place into agency pipelines. But the second thing I'll talk about is, there is some haircut or some bit of a caution that we're using today because of staffing. Hopefully, as Pete talked about in his part of the presentation, we've certainly released some of those yields as staffing gets closer and closer to where we need to be. Hopefully, once we get these new sites running, we will be able to extract some of that out of there. The other thing I will remind everybody, I know I do every time I talk about this, but the tables that we're talking about are something that we started to put out just after IPO, 15 years ago. And they were really designed to give you guys a feel for, what cash collections by tranche looks like, how revenue can be computed, and you can see where the revenue comes from. They are gross multiples, they are not net. And I always encourage everyone to think about the experience of looking at our bankruptcy-asset class. Over a decade ago, we started buying bankruptcy assets, and people quickly got the hang of the idea that a lower multiple with lower expenses can still drive a great return. And conversely, a high multiple with high expense could actually drive a worse return. So just keep in mind what we're experiencing today, as we are buying core paper today to generally lower multiples because the expense base for us is lower and the paper is more liquid, and there are some curve shape issues. So it's a ---+ again it's a long ---+ long-winded answer to your question, but I wanted to fully address it. There won\ Yes, the table in the press release would give you the multiple in the quarter. So for core, that was 193%. We don't separately disclose cost to collect on the different types of papers. So we've given sort of guidance around overall level of expenses and our cash efficiency ratio. That's about all ---+ that's about the limit of what we disclose on costs. Yes, that's a difficult one. That's why we said, when we first published the revenue model, that it was a base estimate and those 4 items that we highlighted as drivers of potential variance are ones that it's difficult for us. We won't know until we actually close the books for the quarter. So it's very difficult for us, even to know what that's going to be. I think the best I could tell you is what we told you last quarter, which is, you could use the current quarter's amounts as a proxy for what might happen in the subsequent quarter. Yes, that's about what our 9-month number is. Yes, again, as I had highlighted, the increased staffing costs that we expected to see has really been offset, primarily, by lower investment in legal. But again, as this mix starts to shift and we're buying higher balance accounts that will translate into more accounts going into the legal collection channel, potentially, as early as the fourth quarter. Yes, right, exactly. So my point that I was trying to make, maybe I didn't put a fine enough point on it. It was ---+ our efficiency ratio for the third quarter was closer to 62%. And I wanted to caution you not to just take that and run rate it. That we think for the full year will be closer to our ratio that we've experienced for the full 9 months. No. Yes ---+ so good question. So no, we\ Yes, maybe I'll address the haircut comment first, and then I'll let <UNK> talk about TCPA relief and other things. So the comment on the haircut really is to shape of the curve in the first part of the deal. And the relative ramp of expected cash collections in the near term. Just a commentary around the fact that we're acknowledging our existing staffing levels in how we're booking those deals, and how revenue will ramp in the early part of the deal. Nothing more than that, it doesn't get to overall profitability of the deals or anything. Yes. And as far as TCPA, we are waiting, like you guys are, to hear something out of the DC circuit or potentially from the FCC. But as I said last quarter, worst case scenario, if we all woke up the first of the year and we had TCPA reform, what we would probably end up doing is just running our call centers with a little less of an occupancy factor. Now today, in some of our centers, one of them particularly were like 110% staffed. And if you ever come to our sites during shift change or peak periods, you'll have a very difficult time finding a parking space. And so it's not a great way to run a call center. So I'm optimistic that should I have TCPA relief, that to your point, I think that's going to have an impact on yields. I'm very optimistic to that. And I'm ---+ I think that our ability to probably rightsize our buildings is easily doable. So hope that answers your question. Sure, I sure can. So to your point we are pan-European, we love our acquisition of Asset Capital and the diversification that it affords us. But as I said in my prepared remarks, there are a significant portion of deals that, we think, and I stressed that last quarter as well, that we think are trading for irrational prices, in a lot of cases, negative IRRs from our perspective. So what I have asked the folks, our European management team, to do is, make sure that our view on that is accurate. So I want to be fair on these comments that it's our view and might not be others' view. But ---+ so what we're doing is continuing to push as hard as we can on operational changes, push more into the legal channels in Europe, as I addressed in my prepared comments. And push into scoring and efficiencies and do all the things we've done here in the States for 20 years. And then, to the extent that, our read has been correct, that pricing is irrational in a lot of the cases, that's not sustainable. So in that scenario, I will hopefully wait those guys out. To the extent that we're mistaken and there's less of that irrationality that exists, then my goal would be to take market share of that. So I get that question as well from time to time. I guess the first part that I'll answer is, I don't really see that as a trend. So that's where I'll start with. Second, the commentary about originators not following debt collection rules, I didn't hear that comment. I think technically, if you look at things like the FDCPA, it's probably an accurate statement. But I'm not aware ---+ and I don't know all the insights of how the banks operate ---+ I'm not aware of banks violating FDCPA or something like that. So I don't really know where that comment is coming from. But I don't see it as a trend. And quite frankly, the opposite is, as I mentioned in my prepared comments, we're seeing some signs of people actually liquidating their agency pipelines. So in other words, placing less at contingent DCAs and selling more. So I'm seeing a little more of that and, kind of, less of what you're talking about. No, if my date is right, I think they were slated to come out with rules sometime at the end of September, and that didn't happen. So I really ---+ I have not heard any insight from it. I don't know what's going on there. But we're certainly anxiously waiting to see that, and it certainly has its pros and cons. To the extent that it homogenizes efforts ---+ that would be interesting; to the extent that it had some sort of a curveball, so to speak, inside the rules that might be challenging to deal with. But I think, by and large, this, kind of, feeds back into your other question. I think by and large, people are following a similar debt collection process. I think, they're generally following consent orders issued out through the market. I know that other people's consent orders, say, at law firms impact us. So no, I think the market from a regulatory standpoint is operating pretty well right now. So I don't know how that would change post CFPB new rules. All right, well thank you very much, thanks, everyone for joining us today. We look forward to speaking to you again next quarter. Thank you.

2017_PRAA

2016

HPQ

HPQ #Thanks, <UNK>. So let me say that, everything we've spoken about so far has really been focused on the core, and we're really incredibly focused on our traditional franchises of print and personal systems. But as part of our overall strategy for the Company, we do have certain growth areas that are incredibly important to us. You mentioned a couple of them. Our A3 product work remains on track, and our portfolio will come out towards the middle of next year. That is on time and on track, and we're doing a lot of work around preparing, not only for the products, but for the go-to-market that is required in order to be successful in this marketplace. Another part of our growth engine is graphics. Graphics grew for the 11th consecutive quarter, and we're just about to walk into drupa next week, which is the Olympics of the graphics business. It happens every four years, and we're very excited about some of the products that we will be announcing at drupa. And the third area is commercial mobility. And our commercial mobility practice continues to grow. We're excited by the work we're doing there. We have made some really interesting category-creating product announcements, with the Elite x3 during the course of the quarter at Mobile World Congress to rave reviews. So lots of positive signals in the market from a product perspective, and the pipeline that we are building. And then, of course, only last week, we announced our 3D printing products. And we have really breakthrough innovation here, solving problems of speed, quality, and cost. We said, we would release them in the second half of this year, and a proof point of that is the announcements that we made last week. And the strategic announcements that we've made with Nike, with BMW, with Johnson & Johnson, and [JBL], a very important player in this space. I think there is a lot of markers out there, that point to the execution of this team. We do what we say we are going to do, whether it's product, whether it's go to market, or business model readiness. Well, thank you, <UNK>, and thank you for the congratulations. And first, let me extend my congratulations to Megan and the Hewlett-Packard Enterprise team on a spectacular earnings, and on a very successful announcement of the spin merger they're doing with CSC. I think what that demonstrates is that, the separation and the focus of the organizations on the markets that are moving at top speed is really working. It's produced better results for Hewlett-Packard Enterprise, it's producing solid results for us, as well as fueling the innovation engines of both companies. So I don't want to comment much further on Hewlett-Packard Enterprise's announcement, but I will say that we are really committed to the long-term success of HP. I'm very happy with the assets that we have, in both printing and personal systems. They are both an important, and play a very important role within our portfolio, as sort broad things. We obviously, always continue to look, and re-evaluate the markets as they change, and measure all of our assets relative to the strategy. And sometimes that results in a divestiture, and we made a divestiture this quarter in some marketing optimization assets, that's an ongoing process. But as far as our major franchises go, we're very committed to both portfolios. (Inaudible ---+ low volume) down 50 basis points as you mentioned. And that's really driven by currency and the very competitive pricing environment we saw. It was partially offset by the productivity initiatives that we've got, and the broader non-revenue-generating cost reductions, as well as the favorable hardware mix. And then, we had some benefit from the divestiture gains. It wasn't litigation, it was divestiture of the marketing optimization assets. But as I told you, we made the conscious decision to invest that gain back into placing incremental NPV positive units. And you can see the impact of that, frankly, in the share gains that we had quarter on quarter, as well as basically bringing our channel inventory levels for supplies in a bit more. From a quarter-on-quarter perspective, the increase was really driven by cost improvements, as well as to the divestiture gain, and that was partially offset by competitive pricing, currency, and some investments that we made in go to market and R&D. Thanks, <UNK>. I am super excited by it. I think the feedback from potential channel partners, from end customers, and from analysts, and those that follow the industry closely, understand what a breathtaking breakthrough we've made towards, really pulling 3D printing into the mainstream. We released the first production, short run production 3D printing systems. They're 10 times faster than other products that are out on the marketplace, unbelievable quality, and most importantly, at half the cost. And when you get those three things right, you start to tap into specific applications that are better to be done by digital 3D printing, than they are in analog fashion. And the best example I can give you, is our 3D printers themselves, 50% of the bill of materials of our 3D printers are printed by our 3D printers. So our printers are printing themselves. And it's a perfect example in short run manufacturing, of the great business case. We're not doing this to make a point. We're doing this, because it's more economically advantageous to us, to print these products in 3D, than it is to use traditional manufacturing. So we're very bullish. We have a long and complex, and a like complexity here road map. This is not easy to duplicate. We're leveraging more than 5,000 patents from our core, leveraging 30 years of innovation that we've had in our printing business. And we're bringing it to bear into a market that really hasn't had a very large mainstream player, with the brand that HP has, and a reputation that we have. So we're really excited by the market. We're happy with the ramp we're doing on our partners, and our certified channel partners. We're incredibly excited by the really impressive ecosystem co-innovators with us, Nike, BMW, Johnson &, Siemens, [JBL], the list goes on, both in materials, as well as in customers. Yes, look, we're not surprised by the PC market. I think we were one of the earlier to predict that these markets would continue to be challenged for quite some time. And as a result of that, we needed to take immediate action to get our costs in line with where the markets were. But over the long-term, we sort of generally broadly agree with the analysts, and where they expect things to land. We see continued declines in calendar quarter two. The market's projecting that it will improve in calendar quarter three and four, and we tend to disagree. Now whether it's low single-digits or mid single-digits, I guess, that's up for debate, and no one is perfect at making those predictions. But I think things are getting better. To your second point on some of these new categories, I think that as the technology improves, as we are able to fit more power into smaller platforms, we get to have this continuous evolution of the continuum, all the way from mobile up to workstations. And these lines are beginning to blur, and that enables us to create new products and new categories like Elite x3. That technology is not going to slow down. It's only going to accelerate. So I think we've got to start looking as an industry, at the entire spectrum, all the way from phones to workstations. Think about that market, think about how those hard lines were characterized in the past, and how those hard lines will begin to break down in the future. And as leaders, it's incumbent on us, to reinvent what the category is capable of. Whether that be the success, we're having with our x2 or the new category-creating products like x3. It's all about changing that continuum. So we continue to have a very highly disciplined approach to this business. We segment, we segment again, we navigate the heat in the market, and we predict where we think that heat is going to be. We're constantly challenging ourselves on price, function, value for our customers. We're always taking costs out of the system, and we have to be a massive innovator. And I think we're doing all of that as well. Thanks, <UNK>. On the supplies, I think the right way to think about it is, a 16% decline in supplies revenue. The fact that there was 6 points of currency. So you're down to ---+ down 10% constant currency, but you've got 7 points of channel inventory correction that our belief is, you don't continue to correct channel inventory on a go forward basis. So really, when you are looking at, what I guess, we sometimes refer to as real supplies growth or decline, right about minus 3. And we obviously, as we go through 2017, we would expect that will continue to improve, so it stabilizes by the end of 2017. But again, largely in line with what we expected. And then, from a free cash flow perspective, a couple of things. First off, where we saw particularly strong performance was in the cash conversion cycle. If you look back to Q1, our cash conversion cycle was minus 15 days, and we are now at minus 24. And we basically hit on every one of those metrics. <UNK> mentioned it, was a company-wide initiative, in which we educated, and helped people become even more conscious about cash flow. We enlisted the help of our sales reps in getting collections done. It was an incredible team effort. And something, in many ways we've instituted now, kind of permanent changes, and permanent initiatives around that free cash flow, and the cash conversion cycle. I also just really briefly want to mention the fact that it, our free cash flow on a year-to-date basis also includes about $170 million of separation cash outflows, which obviously are more one-time in nature. Thank you all for joining us today. I hope you will agree, we delivered really solid results here, and we did exactly what we said we would do, and that's important to us as a leadership team. We do know how to execute, regardless of market conditions, where we don't stick our heads in the sands here. We understand what is going on in the market, and how to adjust our organization accordingly. We're delivering on our financial commitments. We've made solid progress, more work to do. We're executing across core, growth and the future, and lots of proof points there. We're shifting to higher margin and growth product segments, and we're setting this Company up for long-term success. So thank you very much.

2016_HPQ

2016

EIG

EIG #The Board of Directors approved it yesterday. There is a waiting period before a share repurchase can become operational. We're currently in the closed window. Sure. So this is <UNK> again. We took a $17 million impairment charge for other-than-temporary impairments as required under GAAP. Those impairments were really driven by considerations around the severity of the declines in market values of specific holdings. The holdings are largely equity holdings in the energy sector, particularly within our master limited partnership, MLP strategy component. And that is largely it. I think the only additional comments I'd make, which is to reiterate my prepared remarks, is we're seeing tremendous volatility in the marketplace, in the capital markets, as I'm sure everybody's experiencing. No, none. At this ---+ It's always possible. But at this juncture, none of our holdings. Our holdings, our MLP strategy is actually focused, just to give you a little bit more color on it, is focused on transportation and storage names. So they're very much midstream companies and they are largely gas as opposed to crude oil oriented names. And so the whole sector, I think ---+ well, the entire market has shown a strong correlation to crude over the past six months and I guess I don't need to comment further on that matter. So we have energy exposure beyond our equity strategy. We obviously had it as part of our corporate one portfolio. Energy we maintain a benchmark weighting for energy at 8% and that's largely where we are within our fixed income portfolio. Basic materials is 3% and that's where we are. So the energy exposure within the dividend ---+ sorry, within the equity portfolio that includes both the MLP and the high-dividend equity strategy is about 27% of the market value of the equity securities which were about $200 million at the end of the year. I'll answer that one, <UNK>. Let me reference you to the press release issued by A. M. Best. They indicated two areas of concern. One was continuing adverse development in more recent years. As I indicated in my comments earlier, in fact, in 2015 we had no actuarial adverse developments in any of the years from 2008 to 2014. The second reason A. Best cited is the concern for our forward outlook having to do with our business concentration in California. As we indicated multiple times in the call today, in fact, our exposure to California has decreased meaningfully over the last 18 months. So I can only reference you to the two items that they identified in their press release as to why they need to keep us on a negative outlook. Obviously, we would disagree with both of those points. A. M. Best has indicated to us that they reset the outlook annually. So conceivably they could do a review in later 2016, which would be our normal rating cycle or they could continue it indefinitely. All I can point to is the two areas that they've identified that were of concern to them and, in fact, we believe that actually that's incorrect. I think it's important to note that although we would certainly like to have an A-minus stable outlook, the negative outlook has had no impact on our business whatsoever. Thank you. Thank you, everyone, for joining us on the call today. We appreciate your interest and your participation. We look forward to speaking with you again as we report our first- quarter 2016 results. Thank you and have a great day.

2016_EIG

2016

CF

CF #As we look at the factors, <UNK>, that could affect that, one of the big ones is just where Russia ---+ Gazprom, prices, their exports to places like the Ukraine and so forth. There's another one that is kind of how LNG continues to evolve, and how much of the new production ends up moving off of oil-linked-based contracts more onto a spot basis. Over time, it is about $3 or $4 to get any sort of reasonable capital recovery on LNG contracts. So, if you say, Henry Hub trades at $3, that means LNG-importing regions should trade somewhere in the neighborhood of $7 or maybe a little bit above by the time you re-gas and distribute from their end to production plant. So, as we look forward, our view is we're likely to be able to enjoy, call it, $4 plus or minus of advantage over most of the rest of the importing or gas-deficient regions. I think, <UNK>, the other thing I think you necessarily have to look at when you talk about energy costs, you really got to look at oil. And what we do know is with the low oil prices that we've seen, you're seeing oil exploration drop off by major oil companies that are not putting the kind of money into the deep water and the Arctic and these more frontier regions that they used to be, in terms of exploration development. In addition to that, we've also seen development activity in North America with respect to onshore oil production come up as well. Eventually, the problem solves itself. The stuff that's on continues to decline, the declines don't get replaced with new projects, and, eventually, the oil market straightens out. The question is, how far off are we from that happening. Today, it doesn't look like it is near, but certainly, at some point, the piper has to be paid, because if the investment has not gone into the exploration and development, eventually the supply dries up while the demand is growing. It is something we continue to investigate and look at. As you could appreciate, these cases are fairly complex and take a long time to get there. One of the issues of bringing a new damage claim is the demonstration of financial harm, and there is a baseline threshold in terms of profitability. And the challenge a little bit is even though pricing is down, margins are down, profitability is down, our gross margins for the first half of the year were still 35%, for the second quarter over 45%. And the problem is that, that level of profitability, the Commerce Department does not have a lot of time and interest in talking about the economic harm that we may have suffered. So something we continue to look at, we've probed, but there is not a lot of, I would say, imminent movement likely to happen in that regard. Slide 17. India does show up in Other, in both 2015, 2016, and I think into 2017. But I think there is only one or two plants that we're talking about that are net-new capacity that's coming online, so it's not a huge volume of production. When you look at India, though, just for a quick comment. They are a huge market, at over 30 million tons of consumption, with 21 million, 22 million of that produced, and 8 million, more or less, imported. And when you look at the gas constraints, the energy constraints, power constraints, you have a hard time looking at that as an opportunity to build urea plants when you can import that at below their production costs, and that energy is not being directed to the public's better use. There have been a lot of announcements on new capacity, but most years there are announcements, and most years those do not happen. The other thing is, in India in particular, because there are such heavy subsidies and price controls in place, the return profile that you are able to potentially get there is really subject to government control, and there is no guarantees anywhere in a commodity market ---+ it's tough enough, even in a place like the US, but when you are operating in an environment where the end product may be subject to pricing controls, where it limits the price that you are able to charge in the domestic market, it is really a difficult thing to get your mind around wanting to put new capital in the ground over there. Or that a new plant that was built two years ago, that still does not have gas supplied to it, has not operated ---+ that's a 1.2 million urea plant sitting idle. So, I have a hard time ---+ I'm with <UNK>, how can you invest when you don't even have gas for your current plants. One of the things that we see, <UNK>, is across a couple of different initiatives, one of which is before our nutrient stewardship programs that have been rolled out, which is to minimize the environmental impact or loss to the environment of nutrients, keep the applied nutrients where they should be in the field and available to the crop, changes around a little bit sort of the application intensity away from the fall and more of it into the spring, and over the course of the spring, instead of just one big dump. But one of the benefits of the targeted precision ag is higher crop densities. And so, if you are going to get the same kind of yield with higher density, you need to get an increase of nitrogen application in order to accomplish anything at the grower level. So, when you see those trends moving in a direction that I would say is net-net positive for us over the long run. It might change the form a little bit, or the timing of when that happens from the fall more into the spring, but that's one of the benefits that <UNK> talked about with our extensive flexible distribution network that we are willing to inventory product and take that risk off of the hands of the retailer and then capitalize on the opportunity when the application season does come. For us, we look at all of those trends as being a net positive for our Business. What we see, again, from China, every year is a different year and every year is a different pronouncement or program coming out of China. If you look at the base model of China, we have unsustainable coal prices, unsustainable logistics, unsustainable issues in terms of pollution and just areas surrounding what is being produced and exported. And so they are going to have to rationalize, and we see that taking place with 8 million tons coming off, and we expect additional rationalization, and if pricing remains at its current level, possibly permanent shutdowns. The export tariff is about $12 per ton, so, if today ---+ and this number has been moving, but Chinese urea is quoted in the $195 to $200 range fob for granular. So you cut that price down to, let's say, $185, you are still ---+ one, quality is poor, or less ---+ it is not received as well as our products or some of the products coming out of the Arab Gulf. Is that enough for them to compete. I don't think $12 is going to get them over the hump to allow them to compete on a consistent basis at the current market. So we expect to see ---+ they need to have rationalizations, their domestic industry cannot support the total capacity they have, so like <UNK> said, they are operating in the 60% to 65% operating rate, and their exports are trending down. All of those are trends that, in the in the lowest cost, probably, position that they will have with, again, coal being low, currency at around [CNY6.65], the only thing probably going forward, I would say, moderating is moderating up on all those issues. So you can get $12 on your export tariff, you're probably not going to lose that to raw material costs and freight costs over time. And, in particular in that regard, the subsidy on electrical use in energy-intensive industries is going away, as is freight. So, to <UNK>'s point, we see a number of things that are offsetting to the higher-cost side, internal to China, that will either be a net increase in the cost structure in aggregate or at least offset any kind of reduction in the export tariff. SABIC does a good job and they move their products all around the world, they have contracts into the US, they have contracts into Thailand and Australia, and so they try to [routively] move their product around the world. I can't really comment on them raising prices other than that I think what you are seeing in NOLA, and is our market, of the low of $160,$165, we are now at $185 and probably even moving up from that. So prices are slowly moving up, I think that's in recognition of when you look at the UAN and urea comparison, both those products are trading at a very good value. And we're actually moving forward with maybe another question, looking at how farmers should be looking at nutrients for fall applications and even spring applications. Yes, corn is down, at, let's say, $3.40 for a forward harvest position of corn, but ammonia has moderated equally down, and all the nutrients are down. So on a nutrient basis it is still profitable to plant and we see consumption to be fairly strong. The other issue on that one is we think that there is such a substantial portion of the global capacity that's operating at or below cash cost, that I think somewhere in the range that you are talking about is necessary just to keep supply available over the medium term anyway. I think that is kind of what has to happen over time. Let's start with the first piece, the answer to that is, yes. Once we stop capitalizing interest, <UNK>, we will be back around $300 million a year towards expense. As you know, our interest payments quarterly run around $75 million, $76 million a quarter, so that will not change, just will not be capitalizing anymore and then it will start to go to expense. With respect to the cash from the refund, I don't really think of it that way, because cash is all fungible, the cash will come in the door, and it, along with the operating cash flow that we generate and other sources obviously will be used for a whole number of, obviously, running the operation and a whole number of other things. But what I would do is just repeat <UNK>'s comment, we're going to build cash on our balance sheet, so we've got the flexibility to take out that $800 million in 2018 if we have to do that to defend our ratings. When you look at the additions to ammonia that are coming on, not just SABIC's but Dyno's plant in Waggaman, our own, yes, there is additional capacity coming on. Traditionally, the Arab Gulf ammonia tons stay in the east, and so supplying South Korea, Japan, and some of the [caprolactam] production there, and so ---+ they've done a good job of managing their production and supply, so any additional supply you have to watch and see how it goes, I can't give you a number on what that impact would be. One of the benefits we have a little bit, <UNK>, in that regard, which is the seaborne ammonia trade does not directly impact our ag markets, because unless you have got the end-market cryogenic storage, which really only the producers have, you otherwise cannot move anhydrous ammonia from the Gulf or from Tampa up into the corn belt. And so while it affects some of our industrial-based contracts business, it does not really affect our ag business that much. The upgrades are running at Donaldsonville currently, so when the ammonia plant starts off, that does not really affect mix at all. All it does is add additional new ammonia production to the network. As you know, we have a pretty sizable supply agreement in place with Mosaic that is going to start up at the beginning of next year. So a big piece of those tons are already spoken for, beginning next year, in terms of where they're going. Relative to Port Neal, we have the urea plant attached to the ammonia plant, we would expect to run the urea plant absolutely full out, with the access being some incremental anhydrous that shows up in Port Neal. But, generally speaking, we are going to want to run that urea plant flat out, and there is not a lot of ability to move the mix in Port Neal, there is a couple hundred-thousand tons that we can flex back and forth between urea and UAN, but generally speaking, the new plants are just going to come on and run at capacity. When we looked at the 2018 bonds last time, we looked at it, <UNK>, effectively the maypole provision on it or the premium that it's trading at in the market were roughly about the same, and I think our philosophy is, A, we don't need to do that, and B, if I'm going to be paying somebody to use his money then I'm going to use his money. There's not really a lot of economics in that, and there really is not a need to do it. I think it's just a matter of having the liquidity available at the time to repay it, if we have to do that to defend our rating. We've been exploring the export opportunities for the Company over the last several years in preparation for the additional capacity that's coming online. And the upgrading capacity already has come online. So this year you've seen us export all three of the major products ---+ ammonia, urea, and UAN. Smaller for ammonia and urea, and, for UAN, we will hit a record this year. And we are exploring all different kinds of markets. We have been shipping product to Europe, to Argentina, as well as opening new markets in Colombia, Chile, and Brazil. We're excited about the opportunities in South America, because we do believe in the benefits of UAN, and that is being received well, so the growth is there. You will see us continue to grow those opportunities, but it is weighted against, obviously, net-back options and what is best for the Company. So, I think urea will grow as we bring the capacity online, as if we have a differential again, like we've had in the first six months of this year where the US traded at discount to the international market, then we have a pretty good incentive to export the products out of the United States. Today, I would say all going well will be less than 1 million tons of total exports for the year out of Donaldsonville.

2016_CF

2017

ASGN

ASGN #The answer is yes, and it has been longer than just the last three or four months. Over the last 14 months, as our larger, more sophisticated customers become more reliant on our deployment delivery model staff aug and viewing it competitively against project consulting and offshoring, they have been deciding to spend more of their annual budgets on staff aug than offshoring, especially with the uncertainty of that immigration reform. You've got to remember that these bills have been introduced both by the Democratic members of the House, as well as the Republicans, and so this is something they can probably agree to. So what we've seen early on is, even before there's any change in the law, that certain customers are hedging their bets and not being as dependent on newer projects being executed on those deployment models versus domestic deployment models. For the fourth quarter of 2017. We said it exceeded the growth rate of this segment. It was almost identical to what we said the Apex Systems was, which was about 15%. We are anticipating or estimating 249.4 billable days. And one thing I will point you to is, if you look at our recent investor presentations which you could find on our website, we actually do now have a page that shows that information. Not only for the year but also by quarter. I'm going to let <UNK> answer that more fully, but <UNK>, they have been all through 2016, engaging with us in a very productive way. And I think we stated in our prepared remarks that the financial services grew double digits. So <UNK>, what would you add. I think you said it right. It has been going on for a while, and they are spending money, good IT money to improve themselves, and we've been growing double digits for quite some time now. Yes, I think for continued constructive execution of their budgets, I think that the budgets weren't constrained in 2016 the way they were in 2015, and the discussions we are having about 2017 are on a more normalized spend that isn't constrained because of outsized litigation expenses or settlements. So yes, what we're trying to communicate, I apologize, is that we find the financial services industry to continue to be a productive area. And, as you know, they are classically the fastest spenders and the biggest spenders on technology for our particular deployment model, staff augmentation. About ---+ I think for the full year of 2016, it was about 11%. And for 2017, I think it's steady-state unless we really have accelerated growth, which would be somewhere in the 5%, 6%, 7% range. Well, if we could find it, which we will, but if we could find the right acquisition candidate, we would do that first. Second, at this stage of our leverage and our cost of debt, which is going down again hopefully, it would be share repurchases. And third, it would be the continued deleveraging of the business. We balanced deleveraging and share repurchases through 2016, and we did both. We could have just done share repurchases, but we elected to do both. And I think because we did both, that put us in a position to continue to drive pricing of our debt down. Is that possible, <UNK>. Well, it's in the estimate. I'm not sure I'm following, <UNK>y. Because one of the things we include in our financial estimates is a range ---+ I guess he means by division. We don't get that granular in the guidance, but I think <UNK>y, you should assume, but for the annual reset of taxes and but for lower contribution of perm placement versus the historical level, that we stick to our public statement that we think we are in a stable gross margin environment. And, <UNK>y, the reset on payroll taxes we are estimating had ---+ it is going to have about a 1.2 percentage point of sequential impact on gross margin in Q1. Versus a normalized Q4. And so, if you normalize Q4, you would get roughly ---+ for the out of period, you get roughly [32.8]. From others. <UNK> respond and then I will follow up. So, <UNK>y, that unit has been growing a little slower although in line with the industry growth rates, both in the Apex segment and in the Oxford segment as it relates to life science skillsets. So I guess if you are trying to put that in perspective of the rest of the business from an IP perspective, we are obviously seeing a lot more growth there, but I guess that's what we're seeing right now within the life science skillset. Well, I'm going to let <UNK> address that, but what we are doing is not so novel that it's got a high risk of on execution. This is some stuff that is best practices, and <UNK>, why don't you walk them through your expectations. Yes, I think on the expense side, we will see that sooner, although that will be a smaller part of the total return in the future, the sales strategy, some small tweak there, as <UNK> put it, not wholesale change, if you will, but some tweaks around that will take a little bit longer to institutionalize and see the return on. So I think the expense side over the next couple of quarters and on the sales side in the back half of the year and into 2018. Yes, good question. I think you should interpret it that we don't have any sort of change in economic activity just the way things are right now because of the results in 2016. We would hope to be up low mid single digits year over year on an absolute basis. The word we used was stability, yes. And I would point out, again, <UNK>, as the year is now over, CyberCoders actually did an admirable job. We had budgeted for them to be down on revenues and basically flat year over year on EBITDA, and they pretty much hit that budget. And some of the changes that they have made and the hard work that they have done, I think that they can grow 3%, 4%, 6% this year. Well, I don't mean this to sound defensive, but I think that what we've been trying to communicate on a very grounded basis is that we see a productive marketplace. And based on my recollection, we've grown 1000 basis points faster than anybody else that has reported in this cycle organically. So I point that out just to say we continue to believe because of our size and our positioning that we will continue to have very attractive growth prospects in 2017. Now the spend in telecom and technology right now wasn't as strong as it was in financial services and health care and that may switch and probably will if there is some tax reform, but all-in-all, we feel fortunate that our positioning permits us to grow fairly significantly. And we're excited about that opportunity to continue to grow. No, no, no, I didn't take it that way. I just ---+ I think it is lost that on a same billable day basis, this Company grew 9.8%. Let me address it this way. The only time we have really called out a vertical was in healthcare IT because of the stimulus dollars going away, and then in the financial services, we called out ebbs and flows in the third and fourth quarter of 2015. But as it relates to spend and telecom and then technology, that may be just a collection of our customers and something like that. But we feel good about the continued rate of adoption of staff augmentation vis-a-vis other delivery and deployment models. We feel very good about our positioning, and we continue to believe that we can be a net market share gainer and grow ---+ even though we grew faster in 2016 than the statement discloses, we still think we can grow 200 to 300 basis points faster than the stated industry growth rate. And if we continue to do that, we will create real value. So we are feeling as if a company ---+ and it is operating in an industry that is relatively productive and healthy, and so it's our job to go execute. Yes, the increases just give us greater flexibility. The real change, which <UNK> is not apparent is, when we have an annual reset and we file our results with the banks that refreshes our restricted payment basket, so we have used a fair amount of our capacity to buy shares, and that has all gotten replenished and sent back down to levels where we could execute the remaining availability under the $150 million repurchase with the refresh of our baskets. So yes, we have plenty of capacity. And if we want to do an accelerated repurchase, we could draw on the revolver if we felt that was the most prudent thing to do. So it was kind of on a GAAP EPS basis. It was $0.10. And on an adjusted EPS basis, it was about $0.09. So based on my calculations, if you accept the adjustments, we would have reported about $0.73 versus $0.64 on an adjusted basis. And on a ---+ earning on an absolute GAAP basis, we would have reported $0.55 versus $0.45, which is well above consensus, high end of analysts guidance, or at the high end of our range. I think that's a real compliment to the divisional leadership. The reason we have been able to grow 1000 basis points faster than others is because we were able to fill the orders ---+ find the people to fill the orders. And so I think they've done an appropriate balance of sales and fulfillment. And I think that has been a core competency of our Company and I think it will continue. We greatly appreciate your attention and look forward to speaking to you on our first-quarter conference call.

2017_ASGN

2015

FNB

FNB #Good morning and welcome to our quarterly earnings call. Joining me today are <UNK> <UNK>, our Chief Financial Officer, and <UNK> <UNK>, our Chief Credit Officer. I will provide highlights from the quarter and cover some strategic developments since our last call. <UNK> will review asset quality, and <UNK> will provide further detail on our financial results and an update to our guidance for the rest of the year. <UNK> will then open the call up for any questions. We were very pleased with the quarter\ Thanks, <UNK>, and good morning, everyone. Today I will discuss the second quarter's operating performance and reaffirm our guidance for the remainder of the year. Looking now at results for the second quarter, total average organic loan growth was a solid $249 million, or 8.8% annualized on a linked quarter basis due to growth in both the commercial and consumer portfolios. This loan growth comes despite increased competition as F. N. B. continues to benefit from the increased number of prospects in our metro markets of Pittsburgh, Cleveland, and Baltimore as well as solid results in our Pennsylvania community markets. As you may recall from prior calls and as <UNK> mentioned earlier, expansion into these metro markets has enabled us to deliver sustainable high-quality loan growth while maintaining our underwriting standards. On a linked quarter basis, average commercial growth totaled $151 million, or 9.6% annualized. The linked quarter growth in the consumer portfolio totaled $93 million led by organic growth in mortgage and indirect auto loans. Average growth in indirect auto loans was $30 million and continues to be a solid business for us across our footprint. On a linked quarter basis, organic growth and total average deposits and customer repos totaled $217 million led by strong DDA growth and higher average savings balances. The growth in DDA balances of $140 million, or 21.2% annualized was due to solid organic growth and seasonally higher business account balances. Total growth in transaction deposits and customer repos total $229 million, or 9.4% annualized. Additionally, we launched a new premium sweep deposit product in June that provides F. with more favorable treatment for FDIC insurance premiums relative to customer repos. At the end of the quarter our funding position continued to strengthen as 79% of total deposits and customer repos were transaction based. From a total funding perspective, our relationship of loans to deposits and customer repos was stable at 92%. Net interest income increased $1.9 million, or 1.5% reflecting solid organic loan growth and one more day in the quarter. Net interest income levels compared to the prior quarter included $1.7 million of benefit from accretable yield adjustments equal to the level of benefit realized in the first quarter. The core net interest margin narrowed 4 basis points to 3.39% reflective of the low interest rates and competitive environment for new loan originations. Looking now at non-interest income and expense, core non-interest income was 24% of total revenue and, as <UNK> mentioned earlier, includes benefits from the previous investments made in several fee-based business units. These investments reflect the strategic focus to diversify our fee income stream and lessen our dependence on net interest income and consumer banking fees. As you know, consumer banking fees continue to be an industry-wide focus having been impacted by regulatory constraints and evolving consumer behavior. Core non-interest income increased $1.5 million, or 4.1%. Our mortgage business had a great quarter. Total mortgage revenues increased $700,000 driven by the record origination volume that I mentioned earlier. Wealth management also had a great quarter as total wealth management revenue, which includes security commissions and trust income increased $800,000, or 10%, benefiting from the incremental lift in the Baltimore and Cleveland metro markets. Insurance fee income declined due to normal seasonality from the timing of annual policy renewals and seasonal contingent fee revenue received during the first quarter. Non-interest expense excluding acquisition costs increased $1.5 million including higher OREO expense, higher accruals for variable-based incentive compensation, and seasonally higher marketing costs. These items were partially offset by lower FDIC insurance expense and seasonally lower occupancy costs. The second quarter efficiency ratio was 56.0% compared to 56.6% and 57.3% in the prior and year-ago quarters. We continue to generate positive operating leverage with disciplined focus on expenses through initiatives such as vendor relationship management and branch network rationalization. This year we consolidated an additional five locations bringing the total number of locations consolidated since 2010 to 58, which represents nearly 20% of our total branch network. Regarding income taxes, our overall effective tax rate for the quarter was in line with our expectations at 31%. Regarding our outlook for 2015, as I mentioned earlier, we are reaffirming our prior guidance issued on the April call. As you will recall, at that time we updated our net interest margin guidance for revised market expectations of a delayed Fed interest rate move and a continue low interest rate environment. We anticipate continued slight quarterly narrowing from the second quarter core margin of 3.39% for the last two quarters of 2015. Earlier in June, we completed our first public disclosure of our DFAST stress testing results. We are very pleased with the results, which demonstrates the value of operating a lower-risk business model. All projected minimum capital ratios exceed the regulatory minimum thresholds as well as the well-capitalized thresholds. These results are a proof point of the strength of F. 's enterprise risk management infrastructure and are consistent with our long-term investment thesis and capital management philosophy. In summary, we are excited about the positive revenue and efficiency trends for the first half of 2015. With solid organic loan and deposit growth, a more diversified core fee income stream, positive operating leverage, and a number of strategic accomplishments. The strategy of expanding into new markets to generate sustained organic growth has proven to be key to our success, admit a challenging operating environment for the overall banking industry. We are confident in our team's ability to leverage these new opportunities as our expansion strategy continues to serve us well. Now I would like to turn the call over to the operator for your questions. Yes, we would ---+ I mean, in the short term we'd be just paying off borrowings and then we would use those funds to fund the loan growth that we expect encourage you to go forward. The exact utilization will be kind of in that direction, and we haven't firmed up exactly what we're going to do yet, but directionally, that's what we would end up doing. It's a nice source of deposits with the metro markets that we have and, at some point, you know, the economy really starts to lift off, the loan growths should even accelerate more, and having that deposit source of funding will be important as we go forward. Sure, we've talked about the TCE ratio being comfortable in a range from 6.5% to 7%. Obviously, that ratio gets affected by rates moving up and down. It was a little higher at the end of the first quarter because rates had come down and it's at 6.93% here. So that range of 6.5% to 7% we're comfortable operating in. With the earnings that we're generating and retaining, there's plenty of capital there to support the organic loan growth that we're guiding to. So very comfortable where we are and as we did the stress testings results that were published and very comfortable with the impact of the stress test on our ---+ all of our capital ratios and the projected minimums that we would have, kind of, worst-case numbers throughout the nine quarters or as I said in my remarks, above the minimums and above the well capitalized. So very comfortable with where the capital stack is right now.

2015_FNB

2017

MINI

MINI #60% plus. What was it in the quarter if you ex out incentive comp. Okay. And then lastly, can you just talk about the trucking and mix component of yield. What was the primary driver behind it being down. And then how should we think about that contribution going forward. Got it. So it's more of a one-off thing. There will be some, but we don't expect it to the same extent. And we see ---+ like we said on the prepared remarks here, improving conditions in a lot of segments really. So that revenue will come at a very high incremental margin. Look at these numbers. Yes, I know ---+ or I mean, the update is we're very close with our top candidate, and I will expect an announcement fairly shortly, if everything else checks out here. So it looks very good. Well, yes. Obviously, there are some orders in place, and there's always some level of activity that we see. And in talking to our large customers, they indicate that the second half here is going to be very strong and that the fourth quarter is going to be very, very strong. But seeing is believing, so we have ---+ until we have the orders in hand, we don't bank on the revenues. But this is one of those things that they will have to do these turnarounds at some point. And it's more a question of which quarter will it fall in. I don't think much of a change, really. I mean, we've consistently, over the last several years, really been pricing above our competition. And we continue to be on average, say, 15%, 20% higher in our markets, in certain markets even more than that. But we don't see that we're losing much business due to that. We differentiate our products, as you know, and we sell value. And I think we do it very well. So I can't say that we've experienced any change this quarter over any other. No, no. There's plenty of boxes around, much, much more than we would need. So just a couple quick follow-ups on the containment side of the business. So just generally speaking, do you have pretty consistent lead times. Or do they vary from project to project. I'd say they can vary. Certain projects are planned in ---+ with some advanced notice or time, but other projects is next day. It all depends, really. Is there like a rough average of the lead time before you undertake a project that you could point to. Or is that. . No, I don't. Right. And in terms of turnaround and the downstream kind of maintenance activity, when you look at that, what's the longest amount of time most of these businesses could put off at turnaround. And kind of what inning are we in right now versus that amount of time. Because we've been hearing this thesis kind of play out for the past roughly a year, 1.5 years. And apparently, there is a specific amount of time that they can't put off anymore, but I think a lot of us are kind of wondering when that will pick up. It seems like you think it's going to happen in the fourth quarter. Well, yes. I mean, based on our conversations with the customers, it's that ---+ they indicate that it's going to happen. I mean, the ---+ your first question is really a question you have to post to them, how long they can keep going. This is like the third cycle I'm through when this is happening. And 2 years is certainly not, based on my experience, [I'm neutral]. And having said that, what inning are we in. I don't know. I think we're past the ninth inning. Exactly, exactly. Okay, that's helpful. And then, just in terms of what you're seeing from your competition in that market, particularly some of these smaller companies, with some of the declines that we've experienced, are you seeing some of these smaller businesses exit the market. Or is the market pretty healthy and everybody hanging in there. If we talk about the upstream markets or. . Yes, the upstream side of the. . Yes, on the upstream side, I think there's a lot of companies that have left the market and ---+ for financial reasons or ---+ I mean, so it's ---+ that market, we still see there's obviously a lot of competition there. But pricing has stabilized, and activity levels are up. So we're doing quite okay. In <UNK>ellus, we're, I think, 50, 60 units off from our all-time high on units on rent. And in Midland now, we're up 50% in units on rent from the bottom there last year. So we're doing quite well. Right. That's very helpful. And then just last question. If you could, I think we've done this analysis before, but just on average, what's the average acquisition cost of a unit on the containment side. And how long does it typically take you to break even. Right. But the band of what these units could cost, they can go up from like maybe $1,000 to like $35,000. Is that the kind of the band they're in. Yes. So your biggest tanks would probably be right in the $30,000 kind of range. Okay, thank you very much. Thank you, everyone, for participating on our second quarter call here. I think we are very well positioned now to continue to grow the business as we did here in Q2, and we look forward to speaking with you after our Q3 results. Thank you.

2017_MINI

2015

OMC

OMC #<UNK>, you have the number. Yes, the number was just below $1.1 billion for the quarter. That doesn't include, does not include the most recent Bacardi win. In terms of the pipeline, it's pretty good. We have one or two we're going to wind up defending, but for the most part, the people and potential clients we're talking to we feel very good about. It's changed a little bit. You still get formal bids and competitions, but increasingly, you're getting assignments, as we did like in Bacardi, which did not require a bid. There was a consolidation with certain objectives that we are going to help that company reach. So it is healthy. It could always be ---+ we have a very good track record, so the more of somebody else's business that goes into review, the better opportunity is for us to win. But it's pretty decent, Bill. I think our leverage is probably right where we have historically been, right around that. And our focus is primarily on maintaining our rating, that is the principal focus in terms how we look at our capital structure. I think it's probably safe to say that you shouldn't expect to see the next 12 months in terms of buyback activity to be anywhere similar to the last 12 months. Over the last 12 months, we bought back about $1.25 billion of stock. So we had some catching up to do, as we had discussed last May. But I don't think you can expect the activity to be at that level. Certainly, we will continue to look at it in the context of our free cash flow as far as continuing to pay a dividend. What acquisitions are out there that we do endeavor to do is going to reduce the number, but certainly the activity, prospectively, as we look at the next 12 months is going to be down relative to the last 12. I will let <UNK> ---+ why don't I let <UNK>, who heads the group, answer that first, and then I will add my comments. There's certainly been a lot of coverage on it, but certainly from our standpoint, our media agencies in the US don't seek rebates. And the US, of course, is not a rebate-based marketplace from a negotiation standpoint. In terms of our media agency clients, in the US, they receive all of value that gets negotiated on their behalf. Whatever that form is, whether it's discount, whether it's other quantitative benefits, whether it's qualitative benefits. They're negotiating in a very competitive marketplace, so our buyers are pushing hard to, frankly, extract maximum value out of those vendors in order to meet our individual client expectations. And, of course, all of the clients that we engage with we have comprehensive contracts that govern not only the services that we provide them, but they specify performance requirements, as well. So that is kind of the cornerstone of trust, I think, in terms how we run our business. I'm happy for the question because there's been a lot of innuendo and comments against the industry. We know how we operate and have consistently operated. So clearing the air on this is a positive thing. One other thing is we are fully participating ---+ I think the ANA, after having allowed that presentation to occur ---+ there's now, I think, a working group between the ANA ---+ And the AAAAs. And the AAAAs to go through this. Yes, to go through the presentation that was provided at the ANA. It was somewhat odd to me that no specific allegation came against anybody, even though in that presentation they had redacted contracts and other things. We are a little confused, we don't find it helpful. So as quickly, as jointly the ANA and the AAAAs can get to a conclusion the better off we are all going to be. There's a sense. I don't have the proof, but US economy appears to me to be getting stronger. And if history is a guide to anything, those budgets will increase as demand increases, and clients are going to support their strongest growth areas. So I'm cautiously optimistic. I'm just not willing to publicly forecast the year more than what I can see at the moment. In the first quarter, that number was about $40 million of year-over-year growth in the quarter versus the first quarter of last year. Just give me a second to get that number. In the quarter, the buyback number was, in shares, I think, was 3.4 million shares. I don't have the net number handy, but we can get that for you. No, it really all comes down to the opportunity. But the areas that we're focused on are geographic in nature, which means that they are not ---+ they certainly fit within our historic profile. And different forms of partnerships over the last several years ---+ we have formed over 100-plus partnerships with various companies, either in technology or in some other areas. In very rare instances, but a couple, we might be interested in becoming partners with some of those folks. But if you are, in characterizing what I said, and thank you for asking the question, they are going to be ---+ they're not going to be large. They are going to be closer to our historic pattern than us developing any new pattern. Let me put it that way. I think our view is, especially in the first quarter, which is a relatively small quarter, you can't draw too many trends when you start narrowing it down to regions or disciplines, et cetera. So the more you narrow that number, especially in a quarter, a 90-day period, we don't think, is going to drive the trend for that particular, in this case, country. Our businesses in the UK have been performing very well, very consistently actually over some time. And they have done very well in the market. We expect them to continue to perform well as the year goes on. But I don't think I would say we expect, based on our internal forecast today, that we're going to be in the high-single-digits to low-double-digits for the UK the rest of the year. Some of that could be a bit of timing in a quarter, some of it could be just the fact that is the first quarter and the number is a relatively small number compared to the number for the year. So I wouldn't draw too much of a trend, other than the trend that our businesses in the UK continue to perform well is one that we expect to continue. And I echo exactly what <UNK> said. I guess, we were aided by the change in management of one or two of our major subsidiaries and they've had ---+ they have gotten off to a great start. So market share and not the economy in the UK, though. <UNK>. Obviously, it's a supply and demand marketplace. There are still supply issues in the linear TV marketplace that keep pressure on price beyond, I think, what you might reasonably normally expect. Declining ratings would be less value and lower prices, it's not necessarily the case. I think it's, a major part of that formula is going to be the balance between the long-term and short-term strategies that sellers take in this marketplace. I would add, I think that CPMs, of course, are one way to look at the marketplace. I think the general trend here, or the longer-term trend, is more significant and that is that generally speaking our clients are moving to ---+ many clients, at least ---+ are moving to looking at business measures, what do the aggregation of the investments that they are making across media types do to move their business with the data capabilities that we have. And they are somewhat less inclined to focus simply on what might be called process measures which are the CPMs reaching frequency. It's becoming increasingly an overall ROI discussion with our clients. But specifically to your question on CPM, I think the balance between long-term and short-term strategies from a sales standpoint will dictate that. Operator, we're getting close to the market open, so I think we have time for one more call. Thanks, <UNK>. Well, I think it can. It certainly helped the business grow faster, but if we look at the programmatic business today there is no question that the great majority of it as it exists today is display-based business. But the client requirements that we are seeing from the plans that we put together show a great demand for programmatic video. So there's little question in my mind that the demand is there, and where there is demand, generally speaking, we will see supply respond to that. But the availability of, I would say, premium video is not simply a programmatic question. It goes beyond that as our clients look at it. But programmatically and as alternatives in the upfront marketplace because content and context are so important to the kind of clients that we have. Whether it's, the content has the right affinity or whether it's simply just wholesome enough for their brand is key. And access to that kind of premium video is key to growth. There's no question, though, that the demand is there for it. On the specifics to your question, <UNK>, the programmatic growth was not just US only. That is pretty much, we're in many markets throughout the world now. We started that ramp-up back in Q4 of 2013. The growth relative ---+ the growth in the quarter itself relative to Q1 of 2014, we thought, was pretty good. Again, though, we are not really drawing too many trends on one particular quarter as it relates to the rest of the year. I don't think the first quarter is going to tell the story for the year, but I would say that the programmatic business in Q1 of 2014 was probably still continuing to ramp up and the performance this year in the first quarter was good. But I don't think we're drawing any trends that that level of growth or that that number is necessarily going to continue throughout the rest of the year. Thank you. Thank you, everybody. Thanks for joining the call.

2015_OMC

2015

ENDP

ENDP #On R&D, it's simply that our expected trial work on frozen shoulder, as well as cellulite is delayed a little bit from our initial assumptions, and that's primarily because on cellulite, we want to have the right dialogue with FDA before we enter into a trial in frozen shoulder, we need to make sure we structure the next trial in a way that optimizes the chances of success. All of that being said, in terms of our ultimate expectation of commercial availability of those two indications in 2018, hasn't really changed. We'll be able to have a better view on that, once we get to the next trial, and see what the results look like. So that, largely speaking, explains some of the lower than expected spend in R&D. In SG&A, we're just getting through the integration of Auxilium and sometimes when you go through these types of things, you do slow down spend. You want to make sure that you're fully integrated, before you start spending in certain areas. So that essentially has moved some expenses into second quarter and the second half. So there are a few embedded questions in there. Let me see if I can get to at least some of them. So with the South African market itself, South Africa being a challenging market doesn't bother us, because we are a differentiated player, and frankly, we would rather be in areas where everyone else is running away versus going into areas where everyone is crowding into. I think one of the primary differences that we don't view ourselves as an international player in South Africa. We view ourselves as being a local player in South Africa, which is why the Litha business will continue to operate as an autonomous business unit. It will continue to have the Litha name. The Endo name is not well-known now, but it will be well-known in South Africa. Other than currency, which certainly has been a big headwind for the Rand over the course of the last little while, there's no reason to worry about the underlying growth dynamics in the South African market. It continues to be the most robust market in Africa, and on a local currency basis, is a market that we think, at least with the categories that we are going to focus on, is easily a high single digit growth market. Furthermore, once we have a more robust base in South Africa, being able to export products in Sub-Saharan Africa, all of those markets are double-digit growth markets. Again, that's mostly because the markets have a very small starting point. That being said, from a forward-looking basis, they can be quite attractive for us. And with respect to the Aspen portfolio and our own Litha Pharmaceutical business, we are in the middle of restructuring that entire business. And what I would say is that from a medium-term perspective, we have high single to low double-digit growth expectations for that business, and the business that we acquired from Aspen along with the pipeline, will be a very important contributor. So the product is detailed by the same field force that details XIAFLEX for Peyronie's Disease and TESTOPEL. That being said, it's not a product that's co-positioned with XIAFLEX, so it's not going to benefit from that regard. However, it will benefit from the fact that the broader reimbursement support that's in place and is being optimized with XIAFLEX is one that powers AVEED, as well. So from that standpoint, once the dust has settled on that part of the integration, it will be a net benefit for AVEED. So far, we've seen good continued upward momentum in AVEED with the permanent J code, and as we have consistently said, with these kind of buy and build products, we expect the launch phase to be a protracted one. I don't know that we can declare victory otherwise, until the end of this year. But the physician feedback on the product has been very good. People, physicians who use the product like it a lot, and the only areas for feedback, in terms of continued improvement, has been the reimbursement support, which as I said, will hopefully benefit from what we're doing for XIAFLEX as well. Sure. Operator, I think we have time for maybe one more question. On the tax rate question, we would expect our sustained longer term effective tax rate to be in the mid-teens, <UNK>. And then in terms of your question on M&A, I think, as we've said in the past, <UNK>, we are opportunistic in terms of new therapeutic areas, and as long as the financial criteria that we talked about are met, we could see ourselves in a range of different therapeutic areas. In think, in general, what we've told you to expect is that we are unlikely to get into a very heavily primary care-oriented therapeutic area, unlikely to be in very science-heavy areas like oncology, et cetera. But outside of that, I think we would be open to any specialty-oriented therapeutic area. Operator, I think we're all set, if you would like to wrap. Thank you, everyone, for joining the call.

2015_ENDP

2016

MAR

MAR #February 2015. It's a good question. Certainly in the group space if you have got shrinkage that is occurring sort of real-time so that groups are showing up with meaningfully lower numbers than what they anticipated before, that could be a warning that group participants or that the company sponsoring groups are less bullish about things than they were when the reservation group booking was first made. But again, we haven't really seen movement in that so there is not data there that would tell us to beware because of that. In fact you can tell from our comments about group, group is one of those things that we look at that give us some solidity in our point of view about the future and the group attendance has been good and the food and beverage spending has been good and so that is sort of reassuring. It is a good question around transient cancellation. Again, I don't think we have seen a shift there but I can't tell you whether in prior cycles that would be a canary in the coal mine. My guess is it is not very much because corporate transient business is booked so short before the stay that actually it doesn't show up so much in cancellation, but probably just shows up in the booking itself. Very good question. So a couple of things. I would say we are still in the land where we don't have kind of open sesame yet into all of the information. So full knowledge about exactly how we are thinking about some of these technological platforms and merging them and what we will choose and exactly how we will do it remains to be seen. I think we continue to believe this is a two-year process, that this integration of these two companies when you think about it kind of what we have got to do, get in there, look at it and then figure out from a transition standpoint, that it is a two-year integration is definitely something that you should expect. In terms of loyalty, we've got a host of issues. In addition to both the technological issues around platforms and reservations, etc. , we've also got some other things like credit cards and timeshare businesses where we need to work with our partners to get where we all want to go in terms of the relationship with the customer. And that one is a little bit harder to pick exactly a time. I think we have said before that we are hopeful by 2018 to have merged the loyalty program. So I think the two-year sort of estimate is for right now as good as we can give you. Great, so you are right. We have talked about in general what we expect to do in terms of $1.5 billion to $2 billion of asset sales over the next couple of years when we do this deal. So first of all you can tell what Starwood has done so far this year. They have done a great job of moving through their asset sale program and getting some nice deals done. We, like you, basically take our cue from them in terms of hearing how they are doing on that front and from that perspective, we know that they are talking to a number of parties out there about some very good size transactions. And we look forward to as soon as the deal is closed to getting much more involved in understanding exactly where things are with the negotiations and the terms of the deals and the pace of those discussions. I wouldn't really be able to hazard where we are in Q3, Q4, Q1 of 2017 except to know that I'm sure you have seen Marriott's track record and that is that we don't want to be a real estate owner and we will be moving as quickly as a practical to recycle that capital. But frankly I would expect that you will hear more from us at the end of Q3 when we have closed and we've got a better handle on where things are. Yes. You hit the nail on the head. That is exactly right. There is lots of business out there that we don't have in our hotels by definition obviously. We think we've got about 11% of the rooms in the United States and a smaller share in the rest of the world, usually dramatically smaller than that 11%. We tend to run meaningfully higher rates than the market as a whole and we obviously do that with a purpose. That is partly because of the way our hotels are skewed in terms of their level of luxury and level of services. That is partly about simply our approach to pricing. So there is lots of business out there that is more rate sensitive and can be pursued by us if we think it is in our interest to pursue it. Obviously we are also adding new units around the world and whether that is at 6.5% or 7% it is meaningful growth into our system and so we are with those new hotels making sure we can also grab new customers in order to fill them and do what we need to do and the performance there has been great. So I think there is plenty of business for us to continue to go and grab. I think that business cannot always be grabbed at exactly the rates that the highest rated business we have in hotels but we do our best through revenue management and mix management and the like to drive optimal performance and I think we have done well with that. Obviously that is a topline focus sort of number. I would ---+ let me stress something on the bottom line too and maybe brag about it a little bit. But I think the 100 basis point improvement in margins in the managed portfolio in the United States in a 3% RevPAR growth environment is extraordinarily impressive and that is a bit about good management at the topline but it is also great management of the cost elements of those hotels. And both of those things I think tell you that we've got tools that we can use even in this sort of anemic GDP growth environment that we are experiencing today that can cause us to deliver maybe it is low-ish single-digit RevPAR growth but when you put unit growth and cost management and capital return to shareholders into the equation, you end up with this high teens or maybe even better EPS growth, 18% EPS growth in Q2. And that is with $20 million less in gains on asset sales because we had that in Q2 of 2015. Yes, I think there are two big American lodging companies whose brands are in first demand and of course we believe our brands are in first demand and we have data to support that. But I think there is a significant shift towards quality. I think that shift in many respects the accelerates when there is more anxiety in the market and whether that anxiety is manifested by the way the equity investor approaches it or by the approach that the lender takes and we obviously talked about that a little bit in the prepared comments. Lenders are more cautious today and that caution is also going to force them to put their [borrowers] in a position where they are going with the strongest brands that pose the least risk in a weaker environment and that is very much to our benefit. RevPAR index, okay. Yes, who are we taking it from. Well, remember the way RevPAR index is done, it is not Marriott against <UNK> B but it is how does the Marriott Marquis in Times Square in New York compare to the four hotels or five hotels or six hotels that they have in that hotel's competitive set. And as a consequence in some markets, it is going to be for the Marriott Marquis, I don't know off the top of my head what the competitive set is but I suspect that it is a number of big branded hotels within about a mile of that hotel. In other markets we may have a Marriott that is competing against a limited service hotel because that is the only other hotel in the market or some other products like that or some independent hotels. All of these get rolled up and when we talk about 90 basis points of index growth, that is a collection of taking from lots of different kinds of competitors. Asia is really a bright spot, you can look at it for our total RevPAR numbers that we reported in the quarter. We obviously called out a number of the individual markets but you look across the region and see more often than not good strong performance. Sometimes in markets like South Korea that is aided by an extraordinarily easy comparison because of the MERS crisis last year. But you look at India with its 10% RevPAR growth, that is driven by core economic growth in the country. China, we talked about with Mainland China RevPAR up about 3% in Q2 and if anything, that understates China's performance. We did have a shift in the way we report RevPAR year-over-year which has something to do with service fees and service charges and some other fine tuning of that which has about a 2 point impact on reported RevPAR in China in the quarter. And so if anything, China is doing even better than the numbers that we reported. We have been pleased with China on the development side. Year to date we obviously read the same newspapers that you do and there is some anxiety there as there is in many other markets around the world but it seems that people are continuing to move forward with projects that have strength. On the negative side, Hong Kong has been sort of a tougher market mostly because Chinese visitation has ---+ Mainland Chinese visitation has declined. Some of that is currency driven given Hong Kong's dollar is essentially pegged to the US dollar and so as a consequence has become more expensive as the US dollar has continued to appreciate around the world. We wouldn't expect the story in Hong Kong is going to change for the better anytime real soon. And Thailand is strong too, but I think of across the region generally we are pretty bullish about Asia-Pacific. Maybe I will have <UNK> do that but before <UNK> jumps in on this, let me mention Australia given that you are with Macquarie. So I apologize for not having done that. But Australia is a bright spot in the Asia-Pacific too. So on incentive fees, you will see that what we've got for the first half of the year and the back half of the year is a fairly similar growth rate. Now we are looking so far this year whatever 64% earning incentive fees and by the end of the year that will probably climb up a few percentage points. We've got a great breadth and depth now with greater international exposure across our portfolio where it is not quite the same in terms of the fall off. I think as long as we are staying in the kind of ballparks that we have talked about for RevPAR without a meaningful change, I think we are in the right spot and you've got a right kind of numbers. We aren't seeing that we automatically would have to kind of imagine that all of a he sudden you are going to go back and reverse the ones that you have. We have got a large portfolio of limited service hotels that added nicely to incentive fees in Q2 and their performance looks to continue to be strong. So it is IMF performance was really nice and broad, both in North America as well as internationally obviously impacted by some tough international markets but overall kind of strong growth overall. The other thing I would say on our IMFs is that as you think about where we are from a margin perspective, this performance is really top-notch in terms of the kinds of IMF growth that we are having relative to the RevPAR growth, this really great performance and we feel great about the rest of the year in that regard. Just one other comment on that. If you look at our reported numbers and pay attention to the managed page as well as the system-wide page, obviously managed hotels deliver the IMF. Managed hotels have a higher group mix than the system as a whole. We only really end up talking about RevPAR. We often don't talk about food and beverage and other contribution that comes from group but that does very much drive profitability of the managed hotels. And with the relatively stronger group, there is I think all of the things that <UNK> said are that much even clearer because the performance in those hotels should continue to be a bit better than those that are more reliant on transient and less on food and beverage. Yes, I mean I think it is a good question. I think our number for Q4 has gotten a bit better over the last quarter. I think obviously we're talking about three quarters, a quarter ago left in the year not two and so we didn't give it to for each quarter although I think we did say that Q3 was relatively stronger than Q4. I think Q4 numbers look a little better today than they did a quarter ago. My guess is that often the way this works is if Q3 for example were plus 10 or plus 9 point-something in group business, we are more likely to end up with a group number which is a bit lower than that when the dust settles because there is not likely to be availability to take as much in the quarter for the quarter group business as we probably took last year. The opposite may be the case for the fourth quarter though. So the fourth quarter hopefully will end up with actual group RevPAR numbers which are better than zero. How those two things balance out for the second half in the aggregate I couldn't tell you but it shouldn't be dramatically different than the kind of 5% number that we are talking about today for second half. Yes, though you are taking us well into next year. I think that is possible. I think the good news here though is the 7% booking is a real year-over-year comparison. That is a data point that is compared to the same data point at the same time last year for 2016 and that is a real increase of 7% in group revenue. I don't think there is much more we can say than what we have already said. I will give it a little bit more color. Obviously we have got folks in China that are helping us navigate through this and through them and through our teams, we have been in touch with the Chinese authorities who are doing this process. I don't think it is political. I don't think it is extraordinary. I think it is the wheels of government working and as you can tell from our comments, we expect ---+ we at least hope that we will be done here real shortly and be able to close transaction and close it on the terms that we have explained to all of you. Obviously RevPAR is a function of both supply and demand. Supply growing now at 1.5% to 1.6% something like that which in historic terms is not particularly alarming, maybe a little bit more than we have had last year or the year before that but not a frightening sort of figure. It is very much factored into the guidance that we are providing, both our supply growth in industry supply growth and we are trying to make a real world set of assumptions about the way we think our business will perform. Supply growth could be a little higher next year but I wouldn't think it is going to be dramatically different than what we are seeing this year and that will continue to have an impact into performance. Generally an incremental point of GDP growth is about 2 points of demand growth for the industry and as a consequence, we could see occupancy for comp hotels continue to grow even in this kind of supply growth environment. But it does depend on GDP growth and the more GDP moves the more occupancy is likely to move. We have in some markets of the world push advanced pay marketed at a little bit more aggressively. I know the European team has driven a significant increase in advanced pay reservations. I can't tell you operate top of my head what the percentage of transient business is that is advanced pay in Europe although I know it is growing. I suspect it has grown modestly for the <UNK> but not dramatically. But that is one of the tools obviously that can be used as well. Crystal, any other questions. Thank you everybody very much. Have a great summer and keep traveling. Bye-bye.

2016_MAR

2017

REGN

REGN #Thank you, Len, and a very good morning to everyone who has joined us on the call As Len mentioned, EYLEA continues to be a leader in the retinal disease space, with a number of important near-term opportunities First, we expect to have our supplemental BLA for every 12-week dosing of EYLEA in wet AMD filed by the end of this year Echoing Len's thoughts, let me also update you on the potential opportunity for EYLEA in diabetic eye disease In our original pivotal studies in DME, we demonstrated superiority of EYLEA to laser in terms of visual acuity and other outcomes In the government-sponsored Protocol T study, EYLEA was demonstrated to be superior in terms of visual acuity to the other commonly used anti-VEGF agents at the one-year primary endpoint In these studies, in addition to these endpoints, EYLEA demonstrated a two or more step improvement in the diabetic retinopathy severity score, or DRSS, suggesting activity in both proliferative and non-proliferative diabetic retinopathy Consistent with this, as Len mentioned, positive data from the third-party CLARITY study in patients with proliferative diabetic retinopathy were recently published in The Lancet The medical urgency in this setting is reflected by the fact that the vast majority of proliferative patients are currently treated with pan-retinal photocoagulation laser therapy, or PRP, which has been the standard of care in this indication for almost four decades CLARITY compared EYLEA to PRP and showed that patients treated with EYLEA gained approximately four letters in visual acuity compared to patients treated with laser This was the first time that an anti-VEGF agent has demonstrated superiority to laser treatment in patients with diabetic retinopathy without macular edema According to this published study, compared to PRP, EYLEA lowered the rate of new or increasing vitreous hemorrhage by about 50% and decreased the occurrence of macular edema at 52 weeks by approximately 60% In addition, an improvement in retinopathy from proliferative to non-proliferative was observed in 64% of patients treated with EYLEA compared to 34% patients treated with a PRP There were no new safety concerns observed with EYLEA in this study Inflammation was more frequent in patients who received EYLEA, with 8% of patients reporting inflammation compared to 3% of patients who received PRP New or increasing vitreous hemorrhage was more frequent in the PRP group, with 18% of patients reporting this event compared to 9% in the EYLEA group PANORAMA, our Phase 3 study of EYLEA in patients with non-proliferative diabetic retinopathy without diabetic macular edema exploring every 8 and 16-week dosing, is fully enrolled We expect to report data in the first half of 2018, and if positive expect to make a regulatory submission A separate Phase 3 study in this indication, Protocol W, which is being conducted by the Diabetic Retinopathy Clinical Research Network, or the DRCR, continues to enroll patients This study will explore every 16-week dosing of EYLEA, which is the only anti-VEGF treatment being investigated in this study Finally, on EYLEA, I want to remind you that we expect to have the top line data from our Phase 2 combination studies of EYLEA and nesvacumab, our antibody to Ang2, later this quarter While we have not seen the data, we have been pretty clear about the high bar that EYLEA monotherapy sets for any potential combination studies In our view, the results from the Ang2 combination studies are not central to the eye disease strategy that we have just outlined Turning now to dupilumab, our IL-4/IL-13 blocker that is currently approved for the treatment of moderate to severe atopic dermatitis in adult patients whose disease is not adequately controlled with topical prescription therapies and when those therapies are not advisable, we recently reported positive Phase 3 results from two studies of dupilumab in patients with uncontrolled asthma, LIBERTY ASTHMA QUEST and LIBERTY ASTHMA VENTURE These two studies, in addition to our first pivotal study, enrolled a broad population of uncontrolled asthma patients and demonstrated reductions in exacerbations or asthma attacks and improvements in lung function as measured by FEV1. The VENTURE study, which enrolled patients who required chronic systemic corticosteroids for asthma control, showed that dupilumab could profoundly reduce systemic corticosteroid dependence, with half the patients eliminating this dependence entirely Despite the reduction in systemic corticosteroid usage, dupilumab-treated patients still had prominent increases in lung function and fewer exacerbations compared to the control group Based on these data, dupilumab offers the potential for an important treatment alternative to systemic corticosteroids for these most serious of asthma patients Beyond the profound benefit in terms of exacerbations, I would like to emphasize the importance of dupilumab's demonstrated ability to improve lung function in asthma patients Since currently approved biologics do not consistently improve lung functions and were approved based on their ability to reduce exacerbations, this has resulted in a focus away from lung function in asthma However, one of the most serious day-to-day issues that patients with uncontrolled asthma suffer from and which dramatically impacts their lives is their inability to breathe normally For example, the patients in our pivotal studies only retained an average of 50% to 60% of the predicted SAB1 at baseline, despite treatment with steroids and long-acting beta agonists Moreover, only a fraction of this lung function could be reversed with high doses of short-acting bronchodilators Therefore, we believe our finding that dupilumab improved lung function in all of our clinical trials in addition to reducing exacerbations is an important potential benefit to patients if approved in this setting Results from the QUEST and VENTURE studies along with data from our previously reported and published pivotal Phase 2b study will support the regulatory submission that we and Sanofi expect to make to the FDA by the end of this year As a reminder, the recently reported QUEST and VENTURE studies included adolescent patients between the ages of 12 and 17 years We are also currently conducting a Phase 3 study in pediatric patients between the ages of 6 and 11 years Work on the development of dupilumab in other Type 2 diseases such as nasal polyposis and eosinophilic esophagitis is ongoing Following positive results in Phase 2, I'm pleased to report that both Phase 3 studies in patients with nasal polyposis are now fully enrolled Turning to eosinophilic esophagitis, or EOE, a chronic Type 2 immune-mediated disease that is strongly associated with food allergies, EOE is characterized by pain and difficulty swallowing and the possibility of food impaction, which are consequences of pathological structural changes in the esophagus There are currently no approved therapies in the U.S for the treatment of EOE All corticosteroids are used off-label but with limited long-term efficacy and safety data to support their use At the recent World Congress of Gastroenterology, we presented additional data from our positive Phase 2 study These data show that dupilumab significantly improved swallowing in addition to esophageal eosinophil counts, endoscopic features, histology, and esophageal distensibility in adults with active EOE compared with placebo This safety profile seen in the study was consistent with that observed in the other studies of dupilumab Dupilumab has been granted Orphan Drug designation in this indication, and Phase 3 studies are being planned I'd like to now turn to atopic dermatitis, an indication where Dupixent is approved both in the United States and in Europe In September, we presented positive data from CAFE, a Phase 3 study of Dupixent in patients with moderate to severe atopic dermatitis who are inadequately controlled with or intolerant of cyclosporine, which is approved in certain countries outside the United States This study demonstrated that in these difficult to treat patients, Dupixent in combination with topical steroids significantly improved measures of overall disease severity and patient-reported quality of life measures, with a mean improvement of 80% in the Eczema Area Severity score, or the EASI score No new adverse events were reported in this study We also continue to work on expanding development in moderate to severe pediatric atopic dermatitis patients Turning to immuno-oncology, which is another area of growing excitement for us, I'd like to begin with cemiplimab, our foundational PD-1 antibody Our lead indication is advanced cutaneous squamous cell carcinoma, or CSCC, for which we have been granted Breakthrough designation by the FDA We expect to report interim data later this year and to make a regulatory submission to the FDA in the first quarter of 2018. Our PD-1 program has continued to expand We recently initiated a Phase 3 program of cemiplimab monotherapy in first-line non-small-cell lung cancer This 300-patient study, which is being conducted outside the United States, will enroll patients who express greater than 50% PD-L1 and will compare cemiplimab to standard-of-care platinum doublet The primary endpoint of this study is progression-free survival We are planning additional studies, including combinational studies, in non-small-cell lung cancer as well as clinical trials in second-line non-small-cell lung cancer I remind you that with all the recent failures in this space, there is only one approved PD-1 or PD-L1 agent in the first-line non-small lung cancer setting We also recently initiated a Phase 3 study in second-line cervical cancer With our ongoing potentially pivotal study in basal cell carcinoma, this brings us to four potentially pivotal programs with our PD-1 antibody We also have exploratory studies ongoing in melanoma and head and neck cancer, and we're also conducting and planning studies with cemiplimab in combination with our antibody to LAG-3 in a variety of indications, as well as a number of other combination approaches with cemiplimab, including with our bispecifics Turning now to these bispecifics, we will be presenting further positive data from our CD20/CD3 program both as monotherapy and in combination with cemiplimab in B-cell malignancies at the December meeting of the American Society of Hematology, or ASH As a reminder, the CD20/CD3 program has been granted Orphan Drug designation for diffuse large cell B-cell lymphoma, or DLBCL We are also conducting a combination study of our CD20/CD3 bispecific with cemiplimab in CD20-positive malignancies We plan to put additional bispecifics into clinical trials over the next several years Fasinumab, our NFG antibody, continues to advance in the clinic We are currently enrolling patients in a Phase 3 study in osteoarthritis pain, where we are investigating fasinumab compared to naproxen We also plan to initiate a second study of fasinumab in osteoarthritis pain I'll turn now to our mid and earlier-stage pipeline Nesvacumab is our antibody to ANGPTL-3 for the treatment of severe forms of hyperlipidemia We are planning Phase 3 studies in homozygous familial hypercholesterolemia, or homozygous FH, and Phase 2 studies in severe hypertriglyceridemia and in heterozygous hypercholesterolemia, or HeFH We plan to initiate by year end the Phase 2 study of Regeneron 2477, our Activin A antibody, in the ultra-rare disease of fibrodysplasia ossificans progressiva, or FOP We are also exploring the use of our Activin A antibody in combination with trevogrumab, our GDF8 antibody, in muscle and metabolic disorders Another exciting early-stage program is Regeneron 3500, our antibody to the interleukin 33 ligand, which is in the clinic and we plan to investigate for asthma, COPD, and other indications as both a monotherapy and in combination with dupilumab With that overview, I'd like to turn the call over to Bob Terifay It's just worth noting, obviously, it's going to be a long-term growth opportunity over we think a long period of time By adding additional opportunities to it and combining things, we think we have one of the strongest portfolio of combination opportunities that we've already started studying in the clinic, and more will follow But even the very first indication should not be underestimated If you look at the cutaneous squamous cell carcinoma, there's enormous need there And the actual – it is actually – the number of cases is huge, and it's been largely ignored because the vast, vast majority of them can be treated surgically But because there's something on the order of 1 million or 2 million cases, and even though something like over greater than 95% are treated surgically, that still leaves an opportunity of unresectable or metastatic disease, which is on the order of magnitude of melanoma And like I said, I think it was largely ignored by the community because of the perspective that though it was one of the, if not the most common cancers afflicting patients, the vast, vast majority are treated successfully with these Mohs type surgeries and so forth So the important thing to recognize is, even that first opportunity, there's a lot of need there There's a lot of patients who are failures or cannot be treated with surgery And that opportunity is on the order of magnitude of melanoma, which as we know was a huge growth driver for the two original PD-1 agents I think Len made all the important points, and let me just echo The most important point is that where the need right now in diabetic retinopathy is perceived as the most urgent is in proliferative eye disease, there are roughly 0.5 million such patients in the United States And 80% or 400,000 of them receive ablative laser therapy, the most serious of laser therapies And now with the CLARITY data, one has a head-to-head comparison showing by every measure, from visual acuity to, just as importantly, halving the risk of developing vitreal hemorrhages, reducing by almost two-thirds the risk of developing macular edema, this is something that I think patients deserve to have access to and deserve to get in this setting, because without ablating their retinas, they can have better vision and better outcomes and avoid catastrophic events like vitreal hemorrhages I think that the 2 million or so people who have diabetic retinopathy that's considered a little less urgent, I think that this could be an important advance for those patients as well, and already, all the existing data suggest that But I think that there will be probably slower uptake It will be a longer haul to change the practice of medicine there, where many of those patients are treated with a wait-and-see attitude because they haven't had a drug like EYLEA thus far But I really do think in proliferative eye disease, 500,000 patients, those patients deserve to get a therapy that's been shown in a head-to-head study to be so substantially beneficial, not only in terms of visual acuity, but in terms of preventing catastrophic outcomes, which is why they're treated so urgently with ablative therapy Maybe just to put it into a little bit of context, as Len said, we did three pivotal studies And in the overall population, as Len said, it's hard to compare across studies, but I don't think anybody would argue that in the overall population, even in the worst of the three studies in terms of the numbers, they look quite comparable to the high eosinophilic groups for either approved biologics or for near-term biologics that are coming down there And obviously, we also have even better data in the high eosinophilic patients And as Len said, I think the most important differentiator also has to be, not only do we have comparable results to what others have in the high O's in the overall population, but we have these lung function results And I think that this has been just, as we tried to communicate during our prepared remarks, this has been somewhere where the field has been going away from, only because biologics to date have not been doing such a good job If you remember the way Xolair got approved, up until that point, lung function was the standard for approval But because Xolair had no effect on lung function, they switched the focus to these exacerbations, which obviously are very important and so forth But if you know anybody with asthma, you know that the thing that they suffer from and they worry about on a day-to-day basis is the shortness of breath that they can suffer from with a little bit of exercise or some other trigger that they might be suffering from And I think it's really important to recognize that the results on lung function are really impressive, not only on the overall population, but even more impressive in the high eosinophilic population So once again, I think if anybody honestly looks at the data and looks at the effects, not only in the overall population, not only on exacerbation, but also on lung function, you would think that this is the treatment that patients deserve to be given to benefit their condition, and not only in the high eosinophilic patients but the overall population And I just want to add to that Len brings up a really good point, which is that part of our clinical development plan is actually to do studies where we show that in the same patients, we will be able to benefit multiple allergic conditions And that is I think something that, if you know people who are suffering from any one of these severe allergic conditions, whether it's atopic dermatitis, for example, or severe asthma, they generally are suffering from other allergic conditions as well And wouldn't it be wonderful if there was a drug that was a central driver of all of allergic disease that could benefit essentially all of the allergic manifestations in a single patient So that is part of our clinical development plan going forward, that we are going to be doing studies to actually be able to show that, hopefully And we don't think there's any other current biologics out there that even have the opportunity to consider the possibility of doing those studies Josh, let's just close on one point that I think maybe we didn't even emphasize enough is that the other thing that's really important about dupilumab is we really do have an extensive clinical development profile from the safety point of view, and that's building every day in the commercial point of view And going forward in this field, Dupixent has now set an extremely high bar I believe, not just on the efficacy side but on the safety side In the rheumatoid arthritis field, people, because biologics came with a cost, are willing to accept that cost because they had great efficacy We've got really what I think is terrific efficacy but also almost unprecedented safety that we've seen thus far in our clinical trials We really haven't seen the kinds of immune dysfunction problems that you see when you block other angles of the immune system

2017_REGN

2015

LPNT

LPNT #I think of those two questions definitely the larger hospitals more stability, less volatility, a bigger mix of surgical volumes versus medical volumes happening in those larger markets, so larger, faster growing markets for sure to <UNK>'s point will create stability. The expansion state seem to have more stability as well from a volume standpoint. That's not just inpatient volumes but outpatient volumes as well through the ED and through our physician practices also. So states are more mature in that like the state of Kentucky where it was one of the early adopters that got off to a quick start, some places like West Virginia. I think it's too early to say that there is a definite difference between expansion and non-expansion but trends are starting to emerge that that appears where there is a little more stability, at least here four quarters into the expansion. Andy, it's a great observation. I think as the Q comes out and you can calculate on the press release we're well under three times leverage as we finish up the quarter. But as we complete the pipeline that we have defined here we're likely going to see leverage that's north of 3.5 times and depending on certain other transactions that come through could approach 4.0 times EBITDA at least on an LTM basis from an EBITDA perspective. So we are consistent with our past practice of being very judicious about when and how we deploy the stock buyback program. So as you think through those numbers and <UNK> mentioned valuation, we are still in terms of valuation here the transactions that are closing today and through the end of the month have an average multiple of revenue that's less than half a turn. Even with the addition of the two larger transactions we'll finish 2015 with purchase price less than 50% of revenue but it will still drive leverage up to the 3.5 to 4 times range. So we will be thoughtful about the balance sheet and we will be thoughtful about the pipeline and utilize stock buyback as a use of our cash when the pipeline is thinner. And we'll utilize acquisition as the pipeline is as strong as it is right now. So Andy, with regard to the divestitures that we did recently those are all of the divestitures that are expected at this time. Our decision to sell a hospital comes only after a great deal of consideration. We don't take those decisions lightly. Ultimately we came to the conclusion that those hospitals fit better with our provider with a stronger regional presence that could devote resources that were needed in those communities. So to be clear these are the only divestitures that we have in mind, always recognizing that we have an obligation to constantly look at everything and along that line with regard to your second question we're very focused on creating value for our stockholders. We've studied these REIT structures over the years. It's not new. We have certainly refreshed our analysis as they have become more popular, apparently recently. But this structure is just one of many options that are available to attract capital and we have great access to capital. So I think that's the answer for that. Great, thank you very much. In conclusion let me just say our teams are executing on the priorities that have and will remain our focus, delivering high-quality patient care and service, growing in existing markets and through acquisitions, continuously improving our operating efficiency and developing high-performing talent. As we've said on our call today our acquisition pipeline remains active. Our integration processes are effective and scalable. We have the opportunity to build on our momentum, grow EBITDA and cash flow and create meaningful shareholder value in the coming years all while making our communities even healthier. So thanks to all of you for joining our call today and thank you for your interest in LifePoint Health.

2015_LPNT

2017

PEP

PEP #Thank you, <UNK>, and good morning, everyone As you saw on this morning's release, we concluded 2016 with another strong quarter of operating performance, capping off a very successful year The operating environment continued to be challenging in 2016. So in this context, I am pleased to report that we achieved or exceeded each of the financial goals we shared with you at the beginning of the year To recap, we grew organic revenue 3.7%, in line with our goal of approximately 4% We met our goal of expanding core operating margins, which were up 80 basis points compared to 2015. Core constant currency EPS grew 9% versus our initial goal of 6% Keep in mind this includes the impact of deconsolidating Venezuela, which was approximate 2.5 point drag on earnings Excluding the impact of deconsolidating Venezuela, core constant currency EPS grew 12% We generated $7.8 billion in free cash flow, excluding certain items We substantially exceeded our goal of $7 billion Core net ROIC expanded by 190 basis points and now stands at 21.5%, well in excess of our cost of capital And we met our goal of returning $7 billion in cash to shareholders through dividends and share repurchases, bringing our 5-year cumulative shareholder cash returns to $38 billion And reflecting our continuing commitment to providing attractive cash returns to our owners, I'm also pleased to announce that we are increasing our annualized dividend per share for the 45th consecutive year beginning with our June 2017 payment, to $3.22 per share, which represents a 3% yield based on yesterday's closing share price We had notably good operating performance across our operating segments for the year Our two largest divisions, Frito-Lay North America and North America Beverages, each had strong well-balanced performance with volume gains, net price realization and margin expansion, driving high single-digit core constant currency operating profit growth And despite the macro volatility and weak currencies in many of our key overseas markets that impacted our reported results, our international divisions delivered very solid organic revenue growth, led by high single-digit growth in our developing and emerging markets businesses as a group, with particularly strong performance in Mexico, China and Egypt, which grew organic revenue in the double digits Our results reflect our commitment to plan and manage our business in a way that's self-sustaining and balances delivery of attractive short-term financial results with long-term shareholder value creation We achieve this by executing a virtuous circle model that combines top-line growth, productivity and significant reinvestment in the business Our top-line performance is underpinned by strong market positions in growing categories and an enviable portfolio of leading brands And it is fueled by a product innovation engine built on consumer and shopper insights, deep research and development capabilities, and the broad market reach afforded by our advantaged go-to-market systems Our top line growth is also supported by strong collaborative customer relationships Customers value our relationships with them because we deliver growth Our brands and products drive basket size and an extremely high velocity off the shelf, and therefore generate significant cash flow for our retail partners Our customers value our robust innovation, the in-store labor benefits of DSD [Direct Store Delivery], and our sophisticated consumer and shopper insights The strength of our customer relationships was evident in the most recent Kantar Retail PoweRanking in the United States, where we achieved the top spot as the number one best-in-class manufacturer, and we earned top marks in the individual categories of most important brands, use of digital platforms, insights and category management, growth and profitability, supply chain management, clear company strategy, and sales force and customer teams Beyond this impressive recognition, our capabilities and diligent execution enabled us once again to be the largest driver of growth for our food and beverage retail partners in the United States, which is our largest market In fact, while we represent less than 10% of retail food and beverage sales, in 2016 we drove 18% of the total retail sales growth of food and beverage This compares to a net decline in sales for all other $5 billion-plus manufacturers combined Our success is also supported by an aggressive and relentless drive for productivity that contributes to current financial performance and provides the funding for investments that will sustain our growth into the future These substantial investments have largely been directed at capabilities that fuel top line growth So to strengthen our brands, we've increased our advertising and marketing as a percent of sales by 145 basis points over the past five years and increased it by 40 basis points in just this past year alone At the same time, we have directed a higher percentage of our A&M budget from non-working A&M to consumer-facing working A&M to increase returns in our A&M spending And we have strengthened our capabilities in digital marketing, enabling us to execute marketing campaigns that seamlessly weave together social media, traditional media, and point of sale for greater impact We've increased our investment in R&D by 45% since 2011 and have spent approximately $3.5 billion on R&D and food quality and safety initiatives cumulatively over the past five years In addition, over the past several years, we have amplified our own financial investments in R&D by expanding and strengthening our relationships with key strategic suppliers and academic and research institutions to leverage their capabilities to our benefit We've also established a global design center staffed with world-class creative talent Increasingly, we are incorporating design beginning in the earliest stages of innovation to take into account the entire purchase-to-consumption cycle, and this is resulting in the creation of not just products, but truly memorable experiences for our consumers Our R&D capability investments have led to the creation of new products in the short term and to the development of new platforms, ingredients, and packaging with longer-term potential for breakthrough benefits, such as sugar, calorie, fat and sodium reductions, and more sustainable packaging alternatives Under this robust innovation agenda, net revenue from new products, which we define as products introduced within the past three years, has averaged more than $5 billion since 2013. And we are pleased to report that in 2016, PepsiCo accounted for over 17% of innovation sales at retail, as measured by IRI in the United States, more innovation than from the next four innovation contributors combined And it has also advanced our portfolio transformation For example, we launched a number of new low and reduced calorie drinks in 2016, such as new recipes of Mirinda and 7UP with 30% less sugar, which is rolling out in over 80 international markets Meanwhile, we saw great momentum across our nutritious and functional beverages Naked Juice is on its way to being our next $1 billion brand, while Tropicana launched Tropicana Essentials Probiotics, making it the first brand to bring probiotics to the mainstream juice consumer Gatorade Frost exceeded $1 billion in measured retail sales, pushing Gatorade over a high watermark of $5 billion in measured retail sales And our Russia team launched a new J7 apple juice that delivers all the fiber of a single apple in every glass At the same time, we grew our portfolio of healthier snacks with Quaker Breakfast Flats, a snack we plan to roll out in more than a dozen countries over the next two years We are building on the success of Baked Lay's by broadening our lineup of baked products And we're expanding Sabra, a brand that generates roughly $800 million in estimated annual retail sales We are expanding it beyond hummus into a range of products, from guacamole and salsa to Greek yogurt dips and spreads Simply put, when it comes to transforming our portfolio, we are making considerable progress In fact, some people are surprised to learn that our beloved Pepsi-Cola trademark accounted for 12% of net revenue in 2016. What we refer to as everyday nutrition products account for approximately 25% of our portfolio by net revenue These are products that include positive nutrients like grains, fruits and vegetables, or protein, plus those that are naturally nutritious like water and unsweetened tea And what we refer to as guilt-free products comprises about 45% of net revenue This broader definition includes the everyday nutrition products plus diet beverages and other beverages with fewer than 70 calories per 12 ounce and snacks with low levels of sodium and saturated fat We've also made disciplined investments in our physical infrastructure Over the past five years we've invested approximately $14 billion in property, plant, and equipment to support the growth of our business, maintain a safe work environment, use less energy and water, and achieve the highest levels of quality and safety in our products We also recognize that we're living in an era where all of our stakeholders, from shareholders like you to our consumers, associates, and partners, are all increasingly expecting corporations like ours not only to make a profit, but to do so in a way that's responsive to the needs of the local communities where we operate And that's exactly what we've been doing, making investments to lift up farmers and workers, small businesses, families and children, from Mexico, where Quaker launched a pin oat malnutrition prevention trial with over 1,000 low-income children; to Pakistan, where we tripled the number of girls benefiting from our I am PepsiCo mentoring and social program; and forging strong ties with local communities Forging strong ties with local communities isn't just the right thing to do It's also the right thing to do for our business, reinforcing the bonds that will sustain our success over the long-term And finally, we are investing in our most valuable asset of all, our people by: expanding paid family leave; adopting flexible work arrangements; enhancing our learning and development programs; and many other actions We are building a workplace that is diverse and inclusive and that will continue to attract the top talent in industry in all levels of the organization In summary, we've established solid momentum in our business, with strong financial performance generated through a healthy balance of top-line performance and productivity And we have made, and will continue to make, investments in capability and infrastructure that we believe will strengthen the competitiveness of our business and lengthen the duration of our financial returns Our results for 2016 reflect the effectiveness of this approach and gives us confidence in our ability to continue to perform well going forward With that, I'll turn the call over to <UNK> to cover the 2017 outlook Good morning, <UNK> <UNK>, go ahead Well, thank you I'm going to let <UNK> answer this I'll just tell you one thing, <UNK> As I mentioned in my script, investments in A&M, R&D, those we're not backing off of We've increased investment in A&M We've increased investment in R&D and we'll keep investing money in areas that drive the top-line growth of the company, but, <UNK>, why don't you talk about the SG&A productivity plan and the share repurchase guidance? And basically what we're saying is what is under our control, we intend to execute very well And then, whatever happens in the macro environment, we'll try to manage through it as best we can Good morning, <UNK> <UNK>, go ahead This is all walking through the P&L and balance sheet On DSD, DSD is the strength of our company Given the nature of our categories, which are high velocity, relatively low value density, DSD is critical because they're impulse, and how we merchandise the product really drives the growth of the category So we are totally committed to DSD And we continue to make investments in DSD to modify it as we go along to account for whatever disruption happens in the retail channels So PepsiCo remains committed to DSD Regarding the beverage outlook in North America, we've always tracked liquid refreshment beverage growth as a whole We've expected for the past decade or more that there will be shifts within the category from carbonated soft drinks to non-carbonated soft drinks, and we've managed the portfolio accordingly So I think you should focus on LRB [Liquid Refreshment Beverage] as a whole And our expectation is that the overall LRB category will grow slightly above population growth and around GDP growth And that's really what our anticipation is for the LRB category growth going forward Yes, good morning In the case of share in North America, we track LRB share We track savory share We track salty share, macro snack share We track it every which way And as we've always said, we want to make sure we balance share growth and profitability very, very judiciously Our goal is never to hit the pricing lever too much in order to gain share We want to make sure that we keep the pricing architecture across our portfolio very, very consistent over the quarter and over the year So I wouldn't worry about small perturbations in share in any one quarter, in any one category This is something we monitor very, very carefully And I'd say both Frito-Lay North America and our North America Beverage business as a whole are doing well Gatorade, in particular, is one of our crown jewels, and the business is performing very, very well We have a leadership position in the isotonic category And the business is performing exceedingly well in the category, which involves active thirst, which is really what we track So, <UNK>, let me turn it over to you to answer the first part of the question Good morning, <UNK> I think that's way too detailed a question, <UNK> I'd just say that over time, across the company, not just Frito-Lay, but across all of PepsiCo, we have actually dialed up our revenue management capabilities We've built revenue management centers of excellence across North America And we've improved our understanding of household down to a very granular level that allows us to tailor products and packaging for individual households and get the price utilization we need, because we can put the right assortment on the shelves based on the trading area of that particular store and the households that that store targets I think that's what drives revenue management And you're going to see that being deployed across North America And hopefully, that'll result in better revenue realization as we go forward <UNK>, good morning Good to hear you The Mountain Dew franchise is alive and energetic, pardon the pun If you include regular Mountain Dew, Diet, all the variants in Kickstart, it's a thriving franchising and perhaps one of the best-performing franchises in the CSD universe And we intend to continue to invest behind Mountain Dew We intend to continue to invest behind Kickstart and the franchise is doing well Regarding Diet Pepsi, we had a bit of a hiccup with Diet Pepsi with the rollout of the aspartame-free product, but now with the relaunch of the zero-sugar Pepsi, putting it on the Super Bowl, we're back in business It's a great tasting product It is a great tasting product In fact, I'd say it's the best tasting diet in the market Try it And I think our plan is to invest behind the zero-sugar Pepsi rollout and make sure that it is the diet for the Pepsi portfolio And on demonetization, across the board for pretty much all of industry and CPG in particular, because it hit the individual retailers significantly, demonetization had a significant impact on our India business in Q4. And there's still some lingering effects I'm not sure we are totally out of the woods It's a big country, a massive change because it's currency that was about 80% of the circulation out in the country that was taken out of circulation, and the implementation had its share of challenges So our hope was that by the time Q2 rolls by, we would be through the bulk of the demonetization challenges And the new currency and the digital currency will be back in circulation and we'll be back to retail activity coming back to normal We are basic food and beverage I don't believe political actions impact consumption of our products And we're not seeing any deterioration in activity versus our products, and the market growth continues Thank you for your questions So to summarize, we are pleased with our results for 2016 and that gives us confidence in our performance as we enter 2017. We are committed to continue to manage everything within our control in what we expect will be a volatile and uncertain macro environment in order to deliver attractive results in the short-term, as we continue to position the business for long-term success Thank you all for joining us this morning and for the confidence you have placed in us with your investment

2017_PEP

2015

ALEX

ALEX #I can't go into a lot of detail, <UNK>, because our discussions are confidential but just in general as we look at the business we do recognize that production going forward is going to be limited, certainly not limited to the levels of this year we don't believe because this year has been a real outlier in terms of weather and production. But when we just look at the business model really the lever that we think is potentially most constructive to try to pull is the revenue per ton of sugar. And so that really leaves us needing to look for ways to enhance our revenue model. And so that is what we are focused on talking to customers about our ability to generate incremental revenue and hopefully shift some additional risk of the business and the volatility of the business to customers. And that is about all I can say. Yes, that is right, <UNK>. One thing we have concluded just to put this in perspective. This plantation is 2.5 times the size of Manhattan and so it is a big, big operation and to transition it to one crop is very challenging. So what we have concluded is that we are probably best off looking at multiple uses of the land. There are different microclimates, there are different soil qualities and so what we are looking at is more of a diversified approach as opposed to a mono crop which is what we have today. So that is exactly what we are evaluating is a more diversified ag operation with maybe several different components. Yes, <UNK>, thank you. Let me ask <UNK> <UNK> to comment on that. The Macy's building is about a 60,000-square-foot building that Macy's is giving up. They currently ground lease that from us and that lease will expire in the first quarter of 2016. Our current plan is to take back the building and split it up into multiple units for primarily restaurant and small retail base and our hope is to get that online as quickly as possible probably in early or mid-2017. <UNK>, this is <UNK>. So what you are seeing is essentially we have a 70% interest in GLP Asphalt with another member owning 30% and the other member actually has an option to redeem his membership interest at the greater of book value or a calculated formula. So in the past there wasn't really a material or significant difference between those two figures. In 2014, GLP had pretty strong performance so if you looked at the calculated value, it exceeded the book value and under GAAP what we are required to do is allocate that increase in net value to the noncontrolling interest which means that the earnings available to A&B shareholders is reduced by that amount. So I think the adjustment was about $1.3 million for the quarter. It did not, no. It is really based on the performance of the entity and what I would say is that it could go both ways. It is hard for me to predict and give you guidance that it will always be negative because I think it can also be positive. So again, it is based on this calculated formula and because of that it is a little tough to really model in specific sort of impact from it. Steve, this is <UNK>. Let me ask you to clarify. When you talk about turnaround, you mean turnaround in performance in the sugar business or a transition if we were to make a decision to transition to something else. So first of all, I think if we were on the former on the sugar front, if we were able to have some favorable outcome in some of our discussions with our customers and then we got back to normal weather patterns next year, we could have a very different financial outcome, a very significant turnaround in that sense in the sugar business. And that is why we have remained hopeful that we could turn the business around. Should we decide to go a different direction and make a transition then the first thing to know is we have all of our fields planted or most of our fields, we plant them immediately after we harvest them and so most of our fields are planted and we have a lot of sugar out in the field. So it is probably a 1 to 1.5 year process simply of harvesting the balance of the sugar. And then and then there would be transition time into alternative crops or alternative uses. So you are probably looking at a two-, three-year timeframe on the short end of transitioning and probably to ever make a full transition could take even longer. It is really hard to say and it depends on what uses we transition into so not trying to be vague but it really does depend on exactly what we do with the land. Steve, it is <UNK> <UNK>. Primarily the change in the quarter relates to two properties, Pearl Highlands Center and Waianae Mall, which had some occupancy adjustments that brought down their total NOI for the quarters. However on a year to date basis, the total retail portfolio NOI has grown over 8%, almost 9% and again that is a significant part of our portfolio in Hawaii. Steve, this is <UNK>. Unfortunately we don't comment specifically on acquisitions that are in progress but what I will say is that we are continuing to look at urban Honolulu type deals that have a nearer-term horizon than starting from ground-up as well as continued interest in suburban residential opportunities in West Oahu and similarly continued interest on the commercial portfolio for income properties. Steve, I would only add to that that the reference that I made to the fact that we are hopeful that we would be able to announce a deal by the time of our next call, what I'm referring to there is a deal that we hope to be able to consummate on the commercial portfolio, not a development deal. Although as <UNK> indicated, we are still very actively looking at development deals. Yes, it is our expectation that it would be funded primarily if not entirely with 1031 proceeds. They could be as usual from Mainland dispositions. It also could consist of some 1031 proceeds from land sales in Hawaii as well. Certainly the government contracting is coming out at a much more robust pace than we saw last year and so we are pleased with that. The little bit of a delay right now in some of the projects is related to them issuing the notices to proceed once they have announced the winning bidder and contracted for the work. So that timeframe usually ranges from three to six months. Right now it tends to be more towards the six-month side of that range than the three-month side but it is we are happy to report getting a little bit better. So as the city has gotten more comfortable putting out this level of work, we have seen some progress in their ability to do so more efficiently than they did in 2014. How you should think about that project is it is phenomenal. If you want more detail, I can say yes, we have had a couple of very big sales in Kahala this year and some smaller sales as well. We are very much on track with our original underwriting. We have a little bit more than halfway through our original four-year kind of timeline for selling out the project. We have sold about 70% of the lots and about two-thirds of the acreage so that has been going very well and we are pleased with it. Having said that, we do still have I think about nine lots remaining and so we do have some inventory. The only activity that I would anticipate the balance of this year is one mountainside home that is under right now a nonbinding contract but knock on wood, we feel fairly good that that will move forward. Compared to some of the oceanfront stuff, it is a relatively small transaction but we continue to have good interest in the properties on Kahala Avenue and while we can't predict what will happen next year we feel very good about where we are and hope to have some more activity next year. Again there I would point to what we have done year to date having sold 18.4 acres is a pretty darn good result. We do have, we did have in October a closing of a couple of parcels comprising I think about an acre or so. I don't think you should anticipate anything else in the fourth quarter at Maui Business Park but we do have some stuff that we are optimistic about next year. Yes, so as far as closings, we do expect to complete the building. Construction is on schedule, we expect to complete the building next November which would set us up for closings at the end of next year. It is possible that some of those closings could spill over into 2017. So I'm certainly not in a position to say that we would have all the closings in 2016 but that would be our hope and expectation. And I don't want to misquote the capital number. <UNK>, do you know. I can give a range. I believe we are in the $52 million, $53 million range.

2015_ALEX

2017

MINI

MINI #If we look at the downstream segment, we saw stable business in the quarter. There was not that much turnover activity as we would have liked. But that's purely timing issues. I think for 2017 we expect a lot more turnaround activity for that segment. The pipeline looks good at this point. In the upstream markets, we did see some more rigs coming online, more activity toward the end of the quarter, but it really didn't translate into some big shift in our numbers yet. If this continues we should see it pick up in that segment, but it hasn't really translated into more business for us just yet. On the cost side we had a little migration of fleet, higher R&M and higher bad debt on some accounts, so I'd say it's somewhere close to $1 million of incremental or above-normalized costs in the quarter for specialty containment, which we don't expect to continue. It was concentrated on, I'd say, a handful of accounts, not a concern from an ongoing revenue perspective. At the end of the day, even when you look at the increase in bad debts, we're still running only somewhere around 2% of revenue for a full year. So we feel good about the customer base and any type of bad debt, especially going forward, it was just a few account true-ups, basically. Sure. Again, these things are obviously driven by the customer, and when they choose to do their turnaround activities or not. The fact is, over the last couple of years, there's been some major delays or postponement of turnaround, so we feel very good about them actually happening here in 2017. I will not pinpoint the quarter, because I can't really do that. But like I said, we feel confident that they will happen. Pricing has been remarkably stable in the specialty containment segment. There are pressures, obviously, and negotiations taking place, but we have been able to keep our rates fairly flat, actually, on a year-over-year basis which we're obviously very happy about. Thank you. On construction, I think we see a solid, steady demand. We are actually fairly optimistic about 2017 here in that segment. <UNK> has said the year has started off fairly well for us. The industrial/commercial segment is largely the downstream segment that I mentioned before, and again, we feel good about the year and good about the pipeline we see at the moment, and the prospects that we have to go after during the course of the year. It's largely construction activity or a reflection of the customer mix that we have. It's not a typical turnaround month for customers in the downstream segment, if you like. I'd say it's a general mix of business that we have, have all responded fairly well to our activities. We're taking a lot of business. We feel confident about those three ---+ all our end segments, but the construction, industrial, as well as the retail consumer services. I think in general, retail was very solid, but the seasonal obviously was up a couple thousand units as <UNK> highlighted, and somewhere probably around $1 million in rental revenue, Q4 over Q4. That's how we translate. In general, I would say the environment is solid for us. And we've invested in some great talent on our national sales side, so that's actually driving some nice retail business on a more national basis. No, we did not. This was across the country, and like <UNK> and I said earlier, it had a lot to do with the way we executed against these large retailers. So I think we did a much better job than we have in the past, and as a result we grew that business very nicely. Just geography-wise, I'd say we're doing a good job in the southeast, the Midatlantic, California is doing pretty well. That's just broad brush across all end segments, but we're not seeing any weakness geography, from a geographic standpoint and that includes the UK. There's uncertainty with Brexit and all that, but we had a record quarter there. No, I think we have implemented all the actions that we talked about in our Q3 call. So we have put in place a much better onboarding process. We have expanded our inside sales managers from 8 to 14, and they're all onboard. We have put in place a much more structured coaching environment, et cetera. So all the pieces of the puzzle that we believe are necessary are in place, and it's just a matter of letting these things now work through and take hold. So I believe we've done what's necessary and we should see the impact here over the coming quarters. Yes, absolutely. We have state-of-the-art technology for our sales team. We made significant investments in 2015 and 2016. We use www.salesforce.com and we built a proprietary territory management system to support them, et cetera. So those pieces are also in place. There's nothing further to come at this point. Fair enough. For the quarter it was basically down about $3 million, and what I'd call incentive comp, $1 million in bonus and about $2 million in stock comp. So it's basically where we hit our internal targets, we actually trued up in Q4, so that's ---+ if we adjusted for that, we'd probably be down 200-ish basis points or so from an EBITDA margin perspective. I would say there's a mix component. Obviously it's more ---+ the decline is on some of the higher-priced units on the upstream side, which rent for a higher price than our average unit, so I'd say, yes, a mix is a part of that. As you look at our OEC utilization on the downstream side, that was, I'd say, very solid. So it really has to do more with the decline on the upstream side at higher pricing, basically, per unit. I'd say we continue to be focused on that, but at the same time we'll repurchase shares on an opportunistic basis. Obviously we buy about $4 million worth of shares at less than $25 a share in Q4. So I would say the focus is to continue to bring the debt down from 4.9 times to slightly below 4 times. But still repurchase from time to time. So it's going to be a balancing act, but our eye is on reducing debt and bring down our debt multiple. Thank you very much for participating on this call and we look forward to speaking with you again with our Q1 results. Thank you.

2017_MINI

2017

MOV

MOV #I think in this environment it gives us a great deal of flexibility in terms of what we can do and provides a solid foundation and security for the Company. Obviously, you are also ---+ there may be ability to repatriate significant portions of that cash in the future. And we have bought back stock through a plan to offset dilution, as well as continue to pay a dividend. Okay, Matt. I will address a little bit of that and just a little clarification. As I mentioned in my comments, the cost savings initiative will predominately impact the first quarter with the remainder happening throughout the rest of the year as far as the charge goes. We will identify that in our first-quarter results as well as throughout the year and identify the amounts to you. It is predominantly in our operating expenses. It will be a little in gross margin, a little bit in our ---+ the remainder being in OpEx. And the annualized number is $15 million. The number for this year, the savings would be $12 million. And since we've just kicked it off now, being March, you're going to have a partial impact in this first quarter with the remainder happening throughout the year as far as the savings impacting favorably to the P&L. I think inventories have been declining and you're seeing that and especially since for us our year-end is in January and retailers use that period of time to bring down their inventory and continue to focus on that in Q1. What we are very pleased with is that the quality of our inventory, both our own and in the marketplace, is of excellent quality and that's something we always focus on. We don't have a big role in those other off-price retailers and I think that's a fairly segmented business, so I wouldn't ---+ we don't really particularly know that. But we were very pleased with our trend in the fourth quarter in our own outlet store, especially given the fact that traffic continued to be down. But when people came into the mall and came into our stores they bought watches, which further affirms to us the fact that the consumers continue to be interested in nice watches. I think we have done that in the past, so we are not averse to it. I think in Q4 we generally have bought more stock back I think in the first half of the year generally than in the second half of the year. <UNK>, I will try to address a little bit and perhaps someone would want to add a little color. We do have some seasonality to our gross margin. Our gross margin in the fourth quarter is historically lower. We have a certain amount of fixed cost, [for instance], so in a smaller quarter, which the fourth quarter is one of them, it's hard to leverage some those costs. If you go back and look perhaps two years ago, we are right in line with where we were. We were not highly promotional so the decrease was a function of mix of where it's selling and what's selling and so forth, but we are not in a highly-promotional situation as perhaps maybe some other people are. And I think just to add to Sally's, it's basically, we believe, directly related to volume. So the fact that replenishments were lower in January would certainly have an effect on our gross margin and mix and being able to leverage the fixed production costs in that. Some of our cost cuts are also in the gross margin area as well. Yes, that's fine, that's fair. I would like to thank all of you for participating on today's call. We look forward to talking to you during our first-quarter conference call. Thank you again.

2017_MOV

2016

VIAV

VIAV #Thank you. It's roughly ---+ it's for the full year, right, talk about the full-year 40/60, but it's (multiple speakers) It is. It is again, this is ---+ this has some, still some tail to it, the mature product. It did improve, in the sense of growth products did improve on a sequential basis, as well as on a year-on-year basis. So just to give you a little bit more color, the growth business which has for the enterprise and the assurance piece, did grow double-digit for the full year. For FY16, it did grow double digit, whereas the mature business declined double-digit. And so, overall, the business was declining, because the mature business was a bigger mix of the growth business, when we started the year. And that's now shifting. Does that help. Yes I think, just my view and obviously some of our salespeople may ---+ they may indicate that we may might have had a little impact, but largely, it was largely immaterial, because a lot of our sales are ---+ go through the sales force, and some of them are contractors who service Verizon network. So we did not see much impact on the more field side instruments. Now there were some delays on the higher end, high-performance product. But I would say generally, we were not as heavily impacted (multiple speakers) And they were already in our Q4 ---+ Yes. And when we guided you, we already ---+ if you recall, we had already mentioned it, and we had baked it into our forecast, the impact. And it came in, as <UNK> mentioned, in line with our expectation. So we have a very strong position in North America. So as a result, we are more impacted by fluctuations in North America, because we have pretty high share with all of the major carriers. And to the extent, things go up, and down, it does impact us. In Europe, we're significantly lower, I'd say positioned in terms of market presence. So in many ways, by putting more focus on, we are able to offset any fluctuations through share gain. And as I mentioned earlier, we are reviewing our sales strategy, and how we go to market, and Europe is one of the areas that is getting significantly greater attention. So to some extent, we, it's easier to move the needle in areas where you're relatively a smaller player. And so, to the extent they may have, overall trend may be down, but by us picking up share, we are ---+ we can look better than the market. And just to ---+ Can I just, to clarify one thing, which is a very important point, we have NSE and OSP, NSE also grew to <UNK>'s point, and what he saw. OSP also grew in Europe, because that's where you're seeing the growth in our OSP revenue overall. Europe did grow. That's right. Well. I think in generally, at least ---+ in the end, all products grow to the cycles, right. As you go deployment, you have a high growth. And as things become ---+ a technology becomes a little more mature, it slows down, and then just waits til the next cycle. So at least in the near-term, anything optical, I think is going to be by far a stronger ---+ will have a stronger momentum in terms of growth, than anything relating to copper I would say. So clearly, there's a lot of build out with our Metro 100 gig. We all heard about it. I mean, we've seen the results from a lot of the module manufacturers, and it's clearly creating a lot of pull and a lot of growth. The other area that we are seeing, coming onto the horizon is the DOCSIS 3.1 deployment. And that is ---+ there is a bit of a lag, because the first thing the service providers do, is deploy their core of the network, under the backend of the network. And we seeing pretty good results with Arris and others that are selling into that market. Once that is deployed, and we expect that to be coming to an end more or less, they're going to start rolling out the upgrades to the field. And that's where a lot of our opportunities come in. So we expect towards the end of the year, the cable products to start picking up. And that cycle is not a very fast and sharp and short cycle. It's more of a gradual, kind of multi-year upgrade cycle. So that's kind of the second thing we are looking at. And the third element is, as we see more and more copper getting replaced with fiber, such as pushing fiber all the way to the antenna, to the home. We're seeing healthy demand for a lot of our fiber inspection equipment to ensure ---+ avoiding damaging equipment when you make a connectivity of fiber to the home, or fiber to the antenna, and things like that. So on that thing, it's a ---+ usually you see the biggest demand is whenever the network gets upgraded, because then people rethink what is their current assurance or their location intelligence solution. So I think there, we're seeing clearly, a lot of people looking to do anything with the edge. There is much more opportunities that we are seeing in terms of potential leads on the edge of the network, of wireless edge. Less so on the core, because core upgrades happen far more infrequently. And once you are kind of committed to a particular platform, it's very difficult to penetrate or dislodge it. But I think most of our opportunities that we are seeing are on the edge. And once you win those, later as the customers upgrade the core, we come in with our solution into the core. But so in that respect, Arieso is clearly the technology, where we are seeing continuous interest and demand. Well, I mean, the cash is not burning a hole in my pocket, and there's many ways ---+ things we can do with cash. And we always have to assess opportunities; does a M&A create value for shareholders or destroy it. And also we have to take opportunities. We can use that cash for stock buybacks or retiring some of the debt. So in that respect, we clearly want to do the thing that give ---+ makes the most impact to our overall value of the Company. So clearly, the acquisitions are interesting but ---+ and we have our short list. But at this point, we do not see anything that is actionable enough, that will meaningfully the needle. And in case of buybacks and retiring debt, clearly the market has been having a great run. So we've been very opportunistic in selling Lumentum stock. The company is doing really well, and we wish them to continue to do well, because it benefits us tremendously. To the extent, the winds shift the other way, clearly, we'll be more aggressive and active buyer of the Viavi stock. Well, I think, historically NSE business was predominantly NE business, selling core instruments, right. And at least the way I understand the history ---+ as the company became more and more focused on developing and acquiring more software businesses, we had quite an attrition in our sales force, among the instrumentation sales force, and we brought in more of the solution sales talent. So the mix of sales people on the street, and the focus have shifted somewhat away from the instruments. And as a result, we've seen some headwinds in our instruments sales, and think to an extent, that we might have lost some share. What we are trying to do, is to do some rebalancing, so to say swing the pendulum backwards, not all the way I mean, because we have a very nice SE business that we continue to invest. But the reality is, instrumentation business is a very profitable, and it's a sustainable business. And we need to put more money into that, to really drive the sales, and aggressively take back market share. So that's really what we're doing, is just purely rebalancing investment from ---+ into the areas where we are currently generating a lot of profits. And we see a lot of opportunities for taking back share, while at the same time being prudent about not over investing into our software solutions on the sales side, because of the much longer design-in cycles. And you could spend a lot of money, and really have very little revenue to show for it for a while, until you get customer acceptance. So we're trying to be more be more balanced in our approach, how we allocate resources. So yes. I think the SE book-to-bill was less than 1, because you saw the mature business run off, and so that's impacting our bookings there. And the growth share of the business, especially on the assurance side in Q4, the bookings did well. In fact, it did a little bit better than what we had expected. Again, also remember these are lumpy, right. So in a one quarter, we can get a lot of deals, in the other quarter, we see some of the deals getting pushed out. So specifically, in Q4, the technology that <UNK> was talking about, the location intelligence technology which is Arieso did well. I think I'll start, and let <UNK> chime in. I think, when we said single-digits, we said ---+ we talked about our total software business, which includes our data center, right. So there is two elements; there's the network software, and then there's a data center software, right. So can you restate which part of the ---+ you're interested in, because there are two segments. Well, I think, anytime there is an upgrade, or standard change or shift to a new technology, we always welcome it, because it means people need to buy more of the performance management and monitoring, both instruments and software. So it's hard for me to predict to what extent we're going to benefit from it, but anytime you have anything different than status quo, it usually benefits us on the revenue line. On the second question, I believe the second question is around the mature piece, and what our outlook is for the mature in 2017. Again I won't go into the details, because we're not guiding for the full year, but just to give you some color, it, we expect it to continue to decline double-digit. I think we have line of sight, of it declining double-digit. We believe the growth piece of the business will increase double-digit to offset some of it. But overall, I think you will see our SE business slightly declining. However, our core instrument business, and <UNK> mentioned about the focus in core instrument, and how we are defending the core, and going after increasing our market share, should slightly grow, given some of the trends in fiber and optical, as well as in the Metro 100 gig build out, that should all ---+ should play very well to our strengths. I think you may be thinking ---+ for NSE in general, one of the ---+ let me make sure I understand ---+ so it's dealing, working with some of the customers, you probably ---+ do you mean customers as service providers, or network equipment manufacturers. Yes, I mean, maybe it was probably somebody before me, because I mean, we do ---+ the only things I know we work with our customers is on, sell through more customer solutions, where we partner with a leading OEMs like network equipment manufacturers, where we embed our solutions into it. And that gives us obviously, differentiation, but it also gives us additional marketing and sales muscle on the street. On the NE products, instrumentation, we do work closely with service providers, where we ---+ a lot of them have certain features that they like to embed. So what we do in our design, is we design a general platform with an ability to give them options that we can integrate into a platform. So I think maybe that was a discussion, I was saying, is our goal is to go to a fewer platforms that are more easily customizable. So we can add value and differentiate from the off-the-shelf fixed products that may be out there. And give the customer something that is highly compelling, gives them additional functionality that they demand, yet at a reasonable cost, since we are leveraging multiple platforms. I think, I hope that answers your question, but that's generally what we are looking at.

2016_VIAV

2016

HAE

HAE #Yes, speaking very candidly, the footprint of Haemonetics is a tale of two very different businesses, and we have our growth businesses with increased capacity requirements. We are facing into those realities and optimizing the network, and will add as appropriate, our plans as discussed, include the capacity expansion necessary to make that happen. The other parts of our business are struggling more, and in that part of the network, we're actually more in a retrenchment mode. We'll face into the realities of that. I think we've begun to do so already. But I want to be crystal clear about the three broad phases of the restructuring as articulated, and the first phase is stabilization. One of the things that's caused us problems in the recent past is the transfer of products between sites, and our strong intent is to stabilize, and avoid further disruptions associated with that TEG transfer. It's certainly been part of my listening and learning. I've had occasion, unfortunately also through the recall, to talk to pretty much all the leading, or all of our leading customers in the blood center business. So certainly, as part of that discussion, we talk about the state of blood collection, the frequency of transfusion, and where we see that going. As you know, it's hard to get pinpoint data around this. Our strong belief, as theirs is, is that the long-term systemic reduction in transfusion rates will continue. We saw some abatement of that earlier this summer. But our sense is, that's situational and at a point in time that, over the longer haul, we will see the rates continue to go down. And as a result of such, need to face into that reality. Thanks. So just for clarity's sake, the bottom line and ROIC and cash flow, to the extent I've spoken with them, are really focused on our organic plans, and very modest acquisitions that would just augment and offset, as the inevitable puts and takes in our own portfolio play forward. Acquisitions will be something separate. We'll talk about that over time. It's not lost upon me, the challenges the Company's had in the past, executing M&A effectively. So it's not part of our near-term plan. It is something, we'll consider as opportunities present, but over time. In terms of the top line, we're still working through that. As I said, I'll be more comfortable with Bill on board, and having gone through the details of this together with our franchise leaders, to give you more clarity, perhaps, at the end of second quarter. But what I can say is right now, the plan is very much focused on driving both hemostasis and plasma as discussed, making sure that we have a proper answer. We're excited about the upcoming launches in cell salvage and transfusion management. If they deliver fully against their opportunity, I think we'll have a much more exciting story to talk about on the top line, as well as the bottom line going forward. Yes. So I'm not prepared to talk about peak sales. But I can tell you we're excited, and I think it's very much contingent upon the breadth of indications, and the rate at which we can penetrate the top 10 or so markets around the world. In terms of our specific guidance, we remain convinced, and are on track to deliver a full year performance, as we guided to back on our May 10 Investor Day. The setback, and of the ---+kind of where we stand with FDA, we still expect approval. We have approval for cardiovascular. We expect the trauma indication approval later this fiscal year. What I'm most excited by, is that given where we are today, the performance disproportionately driven with disposables on the TEG 5000, both in the US and in China. Yes, we hear you, <UNK>. We're very much contingent upon the indications that we're approved for, as you can appreciate, <UNK>. At this point, we have the approval in markets outside the US, and it'll vary by account and by country, depending on our placements. We are excited to continue to drive the 5000 in parallel. The 6s gives us some degrees of freedom, and particularly with the four different cartridges that we'll be able to work into the treatment regime, we expect that to be a pretty robust part of our rollout. It does vary meaningfully, from one account to the next, from one country to the next, and ultimately contingent upon the approvals that we receive. That is what the increase in spending was related to. In fact, our whole blood spend on R&D or our blood center spending on R&D was reduced significantly in Q1, to about a third of what it was in Q4. I think it will probably stay about this level, as we continue to develop further technologies to support the products that we are launching in our growth franchises, and it will stay disproportionately focused on those products that we believe have growth in solid end markets.

2016_HAE

2016

DTE

DTE #Well, I think a couple of things. One, it had been a very long time since our prior rate case. So there was a lot that we were addressing in the rate case directly preceding. And then if you simply look at the pace of capital expenditure last year, and projected this year in the forward test year, it's a significant spend that we have underway. And we need a rate case to deal with that. So I think historically, we've tried to spread our rate cases out and have been pretty successful in doing that. Our prior case had been four years since the preceding case. That won't be the case in the future, given where things stand. We are investing in both distribution and generation at a healthy enough pace that we are going to need to be in every year or year-and-a-half. I think just even to add on that, to give you a perspective, in the case we just filed, there is a $1 billion rate based increase from the final order we just received. To just give you the sense that there is a pace of capital spend that we have over and above depreciation. Yes, I think it is. In every ---+ probably in every calendar year, at some point in that year, we'll be filing. We did. I generally said that, given the share issuance effect, the combination of the two makes it a very modest impact for us. So it's not a significant player in our plan. It pulls our share issuance down fundamentally; does have some impact in utility earnings, but the two heavily offset each other. Yes. Well we did revise down our electric segment a bit. Just to reiterate what <UNK> said, there is minimal impact. I would say it's relatively small in terms of the earnings growth. But there is a bit of the utility growth that's taken off just because of the bonus depreciation being used versus equity. But there is an offset corporately on the earnings-per-share. It's pretty minimal. There is bonus depreciation. And for the electric segment, there was a fine tuning of the ROE that came up . 10.3%. Which gas segment to you talking. The ---+. Yes. The combination of that is, we knew going into the fourth quarter, the ---+ some of the weather impacts, so we did go in a bit of a lean mode in that fourth quarter. So that helped the earnings out. And there was also some timing of taxes that played out in between the years. That is correct. And the other is, as I was mentioning in my speaking notes, 2014, we had a really strong weather year, so we had a reinvestment plan. A lot of it took place in the fourth quarter of 2014. So you are seeing investment that occurred in 2014. And then a lean that offset and went the other way in 2015. So, put differently, we started talking about El Nino in like July, and we knew it was a distinct possibility. So we had plans lined up for our gas utility that, if it reared its head, we would implement lean late in the fourth quarter. And we did. And it turned out we are glad we did, because it turned out to be an incredibly warm December. We had the opposite, the flip a year before, coming off that really cold winter, we invested ahead. But we invested ahead in 2014 to enable something like we ran into in 2015. And that's kind of the way we do things, that we invest in stronger years to give you the flexibility to do the opposite in years when you need to. And you can do that without affecting the quality of your assets as long as you keep that even-handed. Well, I think if you look at the whole sector, there's quite a few that share prices have come down fundamentally and are sub-investment grade. So, we are watching those. But I ---+ as I said earlier, we don't ---+ so, they are sub-investment grade but we aren't picking up, in our counterparties, kind of the scramble to rework timing or rework commitments. In fact, on one of our pipe positions, we had credit requirements that caused them to post collateral, and they went ahead and did it. Because the position is important to them, and so they want to move ---+ they want to continue on. So we'd be silly not to be watching our counterparties carefully, but we haven't seen any yet that have tilted into the mode where we think there's something near-term. We've been working that payout ratio, so we have a stated payout ratio. And what we've generally done is push it up into the middle of the payout range, and it falls back to the front-end, and we push it back up to the middle. So, that pattern is probably what you can expect in the future. You are right. We've grown earnings a bit faster than we have dividends. So, we'll keep an eye on what you suggested. Thank you. Right. We don't see any evidence of that. And we have the chance to deal with counterparties across a lot of fronts, including our utilities. So, you generally know when somebody is in that position, they start to dance on commitments. And we're just not seeing that. Well, I think there was ---+ there were ---+ predictably, there are some parties on the retail open access side who would prefer that things simply stay the way they are. So there was some noise about that. I think the key to that will be putting together ---+ I mentioned a coalition, and Senator Nofs working on a coalition. I think the key is to get a business coalition that comes together and says actually these are the right things to do. It's the right future direction for the state and it's fair. And I think we'll be able to put that business coalition together. So, you can probably imagine who it was saying that retail open access is fine just the way it is. It was some alternative providers and a few people that they were backing. But I do think we'll be able to deal with that issue. Beyond that, there are ---+ I'd say there's some back-and-forth on exactly what the IRP process should look like, but I don't think that will be a holdup. Okay. Thank you. Well, we don't really have any additional information for you. I'd just say that we appreciate you being with us this morning, and your support, and look forward to any follow-up questions that you have. Thanks very much for joining us. We look forward to a good 2016.

2016_DTE

2017

NATI

NATI #Good afternoon. During the course of this conference call, we shall make forward-looking statements, including statements regarding the impact of currency exchange rates, restructuring charges and our guidance for revenue and earnings per share for the second quarter of 2017. We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the documents the company files regularly with the Securities and Exchange Commission, including the company's annual report on Form 10-K filed on February 16, 2017. These document's contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements. With that, I will now turn it over to the Chief Executive Officer of National Instruments Corporation, Alec <UNK>. Good afternoon and thank you for joining us today. My key messages today are: Record revenue for the first quarter, 9% year-over-year order growth; and strong operating leverage. In Q1, I was encouraged by the solid execution and focus on growth by our entire global team, which contributed to the achievement of our Q1 revenue record. Core revenue was up 7% year-over-year in Q1 and non-GAAP operating income was up 37% year-over-year as we made progress towards achieving our operating model. Our ability to capitalize on the improved economic conditions has come from sharp focus on key growth areas within our space. Investments in RF and wireless, modular instrumentation, sensor measurements and software are enabling our customers to use our platform to solve new challenges within the markets for 5G, semiconductor tests, connected vehicles and the industrial Internet of Things. And as open software-based platform delivers significant value by helping these customers get to market faster than the traditional approach. As I looked at the rest of the year, we will be disciplined in our focus on execution as we pursue our growth and our profitability goals. Turning to revenue performance, I was encouraged to see improved growth across the business. We saw revenue growth in all 3 regions and across most product lines. From an industry perspective, we saw strong revenue growth in wireless, semiconductor and transportation, which aligns well with our product and channel investments. Additionally, we saw revenue growth in our broad-based portfolio, PC data acquisition and instrument control products, correlating with the strengthening PMI. For software, we saw a record revenue for a first quarter driven by a high renewal rates of our customers and excitement around the upcoming release of our next-generation LabVIEW platform at NIWeek. We believe that this growth underscores the continued value our software platform provides for our broad portfolio of customers. For more than 30 years, LabVIEW has provided our customers a more productive approach to building test, measurement and control systems. The combination of powerful graphical programming and intuitive user interface development with [power] integration is proven to be an accelerator in the development of systems, spanning an incredibly diverse set of industries and applications. Helping our customers get to market sooner than those using a traditional approach. As we look NIWeek '17, we will build on the software technology preview program from 2016 and we will be announcing the next generation of software that we believe will once again revolutionize how engineers and scientists develop systems. PXI and RF products had strong year-over-year revenue growth in Q1, demonstrating the differentiation and value of modular instrumentation in design, validation and automated test. The rest of our modular instrumentation portfolio, combined with our differentiated approach for programming FPGA's directly with LabVIEW has resulted in a unique value to our customers by enabling development of highly complexed custom instrumentation at the software level. For example, NI engineers recently demonstrated the world's first over-the-air transmission of Verizon's 28 gigahertz 5G specification at the IEEE wireless communications and networking conference. Because the system uses LabVIEW FPGA-enabled instrumentation, engineers can quickly prototype and optimize their system, giving them a significant time to market advantage. Another example related to 5G research is the collaboration of NI and AT&T to develop a channel of sounder that will speed up the development of advanced models for AT&T's network. Within data acquisition, I was pleased to see the expected correlation of our broad-based products with the improved PMI. Data acquisition products provides the link between the physical world and the digital world, which is becoming increasingly important as the machines and devices that we interact with become smarter. For example, automotive sensing and intelligence has improved the safety and convenience of new vehicles by incorporating advanced driver assistance systems and intelligent infotainment. These advancements require a significantly greater investment in component and in system-level test. To keep up with a growing test requirements, engineers at Valeo have developed a system based on NI platform to record or playback data from multiple sensors to develop test scenarios for validation and control algorithms. This test methodology will help them validate their customers' components faster and get safer systems to market sooner. With measurements and processing at the edge of advanced networking capabilities, we expect CompactRIO to be a key component of the industrial IoT. Led by an increasing pressure to drive operational efficiency, Industrial IoT has brought together companies from across the technology spectrum. And at NIWeek, our customers and partners will demonstrate areas with this collaboration, has given them insight into their business enabling data-driven decisions that drive operational improvement. This tremendous excitement building for NIWeek and the upcoming LabVIEW launch were currently on track to welcome our record number of attendees. Each year, NIWeek brings together users, decision-makers and NI engineers to discuss technical challenges, gain insight into new technology trends and leave with new approaches to solving many of the world's most impactful problems. I am excited to celebrate the impact our customers are having on the world and to see our teams unveil the latest products that will further differentiate our platform for our existing customers and which will expand the number of users we can serve. Now I'll turn it over to <UNK> <UNK>, Executive Vice President of Sales and Marketing to tell you more about what you expect at this year's NIWeek. <UNK>. Thank you, Alec, and good afternoon. With our attendance tracking to be up more than 50% year-over-year, we are expecting to see an all-time record for NIWeek attendance. I want to take a couple of minutes to give you a preview of the products, customers and topics we are going to be showing in Austin on May 22 through the May 25. We will start with our global sales conference where we'll welcome over 700 NI sellers from around the world to train on our latest products and technologies and collaborate on how we can create more value for our customers. Our partners will then join us for a Alliance day, where we expect another all-time record with nearly 800 partners in attendance. Following Alliance day, thousands of our customers will arrive in Austin to attend the largest event of its kind in our industry. These people come to NIWeek each year because they see our platform as a solution to the challenges they face in bringing new technologies to market at an ever-increasing pace. This exponential increase in technology has been a huge challenge for engineers across industries to keep up with, and by building on those same exponentially improving technologies to our software-centric platform, we can offer a solution that is unique and of tremendous value. At this year's NIWeek, you'll hear from companies who are driving these trends and leveraging our platform to change space travel, improve transportation safety, create next-generation communications networks and increase the efficiency of our power grid by building smarter systems, integrating [spacing], intelligence and communications, these companies have shifted from traditional business models to new models based on software and data. They have recognized the opportunities that has emerged from the convergence of physical and digital systems to shift entire industries and disrupt incumbent market leaders. By providing a platform of modular hardware and powerful design software, we have created a catalyst for these companies to change how they bring products to market, from research to production to deployment. Our customers can focus on the outcomes that will drive growth by innovating within an ecosystem of powerful measurement and control hardware, software intellectual property and over 1,000 partners. For those of you that have not been to NIWeek, it's the most tangible incarnation of our ecosystem and we'll give you additional insight into the value we bring to our customers and the opportunity we have to grow our business. In addition to interacting with our customers, we're excited to address you, our investors on Tuesday at our investor conference. Our leadership team, along with a new CFO, Karen Rapp, will discuss our growth strategies in 5G research, test and validation of the connected vehicle, semiconductor test and the industrial Internet of Things. We will also provide you with updates to our leverage model. Finally, you will have an opportunity to meet representatives from NI customers like Analog Devices, DARPA, Blue Origin, Hyperloop One and Valeo to learn how leveraging the NI platform has enabled them to outpace their competition. I hope to see you there. With that, I will turn it over to our interim CFO, <UNK> <UNK>, for the financial update. Thanks, <UNK>. Today, we recorded revenue of $300 million, a new record for our first quarter. Revenue was up 5% year-over-year and was at the midpoint of our revenue guidance. For revenue, which we define as GAAP revenue, excluding the impact of our largest customer and the impact of foreign currency exchange, was up 7% year-over-year. The total value of orders for the quarter was up 9% year-over-year in U.S. dollars, while our order growth, excluding the impact of foreign exchange in our largest customer, was up 10% year-over-year. In Q1, order growth exceeded revenue growth as backlog increased $2.5 million and deferred revenue increased $6 million as a result of strong software orders in the quarter. Non-GAAP gross margin in Q1 was 75.3%, up 55 basis points year-over-year. Total non-GAAP operating expenses were $192 million, up 1% year-over-year. Our non-GAAP operating margin was up 37% year-over-year at 11.5% of revenue versus 8.8% of revenue in Q1 2016. Q1 net income was $18 million with fully diluted earnings per share of $0.14. Non-GAAP net income for Q1 was $27 million, up 33% year-over-year with non-GAAP fully diluted earnings per share of $0.21. Included in our GAAP net income is $2 million of restructuring charges. A reconciliation of our GAAP and non-GAAP results is included in our earnings press release. Now taking a look at our order trends in more detail. For Q1, the value of our total orders were up 9% year-over-year in U.S. dollars. Included in that total is $5 million in orders received from our largest customer compared to $6 million in Q1 2016. Revenue from our largest customer was $4 million in Q1 compared to $9 million in Q1 2016. Now breaking down our Q1 orders, excluding our largest customer. We saw 4% year-over-year increase in our orders with the value below $20,000. On the systems side, orders with a value between $20,000 and $100,000 were up 9% year-over-year and orders with a value over $100,000 were up 22%. Now turning to cash management. During the quarter, we paid $27 million in dividends. We ended the quarter with cash and short-term investments of $365 million at March 31, 2017, and the NI Board of Directors have approved a quarterly dividend of $0.21 per share. Now I would like to make some forward-looking statements. We are encouraged by the improvements in the Global Purchasing Managers Index during Q1 and our year-over-year core revenue growth of 7%. Included in our guidance for Q2 of 2017 is approximately $8 million in revenue from our largest customer compared to $14 million, which we recognized in Q2 2016. As a result, we currently expect total revenue in Q2 to be in the range of $305 million to $335 million. The midpoint of this range represents a 5% year-over-year revenue growth and 8% year-over-year core revenue growth. We currently expect GAAP fully diluted earnings per share to be in the range of $0.12 to $0.26 for Q2, and non-GAAP fully diluted earnings per share expected to be in the range of $0.19 to $0.33. As we continue to focus on improving our operating margins in 2017, we are budgeting for a 2% year-over-year reduction in headcount. Included in our Q2 2017 GAAP earnings per share guidance is approximately $3 million of restructuring charges. For the full year, we estimate the impact of restructuring charges on net income will be approximately $6 million to $7 million. Another housekeeping items, we estimate that, given the current exchange rate, this rag on a revenue from currency headwinds will be approximately 1% year-over-year in Q2. In addition, as our global sales conference and NIWeek moved from August to May, there'll be a shift in our historical distribution of operating expenses of approximately $3 million from Q3 to Q2. We currently expect total non-GAAP operating expenses to be up approximately 1% year-over-year for the second half of the year. In summary, we are encouraged by the strong order growth in Q1 and by the improving trends in the industrial economy. We continue to be focused on growing revenue, leveraging our previous investment and improving our operating margin. As these are forward-looking statements, I must caution you that actual revenues and earnings could be negatively affected by numerous factors such as weakness in the global economy, fluctuations in revenues from our largest customer, foreign exchange fluctuation, expense overruns, manufacturing inefficiencies, adverse effect of price changes and effective tax rate. We look forward to seeing you at NIWeek's Investor Conference on May 23. With that, I'll turn it back over to Alec for a few closing comments. Thanks, <UNK>. I'll close today by thanking our employees for embracing our mindset of growth and driving operating leverage. As we look to the rest of the year and beyond, disciplined management of our investments is the key to the growth and profitability that fuels opportunity for our customers, our company and our careers. We're on pace for record NIWeek attendance and we will share some incredible examples of innovation fueled by the NI platform. This year, our new CFO Karen Rapp will be at our investor conference to meet you and to discuss our plans to accelerate our operating leverage in 2017 and 2018. Thank you and we will now open up for your questions. Sure, Rob. Well, first off, thanks to your question. And we're glad to see that part of that business grow in Q1. We certainly, definitely ---+ as you are well aware ---+ have seen a strong correlation with that business with the broad macroindicators like the PMI because it's a very broad-based business that creates a huge amounts of strength for NI, opening up new customer base and giving us a lot of diversity, which has been crucial to our long-term success. Now a couple of things that have happened in the last couple of years that have been a challenge for that business, one obviously, we had some significant weakness in the broad PMI and then we were also hit by currency rates in 2015 and 2016. So as the currency have started to stabilize and the economy starting to recover, from an industrial point of view, it's good for us to see this recovery and certainly have to get points to optimism ahead. I'd also add that in that business and one thing that gives me a reasonable degree of confidence as I look into the next couple of quarters, we also saw our instrument control business, which I know you're familiar with, which for many years, has been highly correlated with both the PMI and the overall test and measurement industry, show solid and a high single-digit growth in Q1 for the first time in quite a while. So that's another positive indicator as we look forward and I'm really glad to see that broad-based business move into recovery mode. So we obviously talked about in the call last quarter, we are anticipating an overall 2% reduction in our total headcount this quarter, which is coming from a variety of different angles, one being attrition, performance management also, rebalancing resources to drive optimization as we look to hit our operating profit goal in the near term. Looking forward, we did take a $2 million net income impact in Q1 for our GAAP reports, our GAAP earnings per share. That will be about $3 million in Q2 and will be essentially complete by the end of the second quarter. There will be about $1 million to $2 million that will come in the whole second half. Now of that 2% decline in headcount we're planning for this year, headcount is down about 1.2% in Q1. So we made substantial progress towards that goal. We expect the savings to come mainly in the second half and into 2018. Now we will be discussing, as we said, in the call, our revision to our leverage plan for 2017 and '18 and Karen will be covering that at the Investor Conference at NIWeek on the Tuesday. That's a sequential figure, <UNK>, and the actual number is 7,463, as our ending headcount, at the end of the quarter is down, as Alec mentioned, 1.2% sequentially from the end of the year. The average order size is 5,486, it's actually up 9% on a year-over-year basis. Yes, fairly similar to the first quarter and we are holding to our 21% for the full year. And then if we go back and take a look at it historically, Q3 is where it comes down a little bit. So obviously, we have a tremendous relationship with this customer, as you know, and have a very broad set of applications that we serve for them. And 2016 was a very strong growth year for us in revenue with our largest customer, so we were up quite strongly, especially in the first half of the year, last year, we did about $23 million with that customer in the first half of the year. As we look into the second half of the year, our compare on that front will be much easier, it's a much lower revenue. The contribution that customer made in the second half was only about $11 million last year. So we expect to see our core revenue growth and our dollar reported revenue growth come much more in alignment in the second half. Well, we like to take the long-term view at NI. We believe that actions were taken in this time frame are good. Structural actions that will support and strengthen the company for the long-term. So at this point, our intent is to execute against that plan. Sure, Rob, this is <UNK>, and I'll take that one. As we mentioned on the call, we definitely saw strength in semiconductor and in transportation and include wireless as sort of related to that semiconductor industry. So those as you mentioned, were significantly above the average. We were also pleased to see that the energy area, which has been weak for a couple of years, that, that return to growth. So that was a good sign. And then broadly speaking, as Alec mentioned, we were really pleased that the business in a broad sense ---+ the broad base of our business really was growing and we saw our order growth at 9%, was a very good sign with a broad base of our business. Obviously, to your point, there are other industries that were slightly below that average, but generally speaking, there was a broad growth across the different industries that we serve, the end markets that we serve. The real impact we took on the emerging markets and academic was really in 2015. Once the commodity prices collapsed in many of these geographies. At the end of '14, we saw a really big negative there into '15. And as we come out and into '16, it's an easier compare on that front and as the commodities are stabilizing, we expect to see our return to growth in that segment of our business going forward. In terms of our overall long-term model for gross margin, Rob, I wouldn't encourage you to make any changes there. The amortization impact has kind of already heavily rolled into the numbers at this point. And I don't expect any material impact from that as we go through the rest of 2017. Thank you for your time today. We look forward to seeing you at our Investor Conference on May 23.

2017_NATI

2017

SSTK

SSTK #Sure. The growth in paid downloads follows the growth of the e-commerce business. So it tracks pretty well to that. As far as the strategy, let's go back a few years. So when we went public our strategy was at the time we were a Company that was just over $100 million of revenue and we were building what was at the time a relatively new enterprise business. We were expanding our video product and we were building the business internationally. We took that three-pronged strategy now, almost five years later, and did a really good job with that. The business is nearly $500 million in revenue, nearly $100 million of EBITDA. And today what we are focused on is taking our transactional marketplace and turning it into an end-to-end platform. So, what we did in 2015 and 2016 is build ---+ rebuild our entire tech platform in order to do that, in order to take the Company from being a transactional marketplace to having many more touch points with the customer over their entire creative lifecycle for using imagery, deploying imagery, creating imagery and measuring imagery. We have a lot of work left to do and we are going to continue to build on top of the platform. This is not something that we do for the next quarter, for the next year ---+ this is a multi-year strategy and it expands our addressable market pretty significantly. If you think of stock imagery as a $5 billion to $10 billion addressable market, you take the total workflow market, and that is many tens of billions of dollars of addressable market. So, we think we have a great platform; we have a great model. We have great starting point, which is selling over five images per second to businesses all around the world, and we are going to work off of that starting point. To start on Editor, Editor since the beginning of our workflow product and we plan to build that out further. We are not disclosing any specific metrics on Editor, but we have said that people that use Editor do buy more photos from us and it increases engagement. And we will continue to try to increase engagement. On the lower-priced subscriptions, we are just moving to where the market is. We saw ---+ we see other segments of customers that are willing to buy from us on lower volume packages. And we are going to offer those lower volume packages to them when it makes sense. It is hard to just break out micro stock and, in fact, micro stock has had several definitions over the years. I can tell you that businesses of all sizes have not decreased their need for imagery. Every business needs imagery to sell their product or service and we are increasingly becoming the place that people go to get those images. We will also continuously become more of a place that people go to work on those images and we will be more in the workflow of all of these businesses. Look, today we have 1.7 million customers, those are mostly businesses. There are tens and tens of millions of customers out there that could be buying our product and our goal is to get them. We plan to plug into every single place that a person would need an image. We will do this with our API; we will do it actively where we partner with a company and will allow other companies to integrate with our API directly. You mentioned one, Adobe, that is just one of our connectors; we plan to be everywhere a business needs an image. Well, I will start. If you look at ---+ 2016 was a year of re-platforming a lot of the Company, a lot of the way that we work on our products, a lot of the way that we develop our products and a lot of the code that our products get launched onto. 2017 is going to be the year that we build on that technological platform and we continue to innovate on behalf of the customer. We are not going to give much detail about our products. We are the only public company in this space and we are going to continue to innovate and deliver for the customer every day like we do. Maybe I will start on video. Video is an important part of our offering. Video is growing faster than the Company is growing, both on the customer and on the contributor side. Video is still a complicated thing to use. And as we get better with our workflow efforts we plan to make video easier and easier to use for customers. Today it is very difficult and we have proven with Editor that we can make simple transforms of imagery a lot easier for the customer and we plan to do that with video as well.

2017_SSTK

2016

CONE

CONE #<UNK>, if there's any of those peers that think they can't make money, we're more than happy to pay them a commission to float all of those deals to us and we will be willing to do those deals all day long. Just sending that out there. We're happy to pay anyone a commission to bring more of those deals to us. The reality is, we have been designing and focusing on the design of our facilities and our supply chain for the last half decade. The result is that we can consistently deliver these types of yields that we have been putting up for the last several years. I hear a lot of that chatter in the industry. I don't know where it comes from, but all I can say is I would personally he happy to take all of the deals in the industry if the other guys can't walk away. I think you probably saw a lot of that when Walmart was first starting out their company and you had a lot of these mom and pop stores going out of business. Basically because of the logistical and supply-chain efficiency that Walmart was able to bring into that industry, which was fairly sleepy for a number of years. And they shook it up and now we see the same thing going on with Amazon. Being just as disruptive in that same type of industry. I think the results and the proof is in the pudding. They stand on their own. With regard to the EBITDAR numbers, I think you could do a similar type of thing. My only caution there is some of the expense in the EBITDA number as opposed to the NOI number is somewhat forward-looking. When I think of your NOI number, that is really a static type number relative to those buildings that you have in place. If you look at what we are doing in the G&A line, there is really where you get a much better sense for the investments that we're making in the business to where we are going to be over the next couple of years. I talked about what we've been doing on the customer service side. We are beefing up our legal team, finance team, marketing, sales, those are all forward-looking investments that we're making, given where we want to be over the next couple of years. If I had no intention to want to grow this business, and want to do something on a broader scale we would not be making any of those types of G&A investments in the Company. We have always taken the position that we never want to lead with price. We have always felt that as long as we can make a really nice return on the capital that we are deploying, we're happy to continue to do that. And so, if there's irrational decisions being taken by other folks in the industry, we will have to think through that. But the reality is that we are maniacally obsessed with continuing to pull out cost and how to do things faster and cheaper. That is what we do all the time. And so when I think about the competitive landscape, the whole focus is how do I continue to push the envelope and do things differently and more creatively. And so we really from an innovative perspective, that is where we make our money. I talked about, when we first started the Company, a long time ago, we've always went into this from the perspective of we always wanted to be the low-cost provider in the industry. That was purely done on a defensive basis. Because we never had a cost to capital advantage to play around on the right-hand side of our balance sheet. So I never wanted to be in a position where I had an inferior position on what I could actually deliver the cost of the product to be only worsened by the fact that I have an inferior cost of capital position. Our cost of capital position has improved dramatically over this period of time. We have always had the high ground, in terms of being able to deliver a megawatt of capacity at the lowest cost. We're going to continue to sell what we have. And hopefully, some of these other folks that can't meet the current prices out there will self select out. And we can continue to gobble up a bigger share of the market. But we don't see any reason why you have to drop your price to be able to do that. No. Nothing like that in these leases. The only thing I would say is that the lease bumps on these when they're going out for 12 years or less the typical what we have been seeing is lease increases of between 2.5% to 3%. And these are less than that just given the life of these is much longer duration. Closer to that range. Maybe a little less at times. Thanks everyone. I appreciate you joining our call today. As I mentioned, this is the strongest position CyrusOne has ever been in. We feel really bullish about the prospects in front of us. But I would also point out that the entire industry continues to do really well. We are the last one to report our results this quarter. And again, all of my peers also put up really strong results for the quarter. I think it bodes well for the industry heading into 2017 and beyond.

2016_CONE

2015

BGFV

BGFV #Thank you, operator. Good afternoon, everyone. Welcome to our 2015 third-quarter conference call. Today, we will review our financial results for the third quarter of FY15, and provide general updates on our business, as well as provide guidance for the fourth quarter. At the end of our remarks, we will open the call for questions. I will now turn the call over to <UNK> to read our Safe Harbor statement. Thanks, <UNK>. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in current and future periods to differ materially from forecasted results. These risks and uncertainties include those more fully described in our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statements that may be made from time to time by us or on our behalf. Thank you, <UNK>. Although we delivered earnings in line with the guidance we provided for the third quarter, our sales fell slightly short of our expectations. For the quarter, net sales were $270.1 million, up 1.9% from $265.1 million for the third quarter of FY14. Same-store sales decreased 0.4% for the period. We were unable to overcome the drag to our business from cycling against strong soccer-related sales that were influenced by the men's World Cup last year, as well as softer than anticipated sales of firearms-related products, and the continuing impact of the drought in our major markets. In terms of how sales trended over the quarter, we comped slightly negative in July, and comped down in the low single-digits in August. Same-store sales swung to the positive low single digits in September, as we benefit from promotions celebrating Big 5's 60th anniversary. We experienced a low single-digit decrease in customer transactions, and a low single-digit increase in average sales during the period. From a product category standpoint, our footwork category comped positively in the low single digits for the period, while our apparel and hard good categories each comped down low single digits. As expected, each of these major merchandise categories experienced some impact from cycling last year's strong soccer-related sales. Our hard goods category also was negatively impacted by the reduced sales of firearms-related products, which we believe was due in part to some recently enacted legislation in California. Merchandise margins decreased by 51 basis points for the period compared to the third quarter of last year. This reduction was a reflection of product mix shifts along with our promotional efforts to drive sales. Now commenting on store openings. During the third quarter, we opened one store in San Jose, California and closed one store. We ended the quarter with 439 stores in operation. We now expect that this will be the number of stores at year end, as we don't anticipate opening or closing any additional stores during the current period. We have had certain store openings delayed by construction and landlord issues, and would expect those openings to move into next year. We are also reevaluating certain locations that we had anticipated for store openings earlier this year, as we continue to maintain a cautious approach toward selecting the right new store opportunities for our business in the current retail environment. Now turning to current trends. We are currently comping down low single digits for the fourth quarter to date. While October represents the lowest volume sales month of the quarter and the holiday period is always somewhat unpredictable, we feel well-positioned from a product and promotional perspective for the balance of the quarter. However, we do expect that this will be another highly promotional holiday period, and weather conditions over the winter selling season will be critical to the performance of our winter product business, and hence, our fourth-quarter results. We should note that last year, weather was not particularly favorable over most of the quarter, but turned remarkably positive during the last week of the period, and remained so during the first week of the first quarter, which produced extraordinary winter product sales for us. Given that we are in a 53-week fiscal year with a 14-week fiscal fourth quarter, same-store sales for the last week of our fourth quarter this year will compare against the first week of the first quarter of FY15, the week in which our sales were up very strong double digits. In other words, we're hoping for a lot of snow during the winter and particularly over the New Year's holiday period. Before I turn it over to <UNK>, I'd like to note that September marked Big 5's 60th year in business. Since our founding in 1955, we have successfully evolved from selling army surplus products to being a leading sporting goods retailer in the Western United States. We have weathered many challenges along the way, difficult macroeconomic conditions, changes in the competitive environment, changes in the consumer, and not to mention, highly variable weather patterns. Looking forward, to help ensure that we are best positioned to succeed in the constantly evolving retail environment, we have engaged consultants to help us evaluate our store growth strategies, and identify potential avenues for profit enhancement. We look forward to working on these initiatives, while at the same time continuing to focus on driving sales, margins, and controlling expenses. Now, I will turn the call over to <UNK> who will provide more information about the quarter as well as speak to our balance sheet, cash flows, and provide fourth-quarter guidance. Thanks, <UNK>. Our gross profit margin for the FY15 third quarter was 31.5% of sales, versus 32.5% of sales for the third quarter of FY14. The decrease in gross margin for the period reflected the 51 basis point decline in merchandise margins that <UNK> mentioned, as well as an increase in store occupancy costs as a percentage of sales. Our selling and administrative expense as a percentage of sales was 27.7% in the third quarter, down 20 basis points from 27.9% in the third quarter of FY14. On an absolute basis, SG&A expense increased $1.1 million year-over-year, primarily reflecting a higher employee labor expense and operating expense resulting from our increased store count, partially offset by a reduction in advertising expense. Now looking at our bottom line. Net income for the third quarter was $6.1 million or $0.28 per diluted share. This compares to net income in the third quarter of FY14 of $7.5 million or $0.34 per diluted share. Briefly reviewing our 2015 first nine months results. Net sales increased to $754.1 million from $727.5 million during the first nine months of FY14. Same-store sales increased 1.7% during the first nine months of FY15 versus the comparable period last year. Net income for the current period was $11 million or $0.50 per diluted share, including $0.06 per diluted share of charges for the Company's publicly disclosed proxy contest and a legal settlement. This compares to net income of $12.1 million or $0.54 per diluted share, including $0.02 per diluted share of non-cash impairment charges for the first nine months of last year. Turning to our balance sheet. Total merchandise inventory was $318.4 million at the end of the third quarter, up 3.5% from the prior year. On a per store basis, inventory was up 1.6% versus last year, and we feel good about our inventory as we enter the holiday and winter selling season. Looking at our capital spending. Our CapEx, excluding non-cash acquisitions, totaled $18 million for the first nine months of FY15, primarily reflecting investment in our distribution center, expenditures for new stores, existing store maintenance enhancement and computer hardware and software purchases including investments related to a new point-of-sale system. We currently expect capital expenditures for FY15, excluding non-cash acquisitions, of approximately $26 million to $28 million as we increase investment in our distribution center facilities to support overall growth. From a cash flow perspective, our operating cash flow was a positive $25.3 million for the first nine months of FY15, compared to $25.1 million for the same period last year. The slight increase in cash flow from operations primarily reflected a smaller decrease in accrued expenses, and decreased prepaid expenses, partially offset by increased funding of inventory purchases. For the third quarter, we continued to pay our quarterly cash dividend of $0.10 per share. Additionally, during the third quarter, we repurchased 181,969 shares of our common stock for a total expenditure of $2 million raising our year-to-date repurchases to 278,242 shares of common stock for a total expenditure of $3.2 million. As of the end of the third quarter, we have $3.9 million available for stock repurchases under our $20 million share repurchase program. Our long-term debt at the end of the third quarter was $65.3 million which compared to $55.4 million at the end of the third quarter last year, and $66.3 million at the end of FY14. The increase in debt at the end of the third quarter compared to the same period last year primarily reflected our higher level of capital expenditures this year, along with the funding of shareholder dividends and share repurchases. Now I will spend a minute on our guidance. For this year's fourth quarter, we are projecting same store sales in the low negative single-digit to low positive single-digit range, and earnings per diluted share in the range of $0.10 to $0.20. Our guidance reflects anticipated expenses of approximately $0.01 per diluted share associated with consulting fees for the evaluation of store growth strategies and potential profit improvement opportunities. As a reminder, the FY15 fourth quarter will include 14 weeks, and the fiscal fourth quarter last year included 13 weeks. Our same-store sales guidance reflects comparable 14-week periods. Operator, we are now ready to turn the call back to you for questions and answers. I'm sorry, can you speak up a little. How much does the 53rd week add to earnings. <UNK>, I would say that we've estimated about $0.02 to $0.03 for the extra week. Remember, we have got extra sales, but of course we've got all the extra expenses along with that extra week as well. That week is very, very dependent on winter weather. So it's really a call on how you believe winter will be over the New Year's holiday, and hopefully if our best guess at normal would suggest $0.02 to $0.03. Well, I think we've ---+ I believe we've always maintained a strategy of growth, growth under control, always being cautious in trying to open up the right new stores. Not so fixated at just hitting a number, or just for the sake of hitting a number. That said, we're excited in trying to find properties that do fit the prescription for a successful Big 5 store. We've got some stores that were clearly delayed. We wish we were to have opened this year that have come under delay that we will be opening as we roll into the next year, and other opportunities that we're moving forward on. I guess if we have no winter weather, we will again be in a position of having some excess winter product that we have become pretty experienced at carrying over from season to season. We bought around our carryover inventory from last year. We feel very good about the inventory as we enter the season. But certainly, if we have no winter weather, we'll have inventory to carry over into the following year. <UNK>, we actually had pretty good winter weather the last week of last year, and into the first week of this year. So although it was only a couple weeks, it was pretty significant for us. So we were able to sell down our winter products pretty good at the beginning of this year. I think it's a little early in the season to be thinking about not having winter weather. We have got to believe that we are going to get some winter weather. We believe we are more than due for it. Yes. We've certainly had in the fourth quarter ---+ well, first of all, to answer your question, the fourth quarter for us is ---+ with all the different dynamics of the holidays and the dynamics of weather, whether or not we'll have an El Nino or yes or no. Will it be warm, will it be cold. What is the promotional activity and cadence going to be for the holidays, which we expect it to be very competitive and promotional. And then just the overall consumer, and the level of demand, and so on. So we've clearly had ranges that have been at this level previously, and in fact, larger than this in the fourth quarter. So this really isn't out of the ordinary for us. All right. We appreciate those of you on the call, and we will look forward to speaking to you on our next call. Have a good afternoon.

2015_BGFV

2015

SAH

SAH #Well, I think it's what <UNK> said before. We just generated more gross and we have a lot of fixed cost, probably more fixed cost than our peer group, and especially in the comp area. So all of that was, you know, incremental throughput so that was a big driver. Now, we did get some pickups on the top side throughout the year. You're going to have up and downs on medical, legal. We had a clean quarter in those areas on the corporate side. So it's sustainable from a standpoint of once you start generating that gross it flows through easier because we're more fixed than variable. Yes, and our pre-owned business is really rolling which is generating more gross obviously from an F&I perspective and so front-end gross and related gross is from F&I and fixed operations from an internal perspective. It just makes a big difference and the moves that we have made in order to generate that gross from that ---+ from that area has really made a big difference in the other areas, too, which ---+ which when you're expenses tend to be more fixed than variable that makes a big difference. Yes. And some things to look at if you do your homework and look at our liquidity, you know, we have basically tucked away $100 million in liquidity to pay off our $22 million debt. And, you know, that's not showing up on anyone's radar anywhere, but it's there. It's real. And then if you look at real estate, you know in 2000---+ in 2007, we didn't own any real estate. You know, today we own almost 40% of our real estate. If you take just an 80/20 mortgage rate on that, you have got 20% equity minimum in all of that real estate that nobody is giving us any credit for, but what we're building here is ---+ is a foundation for the future to have them bulletproof balance sheet and, you know, we're creating a tremendous amount of value. While yes, it's sexy to be able to go out and buy deals, you know, all the time, that's not our strategy. If that's what investors are looking for, they need to go invest somewhere else in the peer group. If they are looking for a long-term investment and they're interested in ---+ in our EchoPark, which I think is really going to be our future for Sonic Automotive, I think there's a tremendous opportunity in the pre-owned market. You know, CarMax is out there which we really hold them in very high esteem. They're the big 400-pound gorilla and they have how much of a market. They have 1.5% ---+ About 4% of the market they're in, 2% nationally. 1. 5% percent nationally, and their market share is bigger than ours, Penske, and AutoNation combined. You know, think about that. So that's the direction that we're going in. Why should we go out and buy Mercedes stores and BMW stores at ten times EBIT when we're trading at ten times net. You know, it's diluted. It doesn't work. So we're investing in pre-owned market. We're buying our shares back and we're returning capital to our shareholders. Well, not right now. The market is just too big and there\ Hey, <UNK>. Morning. Well, we have rolled out all of this in the Charlotte market so we did it all at the exact same time, but have no intention of rolling it all out at the exact same time. It's like drinking from a fire hydrant, right. Just too much for the stores to consume at one time. The CRM tool, the appraisal tool, the desking tool, the F&I tool, the inventory and management tools, the compensation, the branding ---+ I would say that all of them with the exception of really heavy focus brand advertising and the pricing tool are all installed and we're very happy with. But even all the tools that we're happy with we're not going to roll them out at one time because it's still too much for the stores to absorb, so beginning in the first quarter, we will start you know with the CRM, the appraisal, and the desking tool for our Management Team to begin to use and we'll roll that out over a period of two years. Within that same time frame we'll come back, you know, nine to twelve months later and begin rolling out our F&I tool which is really making a big difference in these stores in helping you know, our ---+ our experience guys or sales associates perform from an F&I perspective. Until the pricing tool is ready, we're not rolling it out. You know what, we've got to get that and get comfortable with it and again, like I said earlier, we're six months away from bringing that to a position where I think we're going to be comfortable with it. Not simultaneously, no. We have a ---+ a training team. We're going to start on the west ---+ we have kind of two divisions. We're going to start on the West Coast and East Coast and meet in the middle, and it's going to take us a couple years to get the CRM, the appraisal, and the desking tool in place. That's not something you can do overnight. It is a huge undertaking ---+ a big, big change in culture from a technology perspective. And so we will very slowly, very methodically install these processes to make sure that we dot our I's and cross our T's and execute ---+ and we're executing at a level that's totally acceptable. I can say that this ---+ this is <UNK>. We've had numerous manufacture partners in going through the system and the technology and, in fact, yesterday we had Mr. [Resonit] in town from California and he was absolutely blown away as have been our manufacturer partners by the system and the ease of use and how integrated everything is. So yes, I would say that we're trying to err on the side of caution in being conservative in our rollout. You know, it is a big change in culture. And as <UNK> said, it's like, you know, drinking out of a fire hose when you go into a dealership and you plug this new technology and processes and pay plans and everything into a dealership so it just take time and then it has to mature. You know, once you get it in. Yes. I mean look, a lot of it depends on ---+ on your brands mix. For us, I think we're not going to get any lower, but as long as BMW and Toyota ---+ as long as the Toyota mix doesn't include a big day supply of trucks, you're going to have margin compression. That's all there is to it and ---+ I don't see their truck inventory getting better overnight. And BMW, look they're introducing new products. Like I said earlier, we got an 85-day to 90-day display of BMWs on the ground. We're not going to have anymore day supply on the ground, I can promise you that. But you know, as long as their day supply is up, I think that their margins are going to be where they are now but as that begins to come down, law of supply and demand ---+ you know, your margins are going to go up. I don't think for Sonic Automotive and our brands mix you will see our new car PRs get any lower. In fact, you made the comment given the quarter our PRs will go up, but as we get into the first and second quarter, you know, there may be some softening from where we were in the first quarter but certainly not to where we are at the end of the Q3. Yes. It should ---+ it should help it. I mean EchoPark's running, you know, new, used and recon combined at $3,300, something like that. So that's ---+ that's ---+ excuse me. I meant used F&I and recon. We didn't start selling new at EchoPark. And so it should help it, you know, the used car margins are better so it should help it, especially versus the import and domestic stores. But what's really going to be fun is just the extra gross dollars it's going to bring to the table just because we're selling so many cars. That's going to make a big difference. Yes. It's actually ---+ we just incurred higher-than-expected expenses in Q1, too. It isn't that it was lower. What you are seeing now is expected. We just had higher exposure in Q1 and Q2. Thank you. Great. Well, I just want to thank everybody for take time out today to join us on our Q3 call. Hope you have a wonderful day. Thank you.

2015_SAH

2016

MTX

MTX #Thank you.

2016_MTX

2016

AWK

AWK #Thank, <UNK>. Hello, <UNK>. Well, actually Illinois was the first. When you look at the fair market legislation, at least in our service area, it started with Illinois legislation. They were among the first to do that. The general question though is, I think that as you continue to see water and wastewater systems under distress across the country, this is a very viable solution. That enables municipalities to benefit from water utilities like us and others to benefit, and to solve ---+ the main thing is to solve a problem for the citizens out there who are depending on the best water quality. But also you have communities around the country who are doing an amazing job, first of all, but they have all of these different priorities. They have to provide for schools, and for roads, and for parks. And the responsibilities that these municipalities have is so long, and as we know, a lot of the federal funds aren't there anymore that were there during the 70s and 80s and even 90s. So they're trying the very best they can to service the citizens of their communities. So where it makes sense and this is an option for them, and they choose to put their systems up for sale, having this type of legislation takes an obstacle away from that. In the past, we've had situations where a municipality or governmental entity wanted to sell its system, we wanted to buy it. But because of the way things worked between the book value and what we were able to put in a rate base that wasn't considered premium, it stopped a lot of deals before they ever took place. So I think this is an effort by states to have a win-win situation. But at the end of day, the people in those communities need be better off, and the municipalities are able then to provide the critical services that they're responsible for. I think that is a big open question right now, <UNK>. I think one of the things we know is that on some of the military installations where we serve water and wastewater, a question has come up about storm water so that we provide services for the whole water cycle. So that is really the immediate issue that we are looking at in clarifying in Washington in terms of roll of storm water in the privatization legislation which, by the way, is actually there. So I think it is one of those that as the entire country looks at water supply challenges and we look at the entire water cycle, it is not ---+ in the past, we tend to say it is the drinking water, it is storm water, it is sewer water. Where you have draught situations, where you have the need and we need promote water recycle reuse, you are going to start everyone looking at the whole cycle. So I think it is very early in the stage to do that, but it is something because it is part of the water cycle that we have to look at. Well, <UNK>, what we know ---+ so we like to go ---+ we like to base our guidance on what we know. So market conditions have stabilized. We know that, and they have begun to slightly improve. So we have seen some increases in rig count, commodity pricing, as you all know, some customers are resumed completion and drilling activities. But we're looking at capital spending, how much of it will hit at the end of this year versus 2017. So I think it is really a timing issue that we are looking at. So what we want to do is look over next few months to look at how that has stabilized, what that means for 2016 versus 2017. But the good news, as you said, is that we are starting to see activity. It is widespread. We are starting to see our growth in market share. The last we had shared with you before this call was about 30%, we're now seeing about 35% as some of the smaller players have fallen by the wayside during the really tough times. So our customers are steady. We're not seeing any further deferrals of completion activities, we are picking up some new customers. But we just need to monitor over the next few months and see what we have got. Thanks, Rich. Well, Rich, I'm not going to comment on NASUCA because they need to speak for themselves. But I will tell you from our standpoint, here's what we know. There is a recognition by the EPA throughout the country about the infrastructure needs that we have in the United States. Our plans are very open. In our state in our DSIC in any of our infrastructure surcharge, we present plans. We also go in when we have either quarterly, sometimes semi-annually filing where there is a close monitoring of the projects we're working on, what we're spending. In addition to our O&M efficiency, at least for American Water, we also have several efforts in terms of capital efficiency. What are we doing not only to spend every O&M dollar, but what are we doing to show that we are actually even improving how we spend every capital dollar. Because for us, it is this situation. We're faced with years of investment. We want to be as efficient with every dollar as we can possibly be, because that means we can put more in ground, not impact the customer bills and to be able to get the infrastructure replaced more quickly which still is a decades-long issue. So that's one thing we know. I will also tell you that with the recent, I will say attention to water quality issues, in a time when you have infrastructure but you also have emerging water quality issues. And we have seen what happens in different parts of the country when you don't invest in infrastructure, I am not sure that is a risk that we are willing to take. Sure. So first of all, understand that our Keystone executives and management spend a lot of time with our customers. We do have a lot of ---+ we share with them and they share with us some of their plans, their drilling plans. So the cautiousness is not really related to timing of holidays or vacations, it is more of you're talking about an E&P industry that's extremely cautious, because of what they have gone through the past 18 months. So you don't have people that have going from being so far down to saying we're going to pull out all the stops and ramp everything up immediately. They have a cautiousness, so we have a cautiousness. It is a testing of the waters, the foundations are becoming stronger. We are seeing natural gas prices I think NYMEX closed yesterday at $2.84, for example. Just in April, it was $1.90 per million BTUs. You are starting see better pricing as the supply is being drawn down because of the heat across the country this summer. We are starting to see some activities where people had not been doing drilling, and now they are. We are starting to see more drilling rigs come up. So our cautiousness is the timing. It is the spacing. It is how quickly will we see this come up, how quickly will we see the supply that basically is being drown and being replenished. What are the forecasts for the winter months, how cold will the winter be. So we try to base looking at objective third-party data like price projections, like drilling projections. We look at all of that, then we also look at our internal discussions we have with our customers and their drilling plans are. So the cautiousness is, what you don't want is for people to flip back and forth to say it is not good. It is great, it is not. We just want to be very cautious as we look at the ramp up and the continuing strength of the natural gas drilling market, and make sure that we are very careful in how we look at that emergence. Really, it is both. They're so close. Basically it is three states, it is Pennsylvania, it is Ohio and it is West Virginia. Of course, the formations are beside each other. And also, importantly, as we mentioned on the first quarter call, Shell has announced that they're going to build the cracker plant there south of Pittsburgh. Which is right in heart of where the Marcellus and Utica, and some of the formations are very close together. So we are very excited about that. Because what they will do is if they start construction as they have said in 2018 and finish in 2020, you are talking about even more valuable natural gas drilling where you can get the NGLs along with the natural gas. So we just see that area and the intersection between Utica and Marcellus being very rich, in terms of ---+ the fact is we know it is the cheapest to drill for the drillers, and it also requires a good bit of water because of the depth of the formations. So we think that is the right place to be, and we have been asked. Also at this point, we're not interested in going into other formations, because we think that the Utica and Marcellus is where we have the most key areas for production growth in the future. We do. We work with a lot of ---+ we have right now, I believe, somewhere between 22 and 27 different customers. Well a couple of things. So, Rich, in recent weeks, the drill count has been about 36 in the Appalachian basin and ours is ---+ we're all natural gas by the way. So we do very little to no support for oil, actually for us it is mostly natural gas. So that's one. Second thing, you are exactly right. What we are finding is that in order to more efficiently utilize wells that have already been drilled, they are looking at higher pressure more sand, which does require more water, you are exactly right. But those changes in the market and the efficiency are things that our folks at Keystone work closely with customers in terms of estimates of how much water we need. So your right, there's changes. That's one of the reasons that the wells have become so much more efficient, is they're doing the second and third frac, and they're also putting a lot more sand and al lot more pressure with the sand when they go to those second and third fracs. So you're exactly right. There's a couple of other things we're involved in. One of them is, we are working with a couple of customers on some automated pumping that really is not pretty standard right now. So we consistently look at working with E&Ps on how to make the production more efficient, how to get the most they can out of each individual well, and to make sure that we are a solutions provider on everything around water and water services. Yes, well we actually have an AMI team that we're working throughout the Company to come up with a rollout. Unlike electric, the water bills are so much less expensive. Of course we're looking at the ability to be able to justify them economically. One good things is we're seeing a lot better technology with the meters that will allow us to actually put in AMR meters that we can then do software upgrades to actually make them AMI meters which is good. We continue to work with some electric utilities on utilizing some of the same backhaul infrastructure, so that our customers don't have to double the cost of those investments. We're working with commonwealth Edison ComEd in the Chicago area, as well as there's a couple of other utilities that have expressed an interest and we're very exited about that. Because it truly is a win-win for our customers, where we put in a water meter. But the one reason it does push to do AMI is interestingly, still a lot of water meters across our footprint are in people's homes. So the ability to put in AMI that we don't have to actually send people out to people's homes and set up times to go into their home is a real not just efficiency improvement, but also a customer satisfaction improvement. So we are taking all of those factors. We have got a plan in place to roll out AMI over the next few years. And where we can partner with electric utilities to offset some of that cost for our customers, we are all for it. Thank, Rich. We don't foresee any announcements the second half of year. With that said, however, one never knows. So when you have got a bid out there that has been out there for a couple of three years, depending on the particular installation and where the Department of Defense is. So it is very difficult to predict, but at this point we don't foresee any further awards this year. But we could be wrong. <UNK>, that is correct. We have looked at the weather impacts through July across all of our states, and although we did see more heat in those states and hot weather, it was offset by also having rain fall in those areas as well. Thanks, <UNK>. Thank you. Operator, I think that concludes our question-answer-session for this morning. Thanks, everybody, for participating on our call today. And as always, if you have any questions, please give <UNK> or Melissa a call. They will be happy too help. We want to thank everybody for participating. Look forward to seeing you in November, and thank goodness in one month, football season starts. So everybody have a great day.

2016_AWK

2016

UFCS

UFCS #Good morning, everyone, and thank you for joining this call. Earlier today, we issued a news release on our results. To find a copy of this document, please visit our website at unitedfiregroup.com. Press releases and slides are located under the Investor Relations tab. Our speakers today are Chief Executive Officer, <UNK> <UNK>; Michael <UNK>, our Chief Operating Officer; and <UNK> <UNK>, Chief Financial Officer. Please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The Company cautions investors that any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. These forward-looking statements are based on management's current expectations, and we assume no obligation to update them. The actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings. Please also note that in our discussion today, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filings. At this time, I'm pleased to present Mr. <UNK> <UNK>, Chief Executive Officer of United Fire Group. Thanks, <UNK>. Good morning, everyone, and welcome to UFG Insurance second-quarter 2016 conference call. Earlier this morning, we reported net income of $0.12 per diluted share, operating income of $0.08 per diluted share, and a GAAP combined ratio of 104.8% for the second quarter. This compares with net income of $0.59 per diluted share, operating income of $0.57 per diluted share, and a GAAP combined ratio of 97.7% in the second quarter of 2015. Our second-quarter 2016 results were impacted by catastrophe losses from hail and windstorms in Texas and the Midwest. During the second quarter, we were affected by over a dozen catastrophe-designated storms for a total of $35.5 million of catastrophe losses. These losses added 15.3 percentage points to the combined ratio, which is five percentage points above our 10-year historical average for the second-quarter catastrophe losses of 10.3 percentage points. <UNK> and <UNK> will go into more detail on our catastrophe losses and the impact on our loss ratio in a few moments. Our expectations for catastrophe losses in any given year is six percentage points of the combined ratio, with second and third quarters being the most significant quarters, with storms and catastrophe events in geographic areas where we conduct much of our business. In the property and casualty segment, net premiums earned increased 11% and are the result of continued organic growth and geographic expansion. Rate increases on commercial lines were in the low single digits in the second quarter in our commercial auto and commercial property lines of business. Rate increases on personal lines were in the low single digits, primarily in our homeowners and personal auto lines of business. I'll let <UNK> address more specifics with respect to P&C market conditions and performance in a few moments. Moving on to our life segment, the current interest-rate environment has presented challenges during 2016. For the remainder of this year, our expectation is for profitability to be difficult in this segment. We are continually working on making adjustments to our strategy to adapt to the persistent low-rate environment. These include changes to life product pricing and marketing changes that will result in reductions in operating expenses and an increase in life insurance interest spreads. Our sales of our single-premium whole life product remained strong in the second quarter of 2016, and we continue to execute our strategy to maintain profitability rather than market share on our deferred annuity deposits by increasing our spreads by 42 basis points as compared to the same period of 2015. By design, this has led to a decrease in the size of our annuity book and consequently has also resulted in a decrease in invested assets which, in combination with the low-interest yield environment, has also resulted in a decline in the net investment income. The second quarter of 2016 expense ratio was higher by one percentage point compared to the second quarter of 2015, but within our expectations, at 30.3%. The increase in the expense ratio was due to an increase in deferred acquisition cost amortization from our continued organic growth, partially offset by a decrease in post-retirement benefit expenses. Strategically, our approach for the remaining half of 2016 remains unchanged. We are focusing on executing our initiatives, which we have shared over the last few quarters, which include continuing to focus on our expanding geographic footprint and agency plant and penetration, growing our specialty business, expanding our program and association business, leveraging the expansion of our product portfolio while maintaining to our core underwriting discipline in a flat to diminishing rate environment, while growing our book of business profitably. We are also pursuing additional opportunities in growing small business products, including expanding our service center. To summarize our thoughts on profitability, while the loss ratio for the second quarter did not meet our expectations due to the 15.3 points of catastrophe storm losses, we are encouraged by the continued improvement in severe losses greater than $500,000, which <UNK> will discuss shortly, and also by the improvement in our core loss ratio when you exclude the impact of catastrophe losses and reserve development. With that, I'll turn the discussion over to our Chief Operating Officer, <UNK> <UNK>. Thanks, <UNK>, and good morning. For the second quarter of 2016, we reported consolidated net income of $3.1 million, or $0.12 per diluted share compared to $15 million, or $0.59 per diluted share, in the second quarter 2015. Through six months, 2016 year-to-date consolidated net income was $25.5 million and $1.00 per diluted share as compared to $38.7 million and $1.54 per diluted share in 2015. The decrease in net income in the second quarter and year to date as compared to 2015 is primarily due to the catastrophe losses previously discussed by <UNK> and <UNK>. Our shareholders' equity increased 9% to $961 million at June 30, 2016, from $879 million at December 31, 2015. Book value increased $2.91 to $37.85 at June 30, 2016, from $34.94 at December 31, 2015. The increases in shareholders' equity and book value are primarily due to net income of $25.5 million and an increase in unrealized investment gains of $59 million. Consolidated unrealized investment gains are $187.4 million at June 30, 2016. Return on equity was 5.6% in the first half of 2016 compared to 9.4% in the first half of 2015. Further adjusting ROE to exclude the impact of unrealized gains, our adjusted ROE was 6.7% in the first half of 2016 as compared to 11.3% in the first half of 2015. The decrease in ROE as compared to the same quarter last year was primarily due to a combination of a decrease in net income and an increase in shareholders' equity. Losses and loss settlement expenses increased by $30 million, or 20%, during the second quarter 2016 as compared the second quarter of 2015. On a year-to-date basis, losses and loss settlement expenses increased by $45.8 million, or 16.5%, compared to the same period of 2015. The primary driver of the increase in second quarter is catastrophe losses, as we previously discussed. As has been historical reserving practice at UFG, we set initial reserves conservatively. As a result, we often have favorable reserve adjustments that vary from year to year across our book of business. Favorable reserve development for the second quarter 2016 was $2.5 million compared to $6.7 million in the second quarter of 2015. The impact on net income for the second quarter in 2016 was $0.06 per share compared to $0.17 per share in 2015. On a year-to-date basis, favorable reserve development for 2016 totaled $26.4 million compared to $23.4 million in 2015. The impact on net income in 2016 was $0.67 per share compared to $0.61 per share in 2015. Three lines together provided the majority of the favorable reserve development in the first half of 2016. The largest contributors to our favorable development were commercial liability, with $13.8 million, followed by worker's compensation with $7.2 million, and commercial auto with $6.2 million. All of these lines benefited from successful claims management and continued successful management of litigation expenses. The favorable development is attributable to reductions in reserves for reported claims as well as reductions in required reserves from incurred but not reported claims, along with continued successful management of litigation expenses. These lines were slightly offset by $4.4 million of adverse development in the commercial fire line of business, which experienced an increase in paid claims. As <UNK> mentioned, the combined ratio in the second quarter 2016 was 104.8% and 98.7% year to date. 2015 comparatives were 97.7% for the second quarter and 93.8% year to date. Removing the impact of catastrophe losses and reserve development, our core loss ratio improved 1.7 percentage points in second quarter and 0.1 percentage points year to date when compared with 2015 results. Referring to slide 10 in our slide deck on our website, we've provided a detailed reconciliation of the impact of catastrophes and development on the combined ratio. In summary, the adjusted loss and loss settlement expense ratio, removing the impact of catastrophes and favorable developments for the quarter, would be 60.3% versus 62% and 64.7% versus 64.8% for the year-to-date comparative. Moving on to investments, consolidated net investment income was $24.5 million for the second quarter 2016, or a 5% decrease as compared to $25.8 million in the second quarter of 2015. Year to date 2016, consolidated net investment income was $46.7 million, which represents a 7% decrease when compared to 2015. The decrease in net investment income for the quarter and year to date was primarily driven by the change in the value of investments and limited liability partnerships as compared to the same periods in 2015, along with the low interest-rate environment. The impact of low investment yields continues to impact the majority of our investment portfolio, and we expect a continuation of low interest rates for the remainder of 2016. With respect to capital management, during the second quarter we declared and paid a $0.25-per-share cash dividend to stockholders of record on March 1, 2016. We have paid a quarterly dividend every quarter since March 1968. Under our share repurchase program, we may purchase United Fire common stock from time to time on the open market or through privately negotiated transactions. The amount and timing of any purchases will be at management's discretion and will depend on a number of factors, including the share price, general economic and market conditions, and corporate and regulatory requirements. During the second quarter, we did not repurchase any shares of our common stock. We are authorized by the Board of Directors to purchase an additional 1,528,886 shares of common stock under our share repurchase program, which expires in August 2016. And with that, I will now open the line for questions. William. Yes, they were. I'd probably characterize those as ongoing, but we look at our capital structure from two different, separate sources, and we do have excess capital, but we don't disclose the amount we have. So yes, we continually monitor that from year to year. Not really, no. This now concludes our conference call. As a reminder, a transcript of this call will be available on the Company website at unitedfiregroup.com. On behalf of the management of United Fire Group, I wish all of you a pleasant day. Thank you.

2016_UFCS

2017

TTEC

TTEC #We talked about this last night just because we knew this question was going to come up. I think the consensus amongst our leadership team is that we're not really seeing any significant wage pressure. We think that part of that is that we're known in the marketplace as really being the higher-end provider. We believe that our salaries and our pay is on the higher side and is more competitive in the marketplace than maybe some other organizations. As you know, we are very focused on a fair price so that we can make a fair return. So, I think that's probably why we don't feel like there's a threat of wage pressure. On the front line, the majority of our deals have cost-of-living increases. So, should the wages shift dramatically, et cetera, we can take advantage and act and adjust the pricing in that area. I'd say the only area where we see wage pressure that surprises us is Brazil. And the good news about Brazil is, it's a very unique market in that automatically whatever adjusted wages that we have to adjust to, we instantly pass through and update the pricing plan to the client. And that's not unique to TeleTech, that's unique to the marketplace in Brazil. That's how it operates. So, that's good. When you've got currencies that are kind of wacky and so forth, it helps. On the management side, meaning what I'd say more onshore, et cetera, I think we feel pretty good about it. I think people are really excited about what's going on here. Although this isn't related to your question, I would tell you that we have probably never seen a better foray of high-quality senior management resumes in the 34 years that I've been running this business, which is interesting because it's contradictory to how low the unemployment is in the marketplace and yet we have management and executives reaching out to us from all over the world wanting to be involved with us. I guess I'm being long-winded about this. We feel pretty good about where we are right now. Now, again, there so many policies that are being changed and so much going on that futuristically could there be some pressure. There could be, but I think that clients are beginning to become more understanding as they see healthcare costs going up, et cetera, that we've been successful in being able to go back, demonstrate cost increases when they take place, and pass them on. <UNK>, I'm going to leave that to you. I will just get myself in trouble if I put out a long-term margin target. Thank you very much.

2017_TTEC

2016

DPZ

DPZ #Overall, it really has been quite strong and pretty consistent. You are right on your comment on India. Certainly the economy there had gone through a little bit of a downturn, but I think the economy is continuing to improve. We had terrific store growth there last year, maybe not quite as robust same-store sales growth as they had had three or four years ago, but, overall, amongst major markets in our international portfolio, it's been pretty consistently strong. Yes. We're trying to drive volume in our business. It's about driving frequency and retention of those customers. I think it's a fundamental choice that brands need to make on whether or not it's going to be about driving ticket and overall sales versus frequency of the customers. And we clearly chose that we want to drive order counts within our system. So, it's a clear choice that you make. I am aware of the example that you are talking about and the change that they made, and you'd obviously have to talk to them about why the shift in focus on that. But for us, as low as our market share is overall within the pizza category, we think it makes sense to be focusing primarily on order counts. All right. Thank you everyone. I look forward to discussing our 2016 first-quarter earnings with you on April 28.

2016_DPZ

2018

EQIX

EQIX #This is Richard for Phil. I figure I'll take another shot at it. Given that the expansion plans are for late second half '18 and the level of it, it seems like, to <UNK>'s point, that things could start accelerating at the end of the year and into next year. And then the Verizon assets, you said, were kind of single-digit growth. It seems like you would expect those to go to an Equinix level, 10-plus percent. Are we looking at this the wrong way. Or is it just level of conservatism. And then a quick question on the Paris 8 dedicated hyperscale build. Can you give us a little more color around that. And is the future phase capacity reserved already for that customer. Or can that be given to other customers. Just a quick question going back to the investments that have been made this year. You've obviously taken down quite a few acquisitions in the recent past. Just curious, maybe tying in with Steve's departure as well, I mean, should we expect that pace to continue. Or should we be in more of a digestion mode from an acquisition perspective. Okay. And then just maybe going back to the Infomart. I mean, it sounds like maybe high 40s EBITDA margin if I interpreted your comment there correctly, <UNK>. It's a very high multiple going in. Obviously, there's a lot of expansion capacity on top of that. I'm just curious, how are you thinking about the additional cost to build out that 40 megawatts. And how are you thinking about sort of the returns here given the sort of high going-in valuation. Got it. And since I'm the last questioner here, maybe could you just give an update on the transition post Steve's departure, where you're at with the search, any comment on sort of how morale is and things like that at the organization.

2018_EQIX

2016

SLGN

SLGN #Sure. <UNK>, <UNK>. I will respond first on that. A really good question. As to conversations, I would say that has been pretty light. We would have not gotten a lot of specific items from the customers on what they are thinking there. I think on general trends what you say is probably about right. The pack in the US broadly was a pretty good pack. We had a couple of customer-specific things that made it a little less than we had been expecting, but there was nothing about the growing season in the US that was anything other than what we would call normal. I think generally customers have the inventory that they want on the US side. I think you're absolutely right on Europe, which of course is much smaller to us, so it will have less impact when you think about 2017. But it was pretty soundly a bad pack in Europe everywhere. And certainly when I speak to the markets we serve I'll say everywhere, it was just off across the board. I do think inventories are low for our customers. I would expect that they would be planning on more pack next year. Definitely in Europe I grew the completely, US I think a little bit more to be seen. But your question, it's very possible the answer to that is yes. That you'd see a little bit less on the plan for next year in the US because of inventory. <UNK>, it's <UNK>. Good question. I think that the 6% unit volume decline versus prior year is about where we expected, and is very similar to what we saw in Q3. I would say we are essentially at the bottom point of our balancing of the portfolio, our rebalancing of the portfolio activities. As we talked previously as well, we had pulled back a little bit on our sales effort as we were going through some of the operational challenges. We are now out in the market actively selling and winning business today. I think that we're just cycling over a period of time where we did decide to walk away from some business, and as we go forward you will start to see some growth in our plastics business. It's almost entirely attributable to the balancing of the portfolio. Again, as we've talked about on the previous calls, we have spent a great deal of time and energy this year insulating our customers from some of the challenges that we faced. Those customers have stayed with us. We've done a nice job on the customer service side maintaining our relationships and in some cases strengthening them. Really it's about the rebalancing of the portfolio and the balance of the business is in fairly good shape at this point. I'm going to assume that question goes to all parts of the business. So I think I'll start on the can side and say that the ---+ certainly in Europe because the pack was shorter than we thought the inventory was a little high, so we probably need to work some inventory off. That's part of what we're thinking about in our fourth quarter numbers for Europe. In the US inventories are high. These, you'll recall as we were getting ready for Burlington plant, we had to drive up inventory a fair amount. That will be a little bit longer process for us to work off those inventories, and probably into and through all of next year we'll be slowly working inventories down in that business. In the closures side because volumes have been so strong, inventories are actually quite light. We'll need to work on inventory balance, particularly on the plastics side of our closures business. And then on plastics I would say there's really no significant shift around that. As we had to move lines we did built some inventory for those lines moves. That's a pretty select part of the market. I don't know that there's a big inventory story there; perhaps a little bit of work off as we get that ramping back up. Okay, we'll take that one and then we'll move on. On steel price we are definitely everywhere all markets we are hearing a fair amount of effort towards inflation of the cost. A lot of the underlying costs have inflated. I will say this is very early. We are not through our negotiations, so we really don't know the answer, but I think there's no question that steel is going to be up. It's going to vary a bit by region. Beyond that I would just say if you take what we know right now it would sound sizable numbers, mid-single digit all the way up to perhaps double digit, again depending on region. That is what we're up against at this stage, and we're working that as we can. I'll let <UNK> on the resin side Sure, and just starting with Q4 on resins, there are price increases that are in the market right now for our primary resins. We'll see how that plays out through the fourth quarter. So it could be a slight headwind for Q4, but as we look out into 2017, the expectations are that our primary resins will be essentially flat. There is additional capacity that is slated to come on board in 2017, and we will see how that is on boarded and participates in the market for next year. But at this point we're assuming essentially a flat resin impact for 2017. Sure. Although I wouldn't read too much into that. I think basically there is narrow windows of time that work for us. We have to have a pretty good sense around earnings so there are no surprises on that. We have to have a pretty good sense around free cash availability. In this particular case because our leverage is to the low end of our range, there is little bit more room in any case to do it. So it seemed to us it was the right time. The leverage was low, the cost of capital is pretty cheap. It seemed like the right decision for us to do to return some cash back to shareholders. Again, it should not be read as anything more than that about what do we view of acquisition opportunities, et cetera. This fits very well in our overall capability in terms of borrowings for the growth we want to do for the business. It's just we've got multiple levers as we've always said and we're pulling this one at this stage because it really doesn't get in the way of acquisition or organic investments that we want to make. <UNK>, this is <UNK>. What I would add to that, you benchmarked it against the last one, but in fact if you look back over the course of our history of doing share buybacks we have done them at the end of the year in previous situations as well. I think it's exactly what <UNK> described. It married up from a timing perspective where it made sense. Yes, that is pretty typical. 2.5% to 3.5% is the range that we talk about often. We do lever as we go through the year for working capital. We're right at the height of that peak right now, so to speak. And all the free cash flow gets generated in Q4. So we would come back. And even with the impact of the tender, assuming that it got fully subscribed, we would be well in the stated range. And let me just add, this is <UNK>. I just want to add one thing, that 2.5% to 3.5% has always been meant to be a bit dynamic. And I'm not trying to say we're leaving that number completely behind. But that was always established based upon a balance between what we thought the equity market could stand of leverage versus a business that is highly predictable, highly strong cash generative. We've always said that the business itself could sustain much higher levers numbers, it's a question of what is the equity market willing to bear on that. I think on balance the equity market is obviously more willing to accept leverage right now at low-cost capital. So my own view is that you'd want to be a little bit higher in that range now on leverage and that you get pretty inefficient as you drift down to the low end of that range. Could not have said it better ourselves. Absolutely. That is correct. Sure. It's <UNK>, I'll response to that. What we have said primarily is around the Burlington investment, which is the most important discrete item on the can business. And what we basically said about that is that we've spent $100 million, we expect our returns on that, which would be something in the range of $20 million I think is a reasonable EBITDA expedition from that. That is our expectation, but you've got to consider what we've already experienced in 2016. I'm going to take you back for a minute and say that we had basically inefficiencies that came into our system for a variety of reasons of some $20 million that we talked about in 2015. That number we have said will be more in the range of $15 million in 2016. That $15 million includes start up costs, et cetera. So if you ignore start up you had inefficiencies of $20 million in 2015. That moves to $10 million-ish range in 2016, plus the $5 million of start up. The increment you'd expect on EBITDA line from the line would be something in the range of $15 million in 2017 as compared to 2016. That is EBITDA, that's not depreciation. Take depreciation out and you're looking at something like $9 million of EBIT. And those numbers nothing is new in any of those numbers. That's the one thing we talked about. I think obviously against that we're always try to be more efficient and find ways to take cost out. What we also know against that is that we will have ---+ it looks right now like we will have ---+ PPI index will be down again for next year. So that creates a little bit more of a price headwind for us in the way our contracts pass that through. We know we'll have to overcome that. And then pension I think is a who knows right now. You look at discount rates and how low they are and it's a little unclear which way pension will cut at this stage. I think that's the broad view of what is in front of us. Sure. I will let <UNK> do that. As we've stated before we're looking for a $15 million year-on-year improvement in our plastics business. As we sit here today we feel very confident that is the number that will be cycling through for next year. Sure, <UNK>, it's <UNK>. To squarely focus that conversation on the operational improvements, it all came from our operational improvements. Our volume was down 6% as we talked about before, and what you are seeing is we still have some duplicative plant costs that we carry through the quarter. But really this is getting back to the basics of blocking and tackling in our business and good executing across our platform in plastics. We're not where we need to be yet, but we're taking the right steps and we're going down the right path. You broke up there, <UNK>. Sorry, the front of that broke up. Actually the answer might be the same for both of those questions. What is driving the growth in the US closures market for our particular business is on the hot fill side again, as we've talked before ready-to-drink teas and sports drinks are growing faster than other segments of the beverage market in the US. We also had a very long very hot summer for most parts of the United States. So our customers started filling early this year into the first quarter, and honestly have been running hard all the way through, I will say, mid-October. It's been a very long filling season for the US. We would expect that to continue for next year, as well, as we look at our customers winning in their markets and our markets outperforming the overall beverage market. We're always looking to rationalize cost wherever we can. We think it's only way for long-term sustainability of the business. So on a long-term scale, absolutely. In the near term I think you have seen the bulk of it on the plastics side at this stage. In terms of the timing, clearly the Cape Girardeau close was much later than originally planned. That speaks to the entirety of the slowdown of the process. But it was very much on-time with our recent reconsidered plans. I think we are quite pleased that we got through that. There were a lot of lines in motion to get that done this quarter. We had talked about it last quarter call that presented a real risk to us again even though we had had some issues in the last year. We had to get the inventory built and get these lines moved. It's definitely an important step for us, and it was on the revised plan. The LaPorte plant was a little later. We had talked last quarter about being a month behind on the new Burlington plant. It was within a relevant range. There was a little bit of hope that we would get it done in time to actually that the Burlington plant could generate a little bit of income off can supplies for this busy season. That was a wish if you can, and we didn't quite get to that. But it was within a month or so of what we had expected. If your number is just on the food can side, I would say that seems pretty high to us. One point of clarification I want to make is the $9 million I'm talking about for next year is not the entirety of the value of the line. It's only the increment over what was embedded in 2016. So just a point of clarification. But as to your question what does 2017 look like versus 2016, $9 million is the right number to think about. You are right that Europe should be better. I think it's hard for me to imagine that won't be the case or that certainly will be a very bad pack year on the side of Europe. Against that if you look at what else is going to happen in the US, again the cost savings that we're talking about from the Burlington line are essentially getting rid of those costs that you're referring to. The benefit is taking out all of that friction cost that came into our system in 2015. There's really nothing beyond that that we pick up out of the new line coming on. We will continue to try to do things better, more efficiently, so there will definitely be some other operational improvements that we're going to make on that side. You may have a better pack, and really that's about our customers. So it's not really about the growing season. I don't think we should expect much better than this year. But perhaps the customer that we had who worked down inventory this year will be back to building inventory next year. I think <UNK>' question is relevant on that, which is what's the broad background of inventories and consumer demand for fruit and vegetable. Against that, I think all that probably nets a slight positive perhaps, but not a big number. To be clear, your number is a little high on containers. Now, if you add in the benefit that <UNK> talked about on the plastics side, I think you're getting into the right range. Yes, say it's about $15 million you mean there is on the plastic side. Yes, I think you're in the right range. Yes, I think that is true. We've got a lot to work through here and pension stuff would affect that. But I think what you are ---+ that sounds right, that if you saw $15 million total improvement in that business that certainly seems like a reasonable performance against our expectation as we sit here. Sure. You're talking about in the fourth quarter. Sorry, in the third quarter. We were basically flat on the food can side. We were down 6% on the plastic side and we were up a couple percent on the closures business. Really the pass through mechanisms are industry standard. They're customer by customer, so I don't think we'll go into a lot of detail here, but typically it's just a lag pass through of some short window of time. And so again, just the impact in Q3, really we didn't have any impact from resin as it was relatively stable throughout the quarter. No impact in either plastics or closures for the quarter. Sure. Again, I'm going to caveat I've already said it once, but we have not done detailed budgets and we do always have learnings as we do that. I would caveat all of that. I think the cadence ---+ certainly the improvement that we've seen on the plastics side we do believe is sustainable. And so that should begin to sequentially flow through the numbers as we go into the year. I would expect that to be in the numbers by Q1 and going forward. In the can business I think because of the seasonality of our business I think it's bound to be that you're going to get a little bit more of that in the mid-part of the year. You'll get the benefit of the Burlington line making cans and going into inventory, but again the bulk of that is going to be ending up in inventory. I think you'll see more of that in mid-part of the year. Well whether we're seeing more opportunities is a different question. Do we see that as an opportunity, the answer is yes we do. Again, it was predominantly a vacuum closure business when we first got into it; actually it was predominantly a metal vacuum closure when we got into it. We went a bit of adjacency to plastics vacuum closures. And then we've moved a little bit more in other areas around beverage, cold fill, et cetera. And then we moved into the dairy side through a few acquisitions. And so we have certainly moved vertically. And yes, we do ---+ we think we've got a really good team, we think we have an excellent footprint around the world. And so we would very much like to find other closures and acquisitions that could help us, and we would move vertically on that. Basically there was very de minimis impact. And that's typically the case for us. Without very significant rate movements, FX is not much impact either on the top line or on the bottom line. Given where rates are today, we would expect much the same for Q4 as well. Good question. Pet food continues to grow, and again, we are primarily here talking about wet pet food versus dry pet food. Some this could be mix shift between the two and the can is basically wet pet food. We are seeing that growth across our business, both in the metal side and in the plastic side. We also do pet food packaging. That has been sustained for some lengthy period of time. We do view that as a sustainable trend from the consumer. To be clear, what I had said in the front comments is that we went through a critical stage. That statement I was just referring to, that we had several lines that were pretty important to a few customers in motion in Q3. So that was very important to us. And so to be clear we are through that critical stage. We're on ramp up, so I shouldn't overstate that, but the most risky part of that is behind us. There are a few more lines moving in Q4, so it's not as if there is not still some important work to be done. But what I was trying to convey is that we ---+ it was a very important third quarter for us and we did get ourselves through that. As to the growth, again, the markets that we are in, historically our plastic business was heavy in personal care; it's also in household chemicals. What we've been doing of late to some extent is moving a little more towards food. None of these are particularly high-growth markets. I would not describe it as a real high-growth opportunity. But there are big customers in there that Silgan has long relationships with that present opportunities for us in the future to capture share, if you will as those customers move forward in various markets. We do see opportunities, but again it's going to be modest on the growth side. We're much more focused on our cost picture right now and getting the right footprint, and then in time we will drive that growth stronger. But that is more of 2018 and beyond. 2017 is much more about holding the gains that we've got and being sure that we get the $15 million that <UNK>'s talking about, which is primarily out of the cost side. Sure. Really not much has changed over the last quarter. We continue to have some excess capacity. As you know, capacity was built in excess of what was needed for a particular customer contract. That capacity still fits there and is still moving around the market. But again, to scale that, that is something like 1 billion units capacity. Maybe 1.5 million units capacity against a nearly 30 billion market. So I don't want to over-portray that, but nothing really has changed around that. To be clear, when we talk mix there we're talking about dollars of contribution per unit of volume. It doesn't ---+ it sounds like it's meant as a derogatory concept of mix, it's really not. It's just that if you sell a small can, like a pet food can, versus a large tomato can there's a lot less dollar contribution per unit sold. That's really what's happening is you are seeing growth in pet food, which is a good thing, but on a per-unit basis that's not as good as if you have bad pack and you don't sell large cans to the pack region. And that's really what's going on. And just a point of clarification, we had talked in Q2 about the fact we had good mix in Q2. It's not ---+ most of this is not a surprise, that the mix was a little less positive in Q3. Sure. This is not new news. Essentially the way our contracts work is we have a pass through for steel or metal pretty much as we experience it. We have pass through for labor, which is based upon indexes and would pass through on that. And then we have pass through in many cases for other costs on something and index, generally a PPI. Really all that's happening historically you get PPI and if you do a good job you can keep your inflation down below that and you improve profitability through the contract over time, which we've always said is essentially what we give back to the customer at time of renewal to get renewals. That is a long, long story of how our contracted work. What is news that we're in a deflationary time. And so when you get deflation in a PPI index, it's not so easy necessarily to get actual deflation in your costs. That may be around coatings, compounds, rent, there's a variety of things that don't necessarily deflate as the PPI does. And that's what's happening is that we've got contractual pass through of deflation in excess of what we can necessarily get through our cost. And as long as PPI deflates we will suffer a bit of that, and when it inflates we ought to get that back over a period of time. In either case they tend to I think to reset when the contracts renew. It will keep carrying forward until you see inflation in PPI and get to a year reset of contracts where you get to pass that through. There are basically three. This is really what are we a bit surprised by, remembering that we're staying within our range. Even surprise is the wrong word, it's just where we think more of the negative of what we were thinking versus the positive. And the answer there is basically that in one case in the US we had a particular pack customer who we were hoping and believed would take a little bit more than they chose to do. They were doing inventory management; that's one. Two is the pack in Europe, which we talked about in the second quarter call as being negative, was decidedly more negative than we thought. So less cans shipped in Q3, less cans will ship in Q4. Packs are done in both places. Which brings up the third point, which is that raises an inventory question. So in the case of Europe there is probably an opportunity for us to burn off some inventory, which has negative impact on us as we absorb the cost they're sitting on that inventory. Those are basically the three things that take us to the low end of the original range that we had out there. Yes, you do have to invest if it continues to grow. I think the question about attracting capacity is more of a broad can question. Essentially you still have can assets that can convert around. So the question is if you bring that in you're just creating more excess capacity into the can market. Is that a good idea for the overall can market that already has excess capacity. We would certainly hope that it does not attract more investment of capital, but do we have to invest as it grows over time. We do and we have. Those are relatively small investments because you've already got the plant in the location you want it. And so these are fairly efficient investments on the growth. Great, thank you all for your time and we look forward to talking about our year end and bit of outlook on 2017 in more detail in the end of January. Thanks.

2016_SLGN

2017

GATX

GATX #Great. Okay. So this is Tom <UNK>. I'll take those 2 questions. First starting with the LPI and the lease rates. As noted in the opening comments, sequentially, lease rates have been pretty stable for the past couple of quarters. And going forward, we would expect lease rates to be in a similar range. The one car type that has performed better than expectations from a lease rate perspective is the small cube covered hopper that carries a variety of commodities, but what's driving the strength is sand. So as far as sequential lease rates going forward, expectations that would be similar to what we've seen so far this year would be appropriate. As far as the boxcar fleet goes, you did see a decline utilization in the quarter. That was driven almost totally by the returns from CSX as part of their precision railroading strategy. And we received over 800 boxcars back from CSX. The good news is that action, that freight still has to move. So we have already seen significant inquiries and activity in that fleet, and we expect that utilization to rebound starting next quarter. So the markets held up particularly well. Given the continued interest in rail assets, the low yield environment that a lot of the buyers are living in, we continue to see pretty good, broad-based demand for the packages we're putting into the market. We will, as we usually do, go to market with another pool of cars, probably in the late third quarter, in the fourth quarter. The timing of that remains unknown and really the demand for that and the interest in it, I can't predict right now. So we'll see how it plays out as we get towards the end of the year. But so far, what we've seen is there has been pretty good, continued good interest and I'd say broad-based for many of the car types we're putting in the market. Well, I think we're always in the market looking to buy railcars. And it's been pretty competitive for sure. We did buy some cars in the secondary market in second quarter and a smaller lot. But there's definitely continued competition. There's continued interest in the asset class. And it's made it difficult, particularly on some of the bigger portfolios. Yes, I can add to that. It's more challenging this time than the last downturn in 2009 and 2010. Obviously, that was driven by the Great Recession. And the capital markets were in disarray and people were having a tough time getting financing and they just weren't showing up at these sales. Completely different situation this time. This is a rail-driven downturn from the oversupply. General economy's fine, access to financing is there. So everything's a lot more competitive. And the fleets that have been offered for sale over the last 6 to 8 months, you see just a lot more competition for them. So it is different this time. I wanted to touch back on the new equipment pricing question, pricing being more competitive to buyers this time around than the previous downturn. Can you guys give us any type of quantification. I mean, from your angle, the overall equipment pricing, is it down percentage-wise 20% now than in the previous downturn. Or any type of quantification on how equipment pricing fell to buyers in this downturn versus the previous one in '08, '09. Well, you said new equipment, what we're really talking about is existing fleets offered for sale and equipment in the secondary market. We were talking about used equipment in that comment. As far as new equipment, Tom can you. Got it. And then just go back to the ---+ I had a follow-up on the average lease term question from earlier. The uptick by 3 months, I guess, after 3 quarters ---+ consecutive quarters of 29 months, is that uptick associated specifically with the unique situation that you described. I think it was frac sand cars maybe. Got it. And if I remember it correctly, I think at the end of the last quarter you guys had less than 3,000 of those small cube covered hoppers in your fleet. Is that correct. And has that number changed. Yes, I'll start and I'll let others chime in if they want to. That's a very difficult question to answer, exactly when that happens. But the simplest answer is supply and demand need to come back into balance. Given enough time, fleet attrition alone would solve that problem. But in order for it to happen more quickly, you need something to happen on one of those 2 sides. On the supply side, something that could help would be an increase in the price of scrap, which makes it relatively more likely that marginal cars come out of service. On the demand side, obviously, you would need some sort of catalyst. We've seen it in a small way, a small portion of the fleet with the small cube covered hoppers, but nothing more broad-based. And that's something you need to see. The other thing you'd need to see is market participants would have to refrain from actions which would make the supply situation worse. Specifically, when looking at investments, you have to make sure that investing in these long-lived assets is accompanied by long-term demand for those same assets. In other words, avoid chasing the hot market, like you saw in some of the energy segments. Well, I don't think it's changed from what I said at the beginning of the year which is, we don't see it happening in 2017, highly unlikely. 2018 will be tough as well. It could, depending on some of these factors. The other thing to remember about our LPI, not only should you not look at it quarter-to-quarter because it's an index with constant weightings and sometimes certain transactions can drive that index. So you need to look at it over a longer term. But the other thing we're working against as far as the LPI is the expiring rate is getting higher as we march forward in time due to what we did during the upturn. So that's why we don't focus so much on LPI quarter-to-quarter. And we're not high-fiving each other because it went from 30 to 20 in the second quarter. <UNK>, I'll work backwards on that. The long-term growth in segment profit within Portfolio Management is going to come on the share of affiliate line. That's the investment in Rolls-Royce. <UNK>er term, that is the primary driver of Portfolio Management. And on that front, through the first half of the year, Rolls-Royce has had an excellent year. And I'm very encouraged by the amount of investment volume that we've seen and will see at Rolls-Royce this year in that JV. We came into the year expecting probably $180 million to $200 million of new investment volume there. We'll probably do more, like somewhere in the range of $250 million. But as I think about that segment longer term, the line to focus on is the share of affiliates' pretax income. That will be the big driver. Marine operating revenue and marine operating expenses, they will not generate substantial segment profit contribution longer term. And the other residual assets in that portfolio, we continue to sell down as we did in the second quarter. As far as the run rate goes, second quarter would be a relatively good barometer, but also note that we had a pretty sizable residual sharing fee within Portfolio Management of $8.7 million in the second quarter. That will not repeat. That was a residual share out of the managed portfolio. There's not a lot left there. So as you think about the business going forward, I wouldn't anticipate contributions of that magnitude. So really just focus in on the JV line. You mentioned earlier that you're receiving some boxcars back from CSX. And just wanted to see if you could comment on any other impacts you're seeing from CSX. I listened to their call yesterday. It sounded like they were going to take out about 60,000 railcars out of their inventory, about 900 locomotives. And just wanted to see if you think that's going to have a big impact on the leasing environment. Okay. Good. And just also wanted to ask you, you mentioned that the small cube covered hoppers are stronger than some of the other car types. But is there any difference at this point in terms of leasing supply and demand between just freight cars and tank cars. I think in the last couple of conference calls you talked about freight cars maybe being a little bit more favorable. No. Yes, I'm sorry, it's LPI, that's the part I missed. So what's going on, as we mentioned in the opening comments, it's just a couple of transactions. And I can't get into the unique circumstances of each one. But essentially, the unifying factor is that there was something about the asset itself that made it difficult to replace with a different type of asset. So there was a unique ability to get price. And because of the way the LPI works, a few transactions get applied to the car types in question and you see a bump caused by a relatively small number of transactions. But the underlying issue is just that the asset was unique for the need of the customer. And the other issue that we can't be so exact, not trying to evade the question is, we're doing a lot of short-term renewals, as Tom said, because the market is weak. So that will start to influence that expiring rate next year. So if we do a tremendous amount of short-term renewals in coal and next year the coal rate goes up a little bit, you could see a change in the LPI that we didn't anticipate at this point. So things change over time depending on how you're renewing your leases today. We're not factoring in any significant sales in the second half of the year. With the last couple of years, that's been the case, but it moves around. As you can tell, this year, it's been more front-end loaded because the market has been ---+ the demand has been there and we've capitalized on it. Yes. On the Marine operating income. Yes. There's 2 factors that work there when you look at 2017 versus 2016: one, is remember in 2016, we sold 5 vessels, our chemical parcel tanker vessels that we had owned for years. We sold those throughout 2016. So some of that drop in revenue that you see '16 to '17 is just the absence of those vessels. All we have left is 5 LPG/LNG vessels. They've also seen some revenue contraction this year just given some challenges in their marketplace. But good year or challenged year, they're not going to be a significant contributor to segment profit at Portfolio Management. And we continue to weigh the best long-term alternatives for us in those vessels. Well, our growth outlook within the joint venture is very attractive in terms if you look out over the next 10, 15, 20 years and the expected growth in global aviation, the number of aircraft on order and just the pure mathematical number of spares that have to sit behind all of those installed engines over the next number of years that, that will be significant growth, as you note. Our portfolio is primarily focused on Rolls engines, almost entirely on Rolls engines, although we're not averse to buying engines in the secondary market outside the Rolls family. But even there, really good diversification across the XWBs, the Trent 700s. We still have a very sizable portfolio of V2500s serving the A320 market. So we think there's substantial opportunity there long term. The portfolio today is about $3.2 billion in total assets, just over 400 engines. And that started as a joint venture back in 1998 with a $300 million portfolio in total. It's 10x that size today. In terms of the flat, I guess, lease rates sequentially, I guess, now for a couple of quarters in a row in tank and freight. I mean, that seems like a sort of perhaps unusual phenomenon just to see sort of sequential flatness for a couple quarters running. I think you sort of talked about what's constraining the rates from going up in terms of the excess supply. What's constraining the rates from going down. Yes. So the key factor there is the supply-demand situation has been fairly consistent over time. So the overhang hasn't come down enough as we mentioned to take the rates up. But the alternatives for the customers that need to move the commodities, lease rates at this level are still better than their next best alternative, so they hang in that level. Okay. That makes sense. And what would the next best alternative usually be. Usually, it'd be leasing the car from somebody else. Okay. And I want to clarify one comment you made earlier about customer switching. It might have come at me a bit fast, but in terms of switching either between freight and tank or among freight cars, could you maybe just run it by again sort of how the customers are switching. Sure. What I was referring to specifically is cars in the backlog, new car backlog. So a customer had ordered some small cube covered hoppers in anticipation of demand. When the sand market weakened they didn't need those cars, so they go work with the builders and either try to defer that order or build another car type in its place. From a builder perspective, switching from a sand car to another freight car type, another non-tank car is much easier than switching from a sand car to a tank car. So you saw some switching in things like grain. You didn't see switching to things like tank cars. Okay. That makes sense. So switching between or from tank cars to freight cars is not one of the factors that's sort of helping the tank car market stay stable. It's sort of staying stable without any benefit from switching in the order book. Correct. Okay. And then just quickly questions on some other areas, the international profit, Rail International improved year-on-year. And it seemed to be at pretty good levels. Is there anything that sort of stood out there. Should we expect sort of a higher sustained level going forward. Well, the real issue in Rail International still in the quarter, I think income was up $3 million, $3.5 million, and the year-to-date, $4.5 million, $5 million. Really the quarterly improvement is driven by lower maintenance expense. As I indicated coming into the year, 2017 is a lighter year from a scheduled tank revision perspective, less under frame revision. They're also experiencing lower wheelset costs, both refurbishment and purchase of wheelsets from 2016. So maintenance is really what's driving the positive story year-over-year. Revenue is higher, but it was essentially offset by the stronger dollar in the first quarter of 2017. So we are still placing new cars, revenues going up in euros, but we do have the drag of a tougher FX comparison in the first quarter. Okay. Got it. And then just finally, the $10.5 million net gain on asset disposition in Portfolio Management driven by the residual sharing income, is that sort of an amount that's in line with what you expected when you gave your earnings guidance the earlier part of the year. Yes. Very much so, yes. It won't be anything on the magnitude we saw on the first half of the year. That's for sure. We still, we came into the year expecting Rail North America to be somewhere in the range of $35 million to $40 million. We're at $32 million through the first 6 months. And our expectation, as Jen pointed out in the opening comments, still in the $35 million to $40 million range for the year. Again, when you try to call the LPI, particularly for a quarter, that level of precision just isn't there. I would say that the second half of the year and the year in total, our expectations have not materially changed. Yes. And we said in the range of down 30%. So there is some band around that. Yes. So as far as in the near term, we continue to see strong sand demand. The more interesting question for the car type is what happens on the supply side. So what you've seen a couple times now is an increase in demand, a lot of cars get built and then too many get built. But the industry gets saved because they keep figuring out a way to put more sand into the individual well. So certainly, the industry will respond. The question is, to what degree and do we see another overbuild. Yes. So from a carman perspective, you never want to say nothing. But one of the things that really helps is that the alternative for a customer to switch is ---+ it's expensive. It costs money to return one set of cars or change mode or do whatever you might have to. And at lease rates at this level with the oversupply that we've seen, it's ---+ to the degree that people could do something different, I think largely it's happened. Of course, in pockets for an individual car type anything can happen, but this level given the oversupply we've seen is pretty low.

2017_GATX

2017

GES

GES #Good afternoon, everyone. As you saw in our earnings release today, we reported that our revenue growth, adjusted first quarter operating margin and adjusted earnings per share all finished better than the high end of our guidance. We are pleased that our first quarter results showed a continuing trend of strong international results because our European and Asian regions performed well while we made progress on reducing our store footprint in the Americas retail business. Again, it is important to note that as of last year, the U.S. represents only 38% of our global business and is expected to be smaller as we shrink our footprint there. Let me start by discussing Europe. Revenues for the quarter grew 23% in U.S. dollar and 29% in constant currency, showing continued momentum from successful implementation of our strategic initiative to elevate the quality of our sales and merchandising organization. The growth was driven by new store openings, comps including e-commerce up 5% in U.S. dollar and up 11% in constant currency, as well as wholesale revenue growth. We are especially pleased with the performance of our European wholesale business. The recently closed Fall/Winter 2017 order book is showing a low double-digit constant currency increase, a significant acceleration from the previous 2 seasons, which were up in the low-single digits. This increase was driven primarily by improvement in same-door sales, as we are beginning to see evidence that the strong comp performance in our directly operated retail stores over the past few seasons is reflecting in our wholesale channel as well. This is a result of our strategic initiative to revitalize the wholesale channel by applying the same principles that are driving our retail channel. During the quarter, we opened 18 directly operated stores in the region on a net basis. We added new stores to our fleet in Italy, France, Spain, Portugal, U.K., Germany, Belgium, Sweden, Turkey and Poland. Based on the strong performance of the stores we have opened so far, we have decided to accelerate our store openings in Europe from 60 to 70 stores this fiscal year. Most importantly, the adjusted operating margin of the European segment improved 890 basis points in the quarter, continuing the margin improvement that we have seen for 4 consecutive quarters now. Moving to Asia,first quarter revenues were up 17% in U.S. dollar and 16% in constant currency. Revenue growth in the region was driven by store openings, comps including e-commerce up 4% in U.S. dollar and 2% in constant currency. This includes a strong performance in Greater China, despite the negative timing impact of an earlier Chinese New Year that benefited the fourth quarter of last year. Very importantly, the adjusted operating margins of the Asia segment improved 60 basis points in the quarter, marking the second consecutive quarter where we have experienced margin improvement in Asia. With the evidence of consistent revenue growth and improving profitability, we are beginning to reap the returns of our investment in the infrastructure we built in Asia. I believe that we are executing well on our strategic initiative to build a major business in Asia. Finally, some color on the Americas, which includes the U.S., Canada, Mexico and Brazil. This is certainly the region where we face structural challenges, like many in the industry, and we are taking proactive steps to address them. Americas Retail revenues and comparable sales, including e-commerce, for the quarter decreased 15% in U.S. dollar and in constant currency. This decline was driven by steep declines in traffic and, to a lesser extent, by lower average unit retail prices as well as softness in our e-commerce business. We made progress on our store closure plan in U.S. and Canada and closed 14 stores in the quarter. We remain on target to close 60 stores this year. In addition, as more than half of our leases will expire or have kick-out clauses in the next 3 years, we have a lot of flexibility to continue with the closure past this year to further improve profitability. If the structural changes in the retail environment do not improve materially, our store count in the U.S. and Canada in 3 to 4 years will be below 300 stores. Americas Wholesale revenue grew 6% in U.S. dollar and 8% in constant currency, driven by growth in both the U.S. and Mexico in the quarter, partially assisted by the timing of some shipments. I am very pleased at the relative stabilization of the wholesale channel in the past couple of quarters and believe we remain on track with our projections for the year. Before I conclude my remarks, I want to give you some more color on 3 important topics: number one, progress on our supply chain initiative; number two, actions we are taking to enhance the strength of our brand globally; and number three, actions to grow our digital footprint and engage our current and future customers. Supply chain: We are executing on our supply chain initiative globally to drive IMU by way of product cost improvement. The estimated cost savings from this initiative is expected to be USD 24 million this year. Enhancing the strength of the brand: If there is one word Guess. has been associated with is sexy. Sexy is being more broadly interpreted where anyone can be sexy. Authenticity is in and being real is more important than being perfect. It's all about building a connection with your audience based on honesty and directness. People aren't just buying a product. They are buying a mindset and an experience. Millennial and Gen Z consumer is seeking purpose-driven brands whose values align with their own. As always, we are adapting to this changing environment. Actions to grow our digital footprint: Transition all our websites to become state-of-the-art responsive sites, enhancing user experience by reducing the numbers of navigation steps and increasing the speed of the website in moving from the landing page to the final purchase. Develop customer experience enhancing loyalty programs with mobile app integration to provide maximum value to the mobile connected shopper. Upgrade omnichannel capabilities with robust buy online, pick up in store integration and 'shop local' technology. Continue to partner with marketplaces like Tmall, JD and vip.com in China; Zalando and Otto in Europe; and Amazon in the U.S. and Canada. Finally, I want to tell you that in the first quarter, we repurchased 1.5 million shares of our stock for $18 million. As I said before, we have the financial wherewithal to finance our company's aggressive growth in Europe and in Asia, to pay a healthy dividend to our shareholders and opportunistically buy back shares. I strongly believe in the future of the company, and that's why I continue to reinvest all my Guess. dividends in purchasing Guess. stock. <UNK>. Thank you, <UNK>, and good afternoon. During this conference call, our comments reference certain non-GAAP adjusted measures. Please refer to today's earnings release for GAAP reconciliations or descriptions of such measures. First quarter revenues were $459 million, up 2% in U.S. dollars and 4% in constant currency versus prior year. I would like to highlight that this was the third consecutive quarter of revenue growth, and revenues finished above the high end of our guidance. Total company gross margin decreased 30 basis points to 31.5%, as higher IMUs were more than offset by the negative impact of occupancy deleverage. SG&A as a percentage of sales decreased by 40 basis points, mainly driven by overall leveraging. During the first quarter of fiscal 2018, we recorded asset impairment charges of $2.8 million related to store impairments, primarily in the Americas. Adjusted operating loss for the first quarter was $23 million. Adjusted operating margin finished up 10 basis points at negative 5%, including the negative impact of foreign currency of roughly 30 basis points. Please refer to our press release from today for additional information on operating margins by segment. Our first quarter adjusted tax rate was 3%, down from 19% last year. Adjusted diluted loss per share finished above the high end of our guidance at $0.24. This compares to adjusted diluted loss per share of $0.23 in last year's first quarter. The net favorable impact of currency on loss per share in the quarter was roughly $0.03, in line with our guidance. Moving on to the balance sheet. Accounts receivable was up 9% in U.S. dollars and 13% in constant currency. Inventories were $403 million, up 12% in U.S. dollars and 16% in constant currency versus last year, marking a sequential improvement versus the prior quarter. The increase in inventory is driven entirely by Europe and Asia to support the revenue growth plans, including some timing of receipts for new store openings. We have significantly reduced receipts of inventory in North America as we reduce our footprint in this region. Free cash flow was negative $49 million, essentially flat with the prior year. We ended the quarter with cash and cash equivalents of $316 million compared to last year's $427 million. Cash, less debt, at the end of the first quarter was $293 million compared to $400 million last year. Moving on to the guidance. I should point out that our outlook for the second quarter of fiscal 2018 and the full year of fiscal 2018 does not assume any restructuring or additional asset impairment charges. Also, guidance for revenues and comp sales for the total company and by segment is included in the supplemental table attached to our earnings release. Excluding currency impacts, the top end of our guidance for the year reflects 7% adjusted EPS growth and operating margin improvement of 20 basis points, as strength in the Europe and Asia business is expected to more than offset the weakness in the Americas Retail segment. For the second quarter of fiscal 2018, we expect revenues for the quarter to be up 3.5% to 5.5% in constant currency, driven by expected strong growth in Europe and Asia, partially offset by an expected decline in Americas Retail. At prevailing exchange rates, we estimate that currency will be roughly a 1.5 percentage point headwind on consolidated revenue growth for the quarter. Our gross margin is expected to be up slightly due to the IMU improvement from our supply chain initiatives. The SG&A rate is expected to be up compared to last year, primarily due to deleverage in the Americas and some unfavorable timing of expenses. We are planning an operating margin for the quarter between 2.2% and 3%, including the impact of currency headwind of roughly 50 basis points. Earnings per share is planned in the range of $0.08 per share to $0.11 per share and does not assume any further share repurchases. Currency is expected to be a $0.04 negative impact on earnings per share in the quarter. Excluding currency impacts, the top end of our guidance for the quarter reflects flat adjusted EPS and operating margin improvement of 50 basis points for the quarter. Our tax rate for the second quarter is estimated to be 40%. We expect consolidated revenues for the year to be up between 4% and 5.5% in constant currency. It should be noted that we expect an increase in revenues even after closing many stores in the Americas. At prevailing exchange rates, we estimate that currency will be roughly 0.5 percentage point headwind on consolidated revenue growth for the year. For the full year, we expect gross margins to be up due to improved IMUs in both the Americas and Europe. The SG&A rate is expected to be up for the year due to deleverage in the Americas business and a reset of incentive compensation. Our tax rate for the year is estimated to be 40%. We are planning an adjusted operating margin between 2.3% and 3%, including the impact of currency headwind of roughly 10 basis points, and our guidance assumes foreign currencies remain roughly at prevailing rates. Adjusted earnings per share is planned in the range of $0.34 and $0.44 per share, as we are raising estimates from our prior guidance of $0.28 to $0.40 per share for the year. The earnings per share guidance includes a currency headwind of roughly $0.03 per share. CapEx for the year is expected to range from $85 million to $95 million as we continue to invest in our retail expansion in Europe and Asia and our technology infrastructure to support that long-term growth. The Board of Directors has approved a quarterly dividend of $0.225 per share payable to shareholders of record at the close of business on June 7, 2017. In conclusion, we are very pleased with our start to the year and expect our Europe and Asia businesses to continue growing sales and profit margins for the remainder of the year while we shrink our footprint in the Americas as we seek to restore profitability in that business. With that, I will conclude the company's remarks and open the call up for your questions. Randy, so I think we're really pleased with where things are going with Europe and Asia, obviously, because we've had a few consecutive quarters of sequential margin improvement. And as we said on the prepared remarks, we expect this sequential improvement to continue during the remainder of the year. So we expected this to be a driver of long-term operating margin in the total company as we drive towards our long-term operating margin goal of 7.5%. The problem, honestly, as you can see, has been the impact of the Americas business on our total operating margin. And the deleverage that we're experiencing with the negative comps have definitely put pressure on the margins of the total company. However, I think we're taking profitability improvement measures, whether it's IMU improvement, whether it's looking at opportunities to close stores like we are doing very aggressively right now. And we're looking at cost structure improvements as well, whether it's rent reductions or reducing our structural costs that support the Americas Retail business as quickly as we can. But I think the key would be to stabilize the comp degradation that's been happening. And as soon as we can actually get, 1 of 2 things to happen, the stabilization of the comps in the Americas or shrink the business in relative terms to a much smaller level than it is right now of the total company, the operating margins of the total company will really be ---+ strongly on their path to expansion toward the 7.5% margin goal we have. Yes. I think let me take the first part of the question, which was really the share of the U.S. in the total portfolio. Rather than getting into a specific number, I'd just say you're in the ballpark in terms of the share of the U.S. significantly reducing compared to where it is right now. So let's say, 1/4 as a around number would be a rather right proportion over time, but not immediately but over time. And I think in terms of long-term operating margin, if we're thinking about 7.5% for the total company, it's obviously going to come with stronger margins in Europe and Asia, which are already expanding right now relative to where they are. And the European historical margins are unlikely to get back to their peak levels, which was probably in the early 20s. This is because that was a wholesale-driven business at that time, and now we're more of a retail and wholesale balanced business. But it should definitely improve from where it is right now. And so overall, we would expect the European and the Asian businesses to be a higher ---+ more profitable margin businesses. And I think the Americas, we will be looking to drive it towards a profitability level that we can sustain going forward. Randy, I want to add something on that one. Regarding the 38% that the ---+ of our total sales in the U.S., I think that we are in 90 markets. And having 1 market with 38% of the sales is something that we should improve and having much more equal market share of each of the markets. So when I arrived, I think it was above 40%. Right now we are in 38% for the last fiscal year '17. And we will continue, I think, as this trend looks like it's going to go down and basically try to be much more balanced in terms of market representation for our brand. <UNK>, what is very important is what I was saying ---+ what we have said in the press release that it is crucial to stay connected with our customer and their aspirations. And this is essential for us. I mean, we are not changing any brand perception or whatever. What we are seeing is reality. I think we have to continue doing what we were doing for the last 35 years. We are a sexy company. We will continue being a sexy company. And basically, what we started to do at the ---+ 2 years ago is to have a much more comprehensive collection, where we have ---+ basically, our collection will be much more outfitted and also much more in terms of ---+ we'll have the core value product and also we'll have some directional pieces. Directional pieces means trendy pieces that we should not miss as we are as well a fashion company. So I think that basically what we are going to continue is we have a strong value ---+ a core value proposition, which is sexy, to be very edgy and to continue being trendy. Yes. The point is a little bit coming back to Randy's question is that ---+ I mean, at the end of the day here, we have 2 markets, 2 main markets, which is U.S. and Canada. And we are closing particular stores in these 2 particular markets because maybe, at this moment, with all these structural challenges, we need to do that. But if, for example, Europe as we consider as a market, I mean, we have more than 20 markets. And we have great potential. And I think we were underdeveloped on some of the markets. Like, for example, I think we have a lot of potential in Russia. We have a lot of potential in Poland. We have a lot of potential in Eastern European countries as well also in Turkey, where we are underpenetrated. So I think that we don't have to think about Europe as a market. We have to see Europe as, I'll call, a bunch of markets that we have a lot of potential and maybe that in the past we didn't really see that potential. And regarding Asia, I think we have 2 main markets. One, which is Korea, which we have a big, strong presence, a lot of relevance. And also we have China. And in China, basically, it's 1 market. And out of these 35 new openings, most of those openings will be in China. So in terms of store openings, we will ---+ for this fiscal year '18, the #1 country in opening stores will be China, much more than Europe per each market. And at the same time, let me tell you one other thing regarding China is that we have to always take into consideration the extreme or the huge potential that we have with the e-commerce and also with our partners in marketplace, which is mainly Tmall, JD.com and vip.com. And I think we are seeing a lot of potential and we are seeing kind of substantial growth in these 3 marketplaces. So <UNK>, I think on Asia, we're really pleased with what we've been seeing in the last couple of quarters. You saw Q4 was very strong. It was benefited a little bit by the timing of Chinese New Year, and we saw margin expansion in Q4 last year. And this quarter, it's actually especially pleasing that we managed to get margin expansion despite the negative impact of the timing of Chinese New Year. So we feel pretty good that we're on a consistent path to improving margins, and this momentum should be building as we're going through the next 3 quarters of the year as well. And that's why we said we expect to see expanding margins for the balance of the year, too. And longer term, I think I said it to Randy in the earlier comments as well, we expect both the Asian and the European segments to be definitely the most profitable segments in our business going forward. Yes. That's what I said in the prepared remarks, and I'm confirming that. I think it's going to get probably more and more difficult as we lap the previous margin expansions, but ---+ and so Europe started a bit earlier because I think on the second half of last year, we had pretty good margin expansion. So as we move into the second half, the level of expansion may be more challenged, but the direction is what we are expecting to be positive as we go through. Basically, let me answer you the question about the real estate. I think we are seeing some opportunities at this moment, but what is important is what I said in my remarks is that, I mean, half of our fleet will be either with a lease expiration or a kick-out clause in the next coming ---+ in the next 3 years. So I think we have plenty of opportunity to close stores. And also what is important to say is that we are giving you a number in terms of in 3, 4 years, we could be in around 300 stores between U.S. and Canada. Of course, I think with the landlords, what we are trying to do is working with them, trying that they understand the reality of the market and the structural challenges that we are facing, not only us, I think most of the industry and trying to work with them on a win-win situation and trying to understand how we can try to find a solution with ---+ to the situation we have at this moment. So I think on the wholesale question that you asked, <UNK>, we're really pleased with what we're seeing in the wholesale business overall. But specifically, on Europe, I think it's really gratifying to see the acceleration that we saw on the Fall/Winter '17 order book. We've been saying for a while that the performance in our retail store should be a leading indicator of what's going to happen in the wholesale channel as well. And sure enough, I think it's ---+ we saw some improving momentum and stabilization in the past couple of seasons and now a good acceleration in the low double-digit increase for the Fall/Winter '17 book. So ---+ and this was actually driven by same-door buys, which is really the equivalent of comps in retail stores. So it's showing that the productivity of our wholesale customers is improving, their profitability is improving. And therefore, that's more a sustainable model for them and for us as we go forward. Then I think I'll switch to the Americas. And Americas is a tale of 2 different markets. So there's the United States, which is a meaningful piece of our wholesale business in the Americas, but Canada and Mexico are also fairly important. And what we've seen is Canada had very strong performance last year. We were very pleased with it. And I think we're expecting Canada to be very ---+ to be good this year as well and pretty stable. Mexico, this particular quarter, was also very strong. And we are very happy with our partners, our joint venture partners over there that we've had for over 10 years. And the performance of that business also is quite strong. So it really depends on which market you're talking about on wholesale. But overall, we're pleased with the fact that the channels actually beginning to do better than where it was previously. I think if there are no other questions at this time, we can close the call. Thank you.

2017_GES

2017

PEP

PEP #Thank you, <UNK>, and thank you all for joining us this morning We will start off this morning with highlights for the third quarter and a discussion of each of the operating sectors' performances in a little more detail; and then <UNK> will cover the full year outlook For the quarter, we delivered revenue, operating profit, and EPS growth in what continues to be a volatile macro environment Organic revenue was up 1.7% for the quarter and 2.3% year-to-date with solid net price realization operating margin expansion in most of the sectors Although we have moderated our full year organic revenue growth outlook, we now expect full year core EPS of $5.23, which is 2 percentage points or $0.10 higher than our previous expectation This improvement is being driven by the strength of our year-to-date results, coupled with an improved outlook on foreign exchange impact Each of our operating sector’s performance came in on or ahead of expectations with the numbers showing sequential topline acceleration, with the exception of our North American Beverages business, where net revenue and operating profit declined So, let me start with that While North American Beverage performance was below our expectations, I will tell you upfront that the issues are temporary and we believe we have taken the necessary actions to improve the performance of this business beginning in Q4. So, what happened? From an industry perspective, weather was comparatively negative, both temperature and precipitation, following record hot summers in 2015 and 2016, and there was a marked slowdown in the C-store channel in Q3. Now given this as a background, our performance did lag the industry, no question about it First, Gatorade, which accounts for approximately one-fifth of our Q3 volume declined following two sequential years of terrific Q3 growth In fact, Q3 volumes were up a total of 18% over 2015 and 2016. Relative to other beverage categories, this is one that is both much more sensitive to weather and more exposed to the C-store channel So the broader weather and C-store industry themes I just mentioned had an outsized impact on Gatorade Second, we underperformed the industry in carbonated beverages This summer, we directed too much of our media spending and shelf space to new low-calorie, much smaller brands at the expense of our Pepsi and Mountain Dew trademarks While our plans for the summer were consistent with our continued and deliberate strategy to transform our beverage portfolio Clearly, we redirected some big brand space to these new products as opposed to focusing on new incremental space We view both of these conditions as temporary and not structural, and we fully expect topline performance to improve in the coming quarters We have a good handle on what happened, and we are making immediate adjustments to get the business back to growth We are stepping up marketing spending on Pepsi and Mountain Dew, including our zero and low calorie products under these trademarks We are reallocating and securing incremental shelf space in this place for our existing and new products to drive better overall velocity We are tweaking our consumer communication with sharper brand messaging on pack, at point of sale, and through traditional social and digital media We have more innovation directed at our biggest trademarks, including low and no calorie products that will hit the market starting in early 2018, and we're executing our programs responsibly to ensure that we're driving profitable growth With the expected improved topline, we also expect improved profit performance as we realize both mix and scale benefits from the improved sales trajectory To be clear, our beverage transformation initiatives over the longer term have been very successful in shifting our mix to faster growing subcategories and providing more low and zero sugar options Since 2010, we have increased our mix of non-carbonated beverages by 7 percentage points Over the decades, we have established and maintained leadership positions in many of the most attractive noncarbonated categories, and we have successfully introduced many offerings to appeal to consumers' increasing demand for zero and low calorie offers So, make no mistake about it, we remain squarely on strategy and having made a few course corrections, expect NAB to return to growth in the coming quarters Moving on to Frito-Lay North America, we had another quarter of very strong results, with a good balance of volume growth, net price realization, and operating margin expansion We feel very good about the business with innovation, pricing, execution, and market share performance all on target We are particularly pleased with the continuing strength in organic sales growth, which is being fueled by effective price pack management and innovation backed by great marketing Take Cheetos as an example We drove 6% net revenue growth for the trademark in Q3 with new products, such as Cheetos Paws, Jalapeño Cheetos, and our SIMPLY line, and Mac n' Cheetos also contributing to the growth The innovation is well-supported by creative consumer engagement that included our award-winning Cheetos virtual museum campaign that asks, "What do you see in your Cheetos?" The program garnered 100,000 online consumer submissions and countless earned media impressions Ruffles, which grew net revenue 11% in the quarter benefited from innovations such as Spicy Jalapeño Ranch and Flamin' Hot that appeal to consumers' increasing desire for both flavors And beyond our largest trademarks, we saw impressive double-digit net revenue growth in premium and better-for-you offerings such as SunChips, Smartfood Popcorn, and Miss Vickie's and in our variety multipacks that provided great assortment of our top brands in convenient single-serve packages At Quaker Foods North America, we are pleased with the sequential acceleration in organic volume, organic revenue, and core operating profit performance, and we continue to feel positive about the trends in the business Our activations of portable breakfast innovation, namely Breakfast Flats launched in 2016 and Breakfast Squares that were launched in the first quarter are yielding positive results And our second quarter launch of Overnight Oats Cups, capitalizing on the growing trend of preparing chilled oats using a variety of healthy ingredients is also gaining traction with consumers Taken together, our innovation and other programming drove mid-single-digit volume growth in our base oatmeal portfolio To wrap-up North America, I'm pleased to report that year-to-date through the third quarter, we generated more retail food and beverage revenue growth in the United States measured channels than all other 5 billion plus manufacturers combined And in the third quarter, Frito-Lay on a standalone basis was once again the number one contributor to total U.S food and beverage retail growth among all 5 billion plus manufacturers Turning now to our sectors outside North America In Latin America, we continue to see very challenging macroeconomic conditions and geopolitical instability, which dampened consumer spending As we enter our fourth quarter, the devastating impact of the Mexico earthquakes and hurricanes in the Caribbean and Puerto Rico are clearly adding to these challenges Within this context, our businesses in the region performed well in the third quarter, posting 5% organic revenue growth Mexico, our largest market in the region, had high single-digit organic revenue growth, while Brazil grew organic revenue mid-single-digits Similarly, we have continued to experience macro challenges in a number of markets throughout our Asia, Middle East, and North Africa segment, including the significant currency devaluation in Egypt and the economic impacts in a number of markets across the Middle East stemming from persistently low oil prices However, we have been adjusting our business to address these challenges We are pricing to cover the increased cost of doing business and we are going more aggressively after productivity to reduce our overall costs As a result, we saw a noticeable improvement this quarter as AMENA delivered 9% organic revenue growth driven by double-digit organic revenue growth in China, Pakistan, Philippines, Egypt And turning to Europe and Sub-Sahara Africa, we had very good results across the region, with organic revenue growth in each of our top four markets, along with six of the next seven key markets and a sequential acceleration overall, which translates to margin expansion and 12% core constant currency operating profit growth Organic revenue growth was well balanced across snacks and beverages, which grew high single-digit and mid-single-digit respectively, driven by strong product innovation and in-market executions Russia, our largest market in the region, had mid-single-digit organic revenue growth and very strong operating margin improvement Among our other key markets, we delivered double-digit organic revenue growth in Turkey, mid-single-digit organic revenue growth in France, Poland and Germany, and low single-digit organic revenue growth in the U.K Now as we mentioned last quarter, across our businesses, we're pleased with the progress we're making in the e-commerce channels, and I say channels, plural, because we're addressing growth opportunities across eGrocery, pureplay, urban grocery delivery, direct-to-business and direct-to-consumer models Our success is underpinned by the significant investments we've made in attracting talents to and building capabilities in our dedicated global e-commerce business unit So today, we have a team of roughly 200 e-commerce professionals supporting our businesses to capture growth in the rapidly emerging e-commerce channels It's made up of seasoned e-commerce and tech professionals, combined with our best entrepreneurial talent from within PepsiCo and we're managing this unit more like a tech company than a traditional CPG from how and where they work, the risks they can take, to how they are compensated And we continue to fortify and enhance the full suite of capabilities that we believe will enable us to win in these channels from data analytics to specialized e-commerce supply chain knowhow Importantly, we're increasingly collaborating with our retail customers to make our e-commerce capabilities yet another point of differentiation in our value-added relationships with them For example, using big data and predictive analytics to shape real-time marketing messages, dynamic merchandising, and tailored offers, our team is enabling us to drive greater purchase instrumentality and higher basket size for our customers online As a result of these efforts, we have a business that's approximately $1 billion in annualized retail sales with impressive growth in key e-commerce markets For example, this year, our e-commerce retail sales are projected to be up 80% in the United States and nearly double in China In many cases, our online share exceeds our offline share and we are gaining online pretty much across the Board While overall penetration of food and beverage remains relatively low compared to most of the categories, it is growing fast and its development is sure to be highly dynamic, and we believe we are well-positioned to win in this space Despite the many macro challenges, we continue to feel good about the state of our business The fundamentals we have been focusing on and discussing with you remains solidly intact We have a leading product portfolio and deep capabilities We continue to drive growth, product innovation, exceptional marketing, and innovation We continue to transform our portfolio to capitalize on evolving consumer trends and we have a robust productivity agenda that is enabling us to continue to invest in the business, while delivering attractive earnings growth And finally this quarter demonstrated that the PepsiCo portfolio does have the capacity to generate topline and bottom-line growth even in the occasional quarter where we see a downturn in a particular sector And it is the resilience of the portfolio that is also enabling us to increase our earnings outlook for the year With that, let me turn the call over to <UNK> Look, we have gone deep on the business to understand what is environmental factors that contributed to our performance and what is our own execution aspects that contributed to performance, and I’d tell you that, roughly speaking, my assessment is about 70 -30 in terms of what the weather, the precipitation, what the C-store slowdown caused to the business, and what we could have done differently And as I said in the script, Judy, Gatorade is a big part of our business and we were lapping 18% over 2015 and 2016, and with a slowdown of C-stores ---+ C-store traffic and the weather patterns in Q3, clearly Gatorade was impacted because the weather has an outsized impact on Gatorade That was the first one The second is CSDs We've been embarking on a deliberate strategy to shift the portfolio to lower calorie offerings and they tend to be more non-carbonated beverages, and that's why we shifted about seven points of the portfolio to non-carbs We have a lot more lower calorie and zero calorie innovation in CSDs, and we actually have it even under the big brands, the Pepsi and the Mountain Dew brands So, what we're going to be doing going forward is taking the big brands and doing a lot more low calorie and zero calorie offerings under that brand So, I tell you if I looked at this quarter, the only two that we need to focus on is getting Gatorade back to growth, which we're already beginning to see and tweaking our advertising spending against Pepsi and Dew The thing to be very careful about is we are focused on responsible growth During the quarter, as we saw the trends, we could have very quickly hit a promotional lever and tried to drive growth, and we tried our best not to do that because we think that once you go down this promotional spiral, it's never-ending So, our team is focused on profitable growth, responsible growth, and we are all focused on getting CSD trademarks and Gatorade back to growth Good morning <UNK>t Let me give my comments and then <UNK> step in with yours I actually believe ownership of the bulk of the bottling system is an advantage because you can actually do two things One, you can flex them quickly and second is that you can extract more productivity from a bigger base So, I actually believe it's a good thing During a period when a refranchising is going on, what happens is that you have funds that you can use to deploy against the market But that is a temporary situation and that is going to get exhausted very soon So, we have to be careful that while the marketplace might have extra funding during a refranchising activity, we don't overreact by hitting a promotion lever to get short-term value ---+ volume in the business Having said that, what are the structural issues we see? One, we see a continued decline in full-sugar beverages We see consumers shifting to lower calorie and zero calorie beverages And we do see a lot of little competitors coming into the marketplace with interesting new beverage offerings, some of which stick, many of them don't stick So, what we have to do is create an entity within our company that does smaller brands, but smaller brands that stick and grow into medium size and bigger brands, we have to create that capability, which we are doing; and second is that the big lesson from Q3 is that it is an and game, not an or game When we launch new products, we have to go for new shelf space The core shelf space, especially in C-stores for the big brand, we have to protect the hell out of it and that's what we're going to do And <UNK>, do you want to add anything to it? But you know, <UNK>, it's also safe to say that, as a leadership, we are focused singularly on value creation, shareholder value creation and we spot trends and if we think we have to make changes in our business, we do that So, at this point, we think our strategy is the right strategy And in terms of overall cost management, we put in place a Smart Spending program about one year ago And as the months go by, we just get better at being smarter and smarter with Smart Spending And what you're seeing, because right here in corporate, we drive Smart Spending very, very seriously and that's where you're seeing the reduction in corporate cost Good morning <UNK> <UNK> good morning I'll answer the second answer, and then, <UNK>, you should take the first one and talk about what's changed I think that the thing to be careful about is not just the reinvestment, it's how much and in what It's better to invest in pull activities than to hit the pedal on push activities Because when you start getting into this competitive battle of more and more promotions, we've been there, done that, I don't think that's a way to create long-term, strong businesses So, we've tended to focus more on innovation and pull-related spending, more A&M spending The shift to digital is a question mark because I don't know what the ROI on digital is as yet And we're relooking at all elements of our marketing spending to see exactly which method of spending gives us the best ROI by brand So, that's a piece of work we are doing What we want to do over the next few quarters is look at our brand portfolio and see how best to do trademark advertising, so we can focus on the big brands and still drive lower calorie products The thing to be careful about is this industry should not escalate to going from push spending to pull spending and everybody throws a lot of money into this business It's going to be a judicious management of this business, where you've got the right amount of A&M spending and judicious execution, so this business remains profitable going forward I think that's where ownership of the bottling business is going to make a huge difference because we can work all of these levers very carefully So, the next few quarters, watch and see what we do to tweak our spending and what the benefits are We feel reasonably confident Good morning <UNK> So, <UNK>, we're not a talking about any long-term algorithm or guidance at this point We usually do that in the February meeting But let me tell you in broad shapes, our focus is on innovation, our focus is on portfolio expansion, our focus is on shift to Better For You, Good For You products And our focus is on productivity and stepped up levels of productivity The whole goal is to marry our innovation capability with our productivity programs And we've had remarkable success over many, many, many quarters This one quarter was a bit of a [Indiscernible] on North American Beverages, and I call it [Indiscernible] because there were many external factors that caused this And believe me, we are all over this business and we will be back There is no issue So from a long-term algorithm, just wait until February next year when we do give you the guidance But all I say to you, our focus is on balanced top and bottom-line growth Invest in the topline; make sure the right productivity to deliver the bottom-line growth Make sure that you invest in all the new capabilities needed and generate the productivity to invest in new capabilities That is a tried and tested playbook, and we're not backing off of that <UNK> good morning You want to take the first part, <UNK>? And talking about NAB trends When you're looking at weather and you're looking at precipitation, you don't plan for a cooler weather or higher levels of precipitation So, we fully expected that this summer would be a normal summer, not a flaming hot summer, but we thought it'd be normal summer And so we kept investing behind the brands like Gatorade, but then when the weather completely turned south and ---+ not literally, but it was cooler and a lot more precipitation, that advertising spending did not give us much lift as we would've liked the business to get Now, if we have not been lapping the 18% growth, it's a whole different ballgame The problem is the combination of lapping the 18% growth for the last two years in Gatorade, plus the fact that we had a cooler summer this year, when it's our seasonally big quarter is what caused the issue And one of the things we've told our businesses is that don't do anything in the short-term which will have no lasting impact for the long-term Many years ago, we use to just hit the promotional spending lever And I think what we're doing very carefully now is saying don't hit the promotional spending lever because that won't last for the long-term So, the weather was a big factor And we hate to use weather as an excuse, <UNK>, but the weather was a big factor And we didn't make all the changes anticipating poor weather, we just kept playing our playbook and that's what caused the issue Again, it's temporary, we're taking the actions and we are all over it Good morning <UNK> Well, I'm going to talk about the pricing question and then <UNK> is going to give you a good answer on the rest of it As I said, <UNK>, at least two or three times, and thank you for asking the question, we are focused on responsible growth The goal is not to hit the promotional lever and try to just buy short-term volume And that's the message that's been made very clear to our entire North American beverage Business, and Al and Kirk and the team are singularly focused on that So, you will see PepsiCo executing a very responsible strategy going forward, balancing push and pull spending so that it's profitable growth In terms of productivity and the plans for cost reduction, <UNK>, why don't you just provide the answer for that? Good morning <UNK> <UNK>, do you want to take that? So, let me give you some of the ---+ what we're seeing in some of the geographies We're actually seeing a strong lift in European business All of our business ---+ actually West and East Europe, we're seeing tremendous strength All our businesses are doing well We have a wonderful portfolio in the ESSA market And we have the right marketing programs, the right pricing programs in place and that's why you're seeing such a stepped up growth rate in the ESSA market, both East Europe and Western Europe And our Russia business in particular is doing very well, and so we feel very, very good about that In the Middle East, which is another big market for us, clearly this year we saw the impact of the lower oil price, the tax on CSDs, all of that went into place Again, we have taken all the appropriate actions to implement more productivity, start to shift the product portfolio And while we took a short-term shock to the system, we're coming out of that And we think that the Middle East, North Africa still represents a very, very good market with lots of consumers is still in coming into the peak consumption years So, we feel good about that market The prospects for recovery in those markets are good As I look at China and the Asia-Pacific region, our business in China is doing well, especially our Snacks business is doing very well Our Quaker business is doing exceedingly well in China The team is a good team Our e-commerce business is on fire in China and doubling in size every year And it's becoming a learning lab for us to learn how to do e-commerce for the rest of the world, so we feel good about China The wonderful thing about the rest of Pacific Rim is that you've got many markets; all these little tigers are recording pretty good GDP growth The markets may not be big as a China or India, but each of these markets contributes positively to our performance, and we've been doing well on those markets and gaining share in all of those markets We have good bottling partners Our own operating businesses are very good Good leadership teams Those businesses are doing well We don't see much of a concern in those markets, even though they've gone through some political ups and downs In the South Asian subcontinent ---+ India, Pakistan, Nepal, Sri Lanka, we face the normal upheavals from GST, the demonetization ---+ or remonetization, I should say We are through all that now And hopefully the business will start to steadily recover in India But Pakistan has been a big success story for us We have a good business there and it's growing very nicely and profitably Latin America is a big question We have strong businesses in Mexico and Brazil in Central America Clearly, Latin America has gone through its share of geopolitical issues, and recently, the earthquakes have really had a devastating impact in Mexico; and the hurricanes that swept through the Caribbean and Puerto Rico have a really decimated those islands In spite of that, the teams have performed well And our Brazil business is doing very well and our Mexico business is doing well across both Snacks and Beverages So, in those markets, I would say we're holding in Latin America, doing exceedingly well in the ESSA region Our AMENA sector is, in spite of all the issues, coming back very nicely North America is our core, and we remain positive about the North American business Now and then, there will be a quarter where some business has a hiccup or a toast up The resilience of our overall portfolio is what allows us to deliver the numbers we're delivering So, overall, we still feel quite confident about our prospects and we are buckling our seatbelts and saying, "There will be geopolitical instability, there will be weather-related issues, we just have to build a portfolio that can weather that and somehow profit through and deliver the performance Good morning <UNK> <UNK>, great question First of all, we always get pushback from retailers and everything I think the real thing is that from PepsiCo's perspective and DSD company, we have big brands and our brands have high velocity So the combination of those three yields tremendous profitability for retailers And clearly, some upside brands have come in and taken a lot of shelf space Our challenge is not to just say, "Hey, give us more space for core CSDs," it's how do we provide the right innovation to go after those upstarts who are taking a lot of space I tell you one of the issues I would say, and I take full responsibility for this, maybe in a couple of cases we were slow to respond to some of these newcomers who have taken a lot of space And believe me, we will fix that And going forward, the agility and speed of response from our company will go up significantly Sometimes when you have too many big brands and too much success under your belt, you lose a little bit on speed, and we are working to fix that So, I think you'll find that the retailers actually welcome the DSD suppliers to keep their shelves looking good going forward and that's what we provide with our beverage portfolio In terms of the third leg, we've tried to build it organically with success, Wimm-Bill-Dann was the last big acquisition we made, and except for the Russian ruble that went through its own share of challenges after we bought Wimm-Bill-Dann, coming out of that, the business has performed exceedingly well It's an ideal portfolio I think what we have to be very, very careful about ---+ if we went off and built that third leg through acquisitions, we have to think hard whether they're shareholder value creating, what kind of a premium do you pay for any acquisition and how do we realize the benefits of that deal enough to offset the acquisition premium And believe me, the stuff we've looked at so far, we don't see a clear path to that And so as we've said many, many times to all of you, we want to make sure that any major acquisition we may ---+ minor or major, I'm sorry; any acquisition we make has a clear path to value creation And if we don't see that, we typically do not make the acquisition We try to do things organically It may take longer, but they create much more value over the long-term <UNK>, did you want to add anything on that? <UNK> good morning Don't know Don't know, <UNK> You know what I think with our revenue growth rate, they're still up there in the top performance in the Whole Food and Beverage space And so it's an environment that requires us to modify our model, our innovation model, our retail, our outreach model And you know what, when you go through these sorts of transformations and you're tweaking part of the business model, there will be issues along the way If we focus on the year and looked at our performance versus other people in the space, I think we stack up pretty well, both on the top and the bottom-line And so will we lean harder on productivity, we will always lean harder on productivity, because we believe that we ought to take out any cost that is not value creating and put it back into investments in the business or flow it through to the bottom-line And that has been our modus operandi So, productivity will always be paramount in PepsiCo As we get better at it, we will keep doing more of it But we're not taking our focus off of growing the topline To us, growing the topline is really the right way to grow the company in a very, very balanced way So, we are redoubling our efforts to grow the topline We're looking to see how to spend the A&M that we put out in a much more efficient way To me, that's the Holy Grail We all spend a lot of money on A&M, how do you spend it in an efficient way so we get the appropriate lift from the A&M? But you know it's interesting times in the entire CPG world globally And we have the size, scale, capabilities, the brands to be a very, very important player in this business and a top performer and that's what we're focused on maniacally And <UNK> let me just close by saying; personally, I'm completely committed to this company because 50 time my salary is in PepsiCo stock And with that level of ownership, believe me, this is something <UNK> and I focus on 24 hours a day Good morning <UNK> <UNK>, good morning Yes, good morning <UNK> Yes, look even in Europe, our categories have had private label penetration, but not to the extent that many other HPC or other categories have had Having said that, we are not complacent about any of this Basically, I think, as we look forward, we're still looking at retailers, if they want to deliver margin growth in a period in which they're seeing price compression, they have a couple choices They can do private label or they can get more efficient or they can get innovation to the stores from the big manufacturers that drive more traffic and velocity So, I think what could happen ---+ <UNK>, this is just my perspective, is that you could see a bifurcation You could see big brands, big companies taking the burden off of retailers through DSD and by bringing our own label into the store and driving more velocity and traffic through the big brands and innovation And then you could see on the other end, a combination of small brands and private label that flanks it on the other side What could be squeezed in the middle is sort of the mid-size brands Now, this is just my perspective, and we've been looking at all of this really hard We think that could be a possible scenario going forward So, from our perspective, doubling down on big brands, making sure innovation is ---+ making sure execution is perfect; our whole system is aligned, so when we have to make changes, we can do it fast And then within our company, making sure we have enough levers on productivity so we can get more and more efficient deploying automation and other tools to be able to put it back on innovation, driving the topline growth, whatever we have to do I think that's going to be the game going forward As we said in the last call, this is going to be a period of brilliant disruption over the next three to five years and we're going to approach it with pessimism or optimism We actually think this could be a time when a lot of competitor balances could be reset And as perhaps the largest U.S company in food and beverages and the second largest food and beverage company in the world, believe me, we will play an outsized role in this resetting of the competitive balance Good morning Go ahead <UNK> So, thank you all for your questions And let me just summarize by saying we are pleased with our year-to-date results for the third quarter with strong results across most of our sectors and we expect our topline performance to accelerate in Q4 as performance at NAB recovers And we're on track to deliver our fifth consecutive year of at least 9% core constant currency EPS growth And we believe we are well positioned to continue to perform well over the long run As always, thank you for joining us this morning and for the confidence you have placed in us with your investment

2017_PEP

2015

SNBR

SNBR #Yes. In the 53rd week, right, in the fourth quarter.

2015_SNBR

2015

SPPI

SPPI #Thanks. Good afternoon and thank you all for joining us today for Spectrum's first-quarter 2015 financial results conference call. I am <UNK> <UNK>, Vice President of Strategic Planning and Investor Relations for Spectrum Pharmaceuticals. With me today are Dr. <UNK> <UNK>, Chairman and CEO; <UNK> <UNK>, President and Chief Operating Officer; <UNK> <UNK>, Chief Financial Officer; Dr. <UNK> <UNK>, Chief Medical Officer; Tom Riga, Chief Commercial Officer; and other senior members of Spectrum's management team. Here is an outline of today's call. First, Dr. <UNK> <UNK> will provide you with the highlights of the first quarter and discuss our overall direction and strategy. <UNK> will then provide a summary of our first-quarter financial performance. Following this, <UNK> will review the Company's operations, and Dr. <UNK> will review the pipeline. We will then open up the call to questions. Before I pass the call to Dr. <UNK>, I would like to remind everyone that during this call we will be making forward-looking statements regarding future events at Spectrum Pharmaceuticals, including statements about product sales, profits and losses, the safety, efficacy, development, timeline and clinical results of our drug products and drug candidates that involve risks and uncertainties that could cause actual results to differ materially. These risks are described in further detail in our reports filed with the Securities and Exchange Commission. These forward-looking statements represent the Company's judgment as of the date of this conference call, May 7, 2015, and the Company disclaims any intent or obligation to update these forward-looking statements. However, we may choose to update them and if we do so, we will disseminate the updates to the investing public. For copies of today's press release, historical press releases, 10-Ks, 10-Qs, 8-Ks and other SEC filings and other important information, please visit our website at www.sppirx.com. I now would like to hand the call over to Dr. <UNK>. Thank you, <UNK>, and thank you, everyone, for joining us this afternoon. We are looking forward to 2015, as it should be a pivotal year for several drugs in our pipeline. Today I would like to focus on our four most exciting pipeline assets. First, SPI-2012 remains our highest priority in the Company. At our analyst day on March 13, we shared the key Phase 2 data which demonstrated impressive efficacy and safety of our compound. If approved, this drug will compete in a worldwide market currently over $6 billion annually. The Phase 3 protocols have been developed in collaboration with both US and European regulatory agencies, and we are now busy selecting investigators and qualifying sites at this time. Secondly, I'm impressed with the clinical data with poziotinib, an oral irreversible pan-HER inhibitor currently in Phase 2 trials. With best-in-class potential, we believe poziotinib will successfully compete in a blockbuster market for which we have worldwide rights, excluding Korea and China. Poziotinib has shown single-agent activity in Phase 1 trials for the treatment of various cancer types, including breast, gastric, colorectal and lung cancers. We look forward to results from several ongoing Phase 2 trials with this drug. We are especially excited about the prospects of this drug in breast cancer where the early clinical data is very strong. We, therefore, are working to quickly develop our clinical programs to get this drug to patients in the United States as soon as possible. Third, we are making progress on apaziquone, a potent tumor-activated prodrug for bladder cancer. There is a high unmet need in non-muscle invasive bladder cancer, and apaziquone has shown promising data in a previous Phase 3 program. In consultation with the FDA, we are now finalizing a protocol for an additional clinical trial. And soon after initiating the trial, we plan to file an NDA with the FDA before the end of this year. Finally, I would like to highlight our propylene glycol free Evomela, whose NDA is currently under active review by the FDA. The PDUFA date for this drug is October 23, 2015. In February, we presented pivotal data that supports the safety and efficacy of Evomela in patients with multiple myeloma undergoing transplant. Evomela has increased stability, which allows it to have a longer use time, which in turn simplifies clinical administration. Once approved, we plan to launch this drug using our existing salesforce. Additionally, we remain active on the business development front. As I just mentioned, we already completed one asset acquisition this year, and we continue to evaluate out-licensing and other in-licensing opportunities that can position us extremely well for long-term growth. Before I hand this call over to <UNK>, our Chief Financial Officer, I want to express my confidence is unwavering, despite the fact that we have competition for Fusilev and expect significantly [devilish] revenue this year. We have been aware of this potential decline in sales and have planned for this eventuality. We remain focused on our long-term strategy. For over a decade now, Spectrum has been dedicated to advancing oncology treatments with passion and commitment. We are now focused on the two drugs in our pipeline that have blockbuster potential, and have a base commercial business to help fund our development stage assets. I'm excited about the potential for further growth and a promising future for the Company. Now let me hand over the call to our CFO, Mr. <UNK> <UNK>. And after <UNK>, Mr. <UNK> <UNK>, our President and Chief Operating Officer, and Dr. <UNK> <UNK>, our Chief Medical Officer, will provide you further details on our pipeline. <UNK>, please. Thank you, <UNK>. Good afternoon to everyone on the call today. Our press release covers all the important figures. So in my remarks, I will touch on a few of the highlights for the quarter. Total product sales were $38.4 million in the first quarter. This exclude $7 million of Fusilev that we shipped that did not meet our revenue recognition criteria, and is reported as deferred revenue on our balance sheet. We expect to record these shipments as actual sales later this year. The $38.4 million in reported sales compared to $40.1 million in the same quarter last year, a decrease of 4%. With regards to operating expenses, I want to point out two things. First of all, we took a one-time non-cash impairment charge of $7.2 million for Fusilev based on our expectation of lower revenues going forward, given the launch of a generic levoleucovorin. This was recorded in the amortization of intangibles line and won't repeat in future quarters. The second thing I want to point out is that we've taken a hard look at our budget and have cut or delayed funding to programs other than the key programs that we are highlighting here today. Based on the actions we have taken to manage our costs, we expect to exit 2015 with cash and cash equivalents of more than $100 million, excluding any new business development activities. I look forward to providing you updates on our progress over the course of the year. And with that, let me now hand the call over to <UNK> to provide an operational update. Thank you, <UNK>; thank you, <UNK> and Dr. <UNK>, and most importantly, thank you to everybody on the call for your interest in Spectrum. The future of Spectrum and the promise of our pipeline is exactly where we are focused in the long-term, and we are uniquely qualified to execute on it. There aren't many companies of our size that have such a strong, diverse pipeline. We continue to be excited about advancing it, and we are moving with urgency to capitalize on it. Spectrum is well-positioned for long-term growth. Let me provide you with an update on our commercial business, starting with Fusilev. As you all may know, generic leucovorin entered the US market in Q2. We expect our future revenues will be negatively impacted due to the competitive launch, but please remember this is an at-risk competitor launch that is pending our appeal in the legal system. Our PTCL franchise grew 20% year over year. Last year in the first quarter, Folotyn sales included a $1.6 million clinical trial supply purchase. That trial is over. It's important to point out that Folotyn sales grew by 8% year over year, excluding sales for clinical trials. The launch of Beleodaq continues to grow our PTCL franchise, and our team is laser focused on continuing to penetrate the HDAC market. Marqibo performance had an uptick in sales and, equally important, an increase in penetration in [Ph-ALL] treatment centers. You have heard us say in the past 77% of ALL diagnosis exists in approximately 130 centers across the country. This is of strategic value to us because these are the same centers that we will be targeting for the potential launch of Evomela. When approved, Evomela will be our sixth product in the market in the hematology/oncology space. This will in turn further help to fund our potential pipeline blockbusters. We are looking forward to October 23 of this year and being able to provide another treatment option to patients with multiple myeloma. Dr. Parameswaran Hari who leads the bone marrow transplant unit at the Medical College of Wisconsin presented data at our recent analyst day. Evomela was shown to be bioequivalent to standard Melphalan. Our product is propylene glycol free, and the peak in systemic exposure was about 10% higher. Efficacy and safety were consistent with what we already know for high-dose Melphalan followed by transplant for multiple myeloma. We look forward to bringing this drug to market with our existing salesforce. Also, we plan to file another NDA this year for apaziquone. This is an area of significant unmet medical need, and there's been no new product approved in the last 40 years. Let me now share with you the highest priority in the Company, SPI-2012, our novel, long-acting GCSF. Jeff Vacirca who is a prominent medical oncologist. He shared the key Phase 2 trial data that made our decision to move forward into Phase 3. As a reminder, SPI-2012 is not a biosimilar. Rather, it's a novel biologic and expands patient options. Our team is focused on preparing to start the Phase 3 trial, and we feel confident we can successfully compete in the $6 billion market. This is an important endeavor for us, and we want to make sure that everything goes well. We have sent the final protocol to the FDA. We are also actively meeting with investigators to get them on board with our program and to help make the trial available to enroll more quickly. We continue to set up sites to have them ready. We are thrilled to have this asset. Spectrum is uniquely qualified to commercialize this novel biologic. We have the commercial fortitude, broad experience in the white cell growth factor market, and the oncology wherewithal to make this novel biologic a success for patients, practitioners, shareholders and for Spectrum. Lastly, I would like to briefly comment on poziotinib. This new pipeline asset has the potential to be best in class. If you look at the market, current pan-HER inhibitors are billion-dollar brands, and current development companies are valued in the multibillion dollar range. While early, our Phase 1 data has us very optimistic about the future potential of this asset. <UNK> will provide more details shortly, as our team are working aggressively to develop this product. I'm confident in Spectrum's future through this unique and desirable position. <UNK> <UNK>, our Chief Medical Officer. Thank you, Dr. <UNK>. Let me conclude by reminding all of you that we remain very excited and energized about 2015, in spite of significant declines in our sales for this year. We expect to make major clinical progress on SPI-2012 and poziotinib, which are potential blockbuster drugs. At the same time, we expect to file an NDA for apaziquone and plan to launch our sixth anticancer drug, Evomela, with an existing salesforce. We plan to make all of this progress in a fiscally prudent manner so we can exit the year with a strong financial position. With that, let me open the call for questions. Operator. Let me take your first question, and then I'll have <UNK> answer your financial question. So at the analyst day, we showed you what our current plan was with which we have gone to the FDA, and that required two studies of 506 patients randomized against pegfilgrastim. And this will be ---+ the efficacy of the drug will be based on really first course of treatment, 10 days of dosing ---+ one dose and then 10 days of evaluation of the blood samples. We have taken this protocol and submitted to the FDA and, in fact, the FDA is currently discussing and we will be able to comment later once we have received the comments from the FDA as to what the final protocol will look like. But we are very actively and aggressively pursuing our discussions with the FDA. So the program that we had initially designed included 500 patients in each of the two trials. However, our meeting with the FDA suggested that, in fact, the number might be less than that. However, that has not yet been finalized. With regard to number of sites, as of today we have 50 sites that have been selected and qualified. Our goal is to have actually double of these sites. Between 90 and 100 sites are being at this time selected and qualified. With this, let me ask <UNK> to comment upon the second part of the question. Great. So <UNK>, I hope you are happy. I think that we are trying to provide a little bit more color for you. I think your question is a good one, and what we are trying to provide is the fact that we have sufficient cash and resources and are making the appropriate prioritization decisions within the pipeline to make sure that we fund these programs that we've highlighted today and make sure they are adequately funded. With regards to how far out we are going to provide that guidance, at this point I am only in a position to tell you about where we plan to in the current year. And we certainly have sufficient cash to aggressively fund these four programs that we've outlined today and still close the year with greater than $100 million in cash. Beyond that, we are just not at a point here where we can talk about that. So <UNK>, let me try to answer this question. So we have been in litigation for some time. This has been known to us for some time that there is a generic levoleucovorin. NDA has been filed approved. And we lost the case; Spectrum lost the case in the lower court. We have appealed the decision, and that decision is going to be heard sometime later this year. So in terms of the timing, I can't tell you when the courts will decide, but it is well-known that the levoleucovorin generic has been launched in second quarter. I believe it was on a certain date in April, middle of April. And the dates that my head of legal team is showing me here is that we are taking all these steps to vigorously defend our orphan drug exclusivity. And we believe we have a strong patent and we continue to ---+ we are waiting for the appeal; appeal is pending, and I believe the first thing is in August. The Court of Appeals has indicated that oral arguments will be scheduled for August, and a decision could come any time after that. Well, let me give some preamble here before <UNK> gives you a better answer. Listen, the Fusilev decline in revenue was well-known to us. No drug lasts forever. In fact, if you look at our revenue in 2013, our total product sales were $143 million. This year in 2014, we did $187 million. So how did we manage with $143 million. We kept acquiring drugs, we kept developing all of our programs, and we kept recruiting people. So, in other words, that we have been preparing ourselves to cost cut. And what that means is for you, <UNK>, that we have been de-prioritizing projects that are less sure, that would take a long time, and we have been focused on the products that add more value and could be quickly on the market. Just to give you an idea, SPI-2012 is a drug that you know as a GCSF. It does not require overall survival or progression-free survival that can take 5 to 7 years before you look at the data. Here we treat the patient and after one dose over the next 10 days, we know how the neutrophil count is. Duration of severe neutropenia is the endpoint. So these are studies we are very pleased to see the relatively ---+ the studies of our major drugs will be of short duration and, therefore, less expensive. So with this, I will have <UNK> add some more color for <UNK>. <UNK>, I think the color, though, is going to be pretty similar to our statements that we made at the beginning. We are expecting a significant decline in Fusilev, and it happens immediately following the launch. And the numbers that I've provided to you are fully inclusive of our expectation that we see a significant decline there, and that happens in Q2. Whether or not we can do better than that, that's great, but my numbers do not anticipate that. I think the fact is we knew this was going to happen. As <UNK> said, we de-prioritized the program and we're going to make sure that we fund these high-priority programs with everything we have. But you are absolutely right, we've taken a hard look at the operating expense and we are going to make cuts where we need to. <UNK>, you know we acquired the rights to poziotinib from our partner Hanmi in Korea. And when we acquired, we saw the data of Phase 1 and we saw that there were at least six Phase 2 trials that are underway. They are in various tumor types, including breast, gastric, colorectal, and some of those trials ---+ and lung. So there are four indications in which these trials have been ongoing. And some of the data ---+ some of the trials will be completed by the end of this year, and the data will become available sometime in early next year. It always takes time to analyze the data and whatnot. So when I'm looking at the schedule, some of these trials will be completed. I think what Dr. <UNK> pointed out to you that we are planning to start US Phase 2 trials before the end of this year. And mind you, all the programs that is currently running the six Phase 2 trials, we are not paying for those trials. They are still being paid and will be paid by our partner. You have followed apaziquone for a long time, and so I'll just give you the highlights of the trial. You remember the last trial, the endpoint of the trial was relapse rate at two years. And when you look at relapse rate at two years, we missed significance in each of those two studies, which were 500 patient trials. But when you combine the two studies, the data was highly significant at p-value 0.017. So we took this data, met with the FDA, and our understanding is and our decision is that we can go ahead and file the NDA with this drug. But FDA wanted us to start another trial, take all the learnings from the first two trials and incorporate them into the new protocol. For example, when we look at our analysis of the earlier trials, we did not see significance at two years, but data was highly significant at 18 months, 12 months, 6 months. So one of the major changes in the protocol for the new trial is that we are looking at time to relapse rather than relapse at two years. So that goes in our favor, and there are some other minor tweaks to the protocol. For example, instead of giving it once, we are now proposing to give this drug twice. So those are the two major things, and there are other minor considerations. However, I have to tell you that about 80 to 90 centers that participated in this trial in earlier trials in Canada and US, they are all excited and ready to work with this new protocol. This is another thing we learned, that this drug is deactivated by an enzyme that is present in the red blood cells. So, therefore, we have now decided in consultation with the FDA that patients with frank bleeding after TUR will be excluded from the analysis. In fact, if we go back and do the retroactive analysis of the two completed trials, there were about 20 patients out of 500 that had frank blood. If we exclude those patients, then the data becomes significant even at two years. However, we decided that in the new protocol we are going to ---+ our priority (inaudible) plan to exclude those patients from analysis, and FDA has agreed with that. Again, we are focusing on the FDA registration at this time. We have decided that at Spectrum right now, our decision-maker is FDA. We are working towards the FDA, and we are paying less attention to promoting these drugs at ASCO and ASH. So at this ASCO, there could be some paper to be presented by the investigators, but Spectrum is not sponsoring any of the presentations at this ASH meeting ---+ I mean the ASCO meeting. Thank you. We would like to thank you once again for joining us on this call today and your continued interest in Spectrum. Our passion is to deliver better treatment options for patients suffering from cancer, and we believe with the team in place and a robust pipeline, we are well-positioned for future growth.

2015_SPPI

2015

IVC

IVC #Thank you, <UNK>, and good morning. Since joining the Company in April, I've been travelling throughout North America and Europe to meet our associates, customers, and the people who use our products. These experiences have validated my beliefs that Invacare has significant opportunities and like the industry's compelling fundamental drivers, positive demographic trends in the markets we serve, and the proven clinical and financial benefits of home care. As CEO, I've spent the last few months focusing the organization on two critical priorities. Our first priority is building a strong, sustainable, quality culture throughout the Company. The second priority is generating profitable growth. There are a number of transition activities underway to make that happen, primarily in the North America HME segment, where we are aligning the team to execute. We've also positioned ourselves for the future by adjusting our capital structure and narrowing our focus on our long-term strength as evidenced through the real estate sale and leaseback transaction completed in April and the recent divestiture of the United States rentals businesses. Before I talk more about our short-term focus and strategy, I'd like to review our second quarter 2015 financial results. First, let's review the segments. Our European business, which comprises our full portfolio including mobility and seating, lifestyle, and respiratory products, had constant-currency net sales growth of 2.9%. With the ongoing pressure from foreign exchange, net sales declined 16.7% compared to the second quarter last year. The Asia/Pacific business grew constant-currency net sales by 6.7% with growth in both the New Zealand and Australian distribution businesses. Foreign exchange rates reduced net sales by 16% to negative 9.3% on a reported basis compared to the second quarter last year. Now I'll cover the two North American segments where we are focusing most of our transitional activity. In the second quarter the institutional products group completed the supply chain shift of its long-term-care bed facility. Driven by increases in bed sales as well as interior design projects, the segment achieved 6.9% constant-currency net sales growth and 6.1% reported net sales growth compared to the second quarter last year. The North America HME business, which is being realigned to achieve its full potential, experienced a net sales decline of 10.5% on a constant-currency basis and a decline of 11.4% on a reported basis compared to the second quarter last year. To offset the sales decline during the quarter, the team continued to manage expenses and still reduced its adjusted net loss by $6.2 million compared to the second quarter last year. For the Company's consolidated results, constant-currency net sales decreased 2.1% for the second quarter compared to the same period last year and decreased by 12.4% on a reported net sales basis compared to last year. Overall, adjusted net loss per share improved to $0.23 from $0.39 last year. The reduction in loss was driven by the decrease in SG&A expense of 17.7% to $82.5 million compared to $100.3 million last year. Foreign currency translation reduced net SG&A expense by $7.3 million or 7.2 percentage points. Constant-currency SG&A expense decreased 10.5% compared to the second quarter last year. Gross margin as a percentage of net sales was lower by 1 percentage point compared to the second quarter last year. This was driven by unfavorable foreign exchange, freight cost, and negative sales mix. Manufacturing costs were favorable. I'll now turn the call over to <UNK> <UNK> to discuss earnings performance for the segments and additional financial results for the second quarter. Thanks, <UNK>. All the references to earnings or losses before income taxes exclude restructuring costs. For the second quarter of 2015, earnings before income taxes in the European segment decreased $6.1 million compared to last year, primarily due to unfavorable foreign exchange and reduced gross margin, which was driven, in part, by negative sales mix. For the North America HME segment, loss before income taxes improved by $6.2 million compared to the second quarter last year. The reduction in loss for the quarter was driven by favorable SG&A expense from lower employment costs and by an improved gross margin as a result of favorable manufacturing and warranty costs. For the institutional products group, earnings before income taxes improved by $1.8 million, largely due to favorable SG&A expense primarily related to lower employments costs and depreciation and amortization expenses. For the second quarter of 2015, Asia/Pacific loss before income taxes decreased by $1.4 million. The reduction in loss before income taxes was largely due to favorable SG&A expense, driven by lower employment costs and a favorable gross margin driven by lower warranty and freight costs. In the second quarter, free cash flow was positive $9.5 million compared to negative $8.6 million in the second quarter last year. The second quarter free cash flow was favorably impacted by $23 million received as a result of the real estate sale and leaseback transaction announced on April 22, 2015. Excluding the cash proceeds from the sale-leaseback transaction, free cash flow was negative $13.5 million. Free cash flow was unfavorably impacted by increased inventory levels and a $1.9 million payment related to the 2014 retirement of an executive officer of the Company. Total debt outstanding, which includes the convertible debt discount as described in the release, was $49.5 million as of June 30, 2015. The Company's total debt outstanding consisted of zero drawn on the revolving credit facility, $13.4 million in convertible debt, and $36.1 million of other debt, principally lease liabilities which increased by approximately $32.3 million as the result of the sale-leaseback transaction. During the second quarter, borrowings on the revolving credit facility ranged from a high of $32.9 million to a low of zero, with an ending balance of zero. The Company's available borrowing capacity was $46.9 million as of June 30, 2015. As of the end of the second quarter, days sales outstanding were 49 days, up from 45 days as of December 31, 2014 and equal to 49 days as of June 30, 2014. At the end of the second quarter, inventory turns were 4.7, down from 4.9 as of December 31, 2014 and down from 4.9 as of June 30, 2014. I'll now turn the call over to <UNK> for some closing comments and then we can address questions. Thank you, <UNK>. Since April, we've implemented multiple initiatives to advance the Company's two priorities; establishing an enhanced quality culture and generating profitable growth. On the first priority, we are making progress towards establishing a sustainable, enhanced quality culture throughout the organization. I'm very pleased with the work and progress of the cross-functional teams on our quality implementation plans. While we are not talking about timing of the third-party certification audit, I want to assure you that establishing a strong corporate quality culture that will enable us to exit the injunctive phase of the consent decree is the number-one priority of the organization. To achieve our second priority of generating profitable growth, we are realigning the focus of the team, particularly in the North America HME segment. As part of this, I've recently appointed Dean Childers as the Senior Vice President and General Manager of the North America HME and IPG segments. I've worked with Dean for over 10 years in both private equity and medical device organizations. He has a proven ability to assess a company's strengths and opportunities and link customer needs with innovative solutions. I'm glad to have him as part of our team. During my travels, I've met many customers as well as people who use our products, who compliment the innovations and technology behind Invacare's medical devices. We truly do make a difference in people's lives in a market that's growing. This reinforces the opportunity ahead of us and we are committed to achieving the Company's full potential. I am pleased to be moving forward on this journey of recovery and growth. I want to thank everyone for their time and attention on today's call. We'll now open the phone lines for questions. Good morning, <UNK>. I wouldn't say transitional issues as a full-stop sentence. Obviously, the Company is not in the place it needs to be for financial performance so we have a number of transitional items underway. We're looking at all parts of the organization. You could go down the financial statement and look at how we generate revenue and how we incur costs in our manufacturing facility and what we're doing in engineering and so on. It's a full assessment of how we're re-orienting ourselves to generate more profitable growth and establish a quality culture throughout the Company as quickly as possible. I think there were a number of issues in the transition related to salesforce focus, re-orienting our priorities, the kind of assessment the teams have to do to determine what they were planning on doing and then realign with what we're now planning on doing going forward. I would also talk about the lifestyles single-user product line transition, which continued through second quarter. That was somewhat hampered by a longer duration deployment of inventory because of the West Coast port strike, which didn't allow all that inventory to come in. There were a number of minor issues like that that accumulated to that decline. I think part of the increased inventory levels were new forecasting for the single-user lifestyle products and then a fair amount of inventory that was stuck in transit through the transition of those products to North America including that West Coast port strike. <UNK>, we're completely focused on building this quality culture and there are a lot of things underway. And I'm not going to talk about the presence or absence of auditors or other artifacts along the way because I think they just don't have any positive predictive value on the timing or likelihood of an exit at any point in time. So, I appreciate everyone's curiosity. I can absolutely assure you it is the number-one thing we're focused on, but we're really not going to talk about those details until there's something that has that positive predictive value we're looking for. Good morning, <UNK>. <UNK>, it's <UNK>. I'll cover that. Just to put it in context, the earnings before tax were $12.3 million last year second quarter and were down about $6.1 million. So, the biggest driver, and I'd say easily 80%-plus, is a combination of FX translation and FX transaction. So, the big issue for the quarter was ---+ and we'll just use one currency though we have many in Europe ---+ the euro last year averaged about $1.38 and this year second quarter it averaged about $1.09. So that's about a 21% hit. So translation hurt us and then, additionally, transaction hit us, too. So, again, big driver for the quarter would have been, by far, FX. We did mention the sales mix. Similar to first quarter, we did have a combination of mix on product and mix on customers that didn't quite go our way. For instance, some of the bigger buying groups were stronger in certain countries. And, additionally, if you looked at product, we might, for instance, the example we gave first quarter was that the power wheelchairs we were selling were the lower-margin power wheelchairs than the higher margin. Just, again, a mix of requests from customers. So, not a major issue on the mix, though, obviously, important enough to mention. The big issue for the quarter was FX. Did that help, <UNK>. Sure. Sure. Invacare is comprised of over 50 acquisitions that have occurred over the Company's history. And I think the company culture has been very strong in terms of fostering innovation and entrepreneurialism on those small, relatively regional or local levels, based on all those little businesses that have great clinical solutions. My idea of a great company going forward is to have solid global platforms where those efficiencies make sense, but still be a company that's perceived as an agile, locally-competitive company in its markets. Because we do compete against smaller players in a number of markets that do have the potential to be agile. We can too. In between having great, strong global platforms and still acting locally, there have to be synergies to come out of the Company as we work more quickly, we have better products, and we're relevant in all those markets. I don't know whether it's the number you had mentioned. I haven't done the reconciliation back to that number. I think that comes after a structural look, which comes after a strategic look at how we move forward in the first, second, and third years going forward. In the short term, the quality culture enhancements are our number-one focus and we're putting together plans to understand how we can do the layering of global excellence and regional excellence and, from that, we'll get to what those cost reductions or profitability changes are. I'm sure they're out there. Sure. Thanks, <UNK>. Yes, <UNK>. Good morning. I'll give you my version of that. And, <UNK>, any other comments. I think ---+ I look at the business in the segments first, as I had mentioned this morning. I think Europe, where we have the full portfolio of products, looks like Invacare in total. I think North America, where we have ongoing focus for quality enhancements, we obviously have the impairment of the injunctive phase of the consent decree, we have more transition going on and you can imagine that when you change some things other things change consequentially and I think the second quarter results in the North America HME segment reflect the consumption of some of our attention as we migrate from all the things we used to do to a fewer number of focused things in the future. So, it's not surprising. But, to be good managers we've got to continue to deliver bottom line improvements, which is why we've continued to focus on overall cost containment and tried to hold or improve, and we did improve the overall bottom line in terms of earnings from that segment. <UNK>. Sure. The charge overall is sales effectivity, which is everything from opportunity alignment to training and knowledge base to brushing up on consultative sales skills to making sure that our sales team is very in-tune with clinical outcomes that we can provide with our great solutions. So, I think all of those are all kind of a brushing up on sales acumen. And then, overall, we want to make sure that we're aligning our consultative skills-based sales organization towards the appropriate mix of clinical-complex solutions and looking for efficiencies to drive everywhere else in the organization in terms of how we provide products and solutions to market. And that takes time. It's not surprising that it happened and some impact on the quarter. And we expect improvements in the future. I think, yes, there wasn't ---+ we didn't buy a lot of plane tickets to bring people back to headquarters, but there was certainly a measurable amount of time in opportunity assessment, the kind of CRM programming that you do, customer relationship management programming that you do, an assessment of the effectiveness of sales hours towards sales opportunities, and making sure we're always able to provide the best clinical outcomes proportional to what our products and solutions can do. And that absolutely consumed time. Not any differently than it would on a normal basis, not holistically, no. Just back to your original question about the one-times. There weren't any particular one-time benefits or impacts in the second quarter. It was a relatively clean quarter. But, then again, I just, for the benefits of the shareholders or people listening on the call, the adjusted earnings per share loss in the second quarter was $0.23 and for the year to date is $0.44. So, we're right ---+ very close to where we were on the first quarter. And given the performance on the sales line for North America HME, I would say that that's a good performance from that vantage point. Again, I think we managed what we could manage in the quarter. Yes. You know, when we have something that I think has positive predictive value that really indicates where we are and the outcome with respect to the injunctive phase of the consent decree, we will absolutely do that. My focus and what we can control is building this quality culture. I obviously can't speak on behalf of the FDA. It's our objective to give them an opportunity to audit us and have good evidence of how we are embracing what we need to do, but timing of that is TBD. We'll be back with shareholders and public announcements when there's something that has real predictive value. Well, you know there's a timeframe there so the moment we complete the audit there may not be anything. At some point, when that's completed there are reports. There's exchange of information with the FDA, for example, and then, ultimately, a resolution. So where within that timeline we'll have a specific indication of outcome, I don't know. Yes, the latter, I think. You know, as part of the privilege of selling a medical device, the FDA can come at any time and the FDA's presence or absence in a company, ours or anyone's, is not particularly indicative at any point in time. So, we may not say anything until it's all over and we have an affirmation or some other change in our circumstance. Yes. Thanks, <UNK>. Well, once again, I want to thank everybody's support and attention this morning. We look really forward to growing this business and continuing to dialogue with you on changes in the Company. Thanks again for your help and I hope you have a good day.

2015_IVC

2015

PBI

PBI #Again, you wouldn't expect that I'd make specific comments on that. As I've indicated before, the portfolio's an evolving subject so we've put pretty strict criteria around how you stay in the portfolio. It's getting acceptable returns, so being a leader in your relative segment and strategic coherence and those things evolve over time. So I would say the portfolio is something that okay now we're done, the portfolio will continue to evolve as the business evolves. Sure. I would say we continue to operate to plan. Basically, if the high level way I look at this is 2014 was really the planning and designing phase, 2015 is the build phase, 2016 is more or less the implementation phase and 2017 is when we get the bulk of the benefits. And to drill down a level, we're far along in the build phase now. We will look to at least get a pilot going before the end of the year and then as I said, 2016 is likely the bigger year of implementation, the biggest year of implementation, so we're tracking along to the plan. We've maintained a very high level of out of box, meaning utilizing the standard system configurations and minimizing the amount of customization we're doing. That said, it's a big program with lots of people involved across the organization but we see a lot of benefits that will come from being able to streamline the business. Some of it, as <UNK> mentioned earlier, benefits in our traditional businesses and I think the other big benefit is, it will be a robust platform we can grow our digital commerce businesses on as well. So steady as she goes, as they say, and we'll continue to update you as we go forward. Thank you. So let me close. As many of you perhaps noticed last week, we celebrated our 95th anniversary. That's a tremendous accomplishment, no matter how you want to look at it. It really speaks to the outstanding work of generations of employees, decades of market defined innovation and a relentless focus on the success of our clients. It's an important milestone in our history, but it's just not a milestone. We're in a multi-year journey to transform this Company and while we made significant progress in the last 30 months, we've got a heck of a lot more to do. I closed our year-end conference in February by saying that's hard to know precisely what 2015 was going to bring. I think that's turned out to be true. I don't think with particular impressions at the time but it is a choppy market environment. I also said, however that I like our position. I like the hand that we've got, I like the opportunities that are in front of us and importantly, we're not building then Company for a quarter or for even a year. We're mindful that we've been around for 95 years and we're really trying to create the foundation for our future and to build a bridge, not just for the next five years but to our second century. We're going to move forward in a very disciplined focus. You see that in our results. You see it in how we manage expense, you see it how we manage capital and again, all of that's for the long term success of the Company. I appreciate everyone's interest in this story. I appreciate your questions this morning and we'll talk to you in 90 days, thank you.

2015_PBI

2015

ULTA

ULTA #I'm glad you asked that because it's an exciting area for us in terms of future growth because really a small percent of our loyalty guests today are using the salon. We are doing a lot. I'd say it's coming from a lot of things. One is we've offered a new online booking service that we know is driving largely incremental new guests, thousands of them in fact. And then also our marketing programs right now are getting more and more focused on integrating makeup and hair and trends and they're very exciting. I think we're actually bringing to our store associates this kind of trend training that we talked about, bringing it to life inside the store. And certainly every get that comes into an ULTA store whose a potential new loyalty member, our associates in-store are doing great job of converting them into the loyalty program, because they understand that that's important for the business. So all those items will work together, we think, and will continue to be a key part of our growth story. We won't get real specific numbers on it, but it is something that we've measured for a while and we are seeing really, really healthy growth. And that growth in effectiveness of our email campaigns is really fundamentally coming from, I'd say, two places. One is better targeting, so we are understanding our consumers' desires, we think, a little bit better, and personalizing the emails to them. And then the offers, the items and the creative that surrounds them we think is better as well. So the emails themselves are better, better items, better offers, better programs that are personalized in much sharper ways, and those things have really worked well. So we are sending out more emails, but we're getting much more effective and efficient in doing it and we think it will be a big growth driver for us going forward. That's correct, you got that. Yes. Third quarter when we flip the switch at the beginning of the third quarter, and that's when it was, right, just doing a store or two and now we're to ramp it up, and it will get more efficient over time. And as we get into the fourth quarter, it's going to service 130, 140 stores. So at that point it will be more productive and be contributing more or less drag overall, I guess I should say. You know I would say that I don't know that I envision another big change here. This is a gradual process, that we've been working on really for some period of time, which is the kind of the careful experimentation, testing and learning, trying things differently and changing such that our marketing mix now ---+ I wouldn't say it's blunt instruments so much anymore. I mean, I understand your question, but I think we now have a really robust array of tools that are getting better and better as it relates to effectiveness and efficiency. So I would just consider this a core part of how we're going to always do our Business, which is constantly look for how can we be driving long-term brand equity, which is really important if you understand what ULTA is and they're aware of us. They understand that we are all things beauty, all in one place. And then lots of surgical tools to drive the short-term, day-to-day results that we need. So it's an ongoing piece of how we're going to do the business, <UNK> and his team are all over it. And that's how we look at it. Well, we're really just starting the national television advertising, as you know. So that's another kind of shift in the balance of the mix. I envision that we'll be able to hold our A-dash ratio pretty consistent over time with the mix being getting more in balance, but I'd say it's getting there gradually. It is not wildly out of balance. I think we're moving into a place that will be pretty sustainable for the long term. Thank you. Yes. In closing, I'd just like to say I'm very proud of the excellent results that the associates across ULTA Beauty are delivering while making significant progress on all of our initiatives, marketing, merchandising, supply chain. I want to thank you for your interest in ULTA Beauty and we look for to speaking with you again soon. Thank you.

2015_ULTA

2015

IIVI

IIVI #I think <UNK> would add ---+ or maybe I will ---+ that some of the products we had in prior quarters that were losing us money we are not shipping anymore. We priced out of that business. So I don't want you to miss, you know, the actions we've taken should benefit us going forward. This is Fran. I'll make a stab at this, and <UNK> can add to it. I think the transition of new assembly line lasers from CO2 to fiber has crossed the 50%/50% point now and our business we've set up in the fiber laser side of it our components are good. Sales there are very good. As I think <UNK> mentioned in his script, or I mentioned in mine, there's softening in China. That was an important place for us to be working, and certainly they started very aggressively. And now they've slowed down as their economy is slowing. But we expect that to rebound. The overall trend by customers ---+ whether they are going to buy fiber or CO2 ---+ it's hard for us to see or to hear. Our customers ---+ some of them do both. So when we hear from them, we are mostly talking about CO2, because that's not an area that we are building a product that competes with our customers. On the fiber laser side of it, we also see how that business is growing; but it is really dominated by one company. And you can watch that company ---+ they are doing well, but our businesses that are in that space are doing very well also. Our HIGHYAG unit, where we make cutting heads ---+ we've come out with new laser light cables, and QVH connectors, and improved cutting heads, all to be in that one-micron space. So that space is, I think, fine, with the exception of China being a little slower. This is Fran. I was making the comment relative to the overall market, the overall business out there. I think if you said that it's a 6,000 high power CO2 plus fiber units go to the field each year, it would be 60%/40% or maybe something like that ---+ fiber laser the bigger number. The number we usually give is of our total Company sales. We are in the 15%, 17% of our total sales are toward the one-micron business. Some of ours are very much the passive components that go into people's fiber lasers or the semiconductor lasers that go into them that we sell to those manufacturers. Okay. To an extent, yes. Remember, we are down in the food chain. The OEMs are building CO2 laser machines or fiber laser machines. We supply to both of those OEM sets. So our business is about a half a step behind. So whether a customer, an ultimate user ---+ pick an auto company or a job shop ---+ where they are going to make their buy-in, they are not really in our ear talking about it. They are talking about it to the OEMs and the aftermarket system builders. So ours is a half-step back. And we have a reasonable feeling, but not an exact feeling. This is worldwide we are talking about. We work in the telecom network, in the long-haul, in the metro. We are also participating through our customers into the data center itself. And as I mentioned in my prepared comments, some of the Web 2.0 customers that are operating data centers and running them are also beginning to talk to us as well about our capabilities. I would say that we have some activities with many of the large data center customers who are at least in contact with us about our capabilities, our product portfolios, and our roadmaps. But our primary channel to that market is through our customers today. This is Fran. Nice to meet you, <UNK>. The change in laser solutions from fourth quarter to first is rather usual for us. The CO2 laser business tends to slow in the first and second quarter and then improve quite nicely in the third and fourth. So that would be mostly driven by the CO2 business being down. It really has to do with the aftermarket ---+ the running of the lasers around the world and how that replacement parts business happens ---+ slows down in late summer as the Europeans are on holiday, and does okay and September, October, November ---+ it shuts down again in December and then runs pretty good in the entire second half, January to June. The only thing I would comment ---+ we see our business with the components that we supply to fiber laser, or disk laser people, or even direct diode laser people up ---+ no doubt about it. But for the end product, the end lasers themselves, we are selling to those people that are selling them into the market. So ours is secondhand, but it is sure growing. Thank you, everyone, for attending. We expect another year of good progress here in FY16. We're happy with many of the new products we've been out with, and <UNK> mentioned many of them, and they are both in all areas ---+ all three of our segments. We haven't gone over those, but we are working hard on that. And as <UNK> <UNK> said, our intensity to improve margins remains unaffected. We are keeping working on it. And our reductions in costs that we have taken during this year, I think, set us up to have a very good year. Thanks for attending. Goodbye.

2015_IIVI

2016

EAT

EAT #Well, we think that consumers are interested in transparency and having options, and so we will continue to build out our food pipeline and innovate around that belief. Some more ---+ we will do more with these kind of ideas. Whether they're ---+ what the implications are and in the menu, it will depend on how aggressive we want to get with that. And so I can't really give you a message there. We're committed to keeping our business model intact. I can say that. And we're charging a premium for the grass-fed patty and having no problems with it and guest feedback has been outstanding. So we will continue to, as we get more and more involved in this journey, to understand where the consumers' heads are at and what the appropriate level of pricing is for some of these products. For this quarter, it was a little over 3%, just reflecting timing of some minimum wage changes. And the guidance is slightly below 3% for fiscal 2017. Well, first, the absolute number ---+ whenever we put a more concentrated server driven initiative out there, we pop it a little bit more, <UNK>, from an absolute standpoint. We see those a little bit of a bump up, but the relative improvement over prior year has continued. So we are selling ---+ doing a better job every day with what we offer and our operations teams really getting out there and getting their team excited about the innovation that we're bringing. We really are encouraged by what we're seeing in the handfuls of restaurants that we have rolled out the craft beer initiative in. And so as we accelerate that through this quarter and hope to have almost all of our restaurants with almost double the number of taps with craft, local craft beer offerings, again, those are the kind of things that we don't have to add labor or servers to get excited about those products. The consumers get excited about having those products available at Chili's and that's another source we anticipate and are counting on continuing to improve our alcohol mix. No, we have ---+ our servers have plenty of time to do that. With the introduction of Ziosk, for example, a lot of time that the server spent getting the check and running back and bringing it back to the guest to cash them out, that all happens now by the guest pretty much and frees up that time for the server. So we have opened up opportunities for servers to have more time with our guests. It also has allowed us to be a little bit more efficient, but as we leverage technology and we figure out how to merchandise effectively, we feel like our guests' and our servers' interaction hasn't suffered. And of course we track it with, again, with all the feedback that we get through our 25% of our guests that give us guest satisfaction surveys every day. We have a pretty good sense for are they having the kind of interaction we think we need to continue to have to make people feel special and to drive that intent to return number to where it needs to be for us to be successful. We are looking at a rent-adjusted leverage, so that would be an EBITDAR base. And it's currently running around any given quarter 3.25, but another half a turn to 3.75. And those are ranges, so they can vary, but that broadly is some direction. With regard to transparency and where the supply chain is, I think it's coming along. I think the consumer is forcing the supply chain to move itself to a point where more of the products that certain segments of the population are interested in are available, not just in grocery but also in various restaurant environments. So, that's encouraging. We're working with partners and with actual growers to say, hey, listen, this is the kind of thing we're hearing and seeing and we need to have those alternatives for us. And again, I think the grass-fed patty is a great example of us and our supply chain team finding a supplier that can make that available to us. And I think there will be this transitional period to some degree around is it a full swap out or is it an option like we're making available now within the burger category as consumers weigh the costs associated with some of this product, which can sometimes be a little higher. And then just how important it is for them specifically. So we think it's moving and we're excited about leading some of that with our partners. And <UNK>, it's <UNK> here. On your second question, we're comfortable with our current business model and the cash flow that it generates to support the leverage. We obviously will continue to evaluate other options over time, but believe the best value creating opportunity now is to continue to drive the Chili's business and this leverage event. We understood, <UNK> (laughter). Hey, <UNK>, <UNK>. Obviously, we have a number. I'm not sure I want to share it on a call because everyone should be working on their own set of assumptions and I don't really want to give ---+ I'm more than happy to give you it, but I don't want to give anyone else that number. We'll just leave it to we don't anticipate, like I said, that this is going to be a whole ---+ that the category is going to get a whole lot healthier in the near future. And so our expectations is that we are going to take share, so obviously we think the category is going to be less than that, and exactly how much softer is kind of everyone's guess. Yes, I think it's that whole idea of it's not one approach. So the value message ---+ we are on TV today with, at any point in time, two or three different messages: a lunch message, a dinner message, a brand message. We've got technology in the mix. We've got food innovation in the mix. There's a lot of things that we're bringing to the table ---+ new to-go, the rollout of Olo and leveraging, again, the fastest-growing piece of our business, which is that to-go piece with a much more we think consumer friendly and really it's an engine that we can actually market and push harder. So, we've got a lot of things in the mix that we think we're going to have to push to stay ahead of the competition. There's a lot of good competitors out there. And you're right, everyone ---+ there's a lot of transparency, especially when you're on TV, so there's no real secrets. It's about who can execute and who's got the resources. I think that's a big part of who's going to win in the future. And we have the resources where we've shown our willingness to invest in things and like technology and in innovation and we're going to continue to that. And so that's how we plan to stay ahead, is to not just rely on one promotional idea like 3 For Me, although it's a great idea. Okay. Well thank you, Dave, and thanks to everyone for participating this morning. I want you to note that our first-quarter fiscal 2017 earnings call is scheduled for October 25, 2016, and we look forward to all of you joining us then. Have a great rest of the summer and good day. Thank you.

2016_EAT

2015

WDC

WDC #In TAM, <UNK>, overall exabyte growth for the market, we're predicting a 15% growth as a CAGR. And particularly as it comes to capacity enterprise, we have commented on that earlier, we see a 35% growth in CAGR. Longer-term, we would expect the TAM to be flat to maybe down low single-digits. You are referring to PC OEM pricing. I would just comment that I don't think we have seen anything notable from our perspective. One comment and not to take offense to the way that the question is phrased, but I don't know if I necessarily like the characterizing it as either offensive or defensive. This is a strategy that we have thought about quite a bit. We think it is going to be good for our shareholders, good for our customers and it is going to allow our Company and our business to grow. So if you want to characterize that as offense then feel free to do so. Yes. What percentage we will have to see and we certainly haven't called anything out publicly. But clearly the mix of our business and the traditional hard drive space is improving. And as it improves, and as the PC related part becomes a frankly, smaller and smaller part of our business, sooner or later there's going to be an inflection point we'll begin to show improvement in revenues in terms of the overall hard drive market as well as a better margin posture as it relates to that underlying business. And so the hard drive business remains a great business. It is just the mix is shifting. Right. In a favorable way. Nothing to talk about at this point. Obviously, we're going to continue to evaluate and think through our go to market strategy in China. China as a market, first off, it's a huge market. It's a growing market. It's evolving market. As you see some of the hyperscale guys there grow or telecom companies, et cetera, we're going to have to look at ways that we evolve our go to market capabilities in that market. Nothing specifically to talk about now. Relative to what we saw, again, our margin decline on a quarter-on-quarter basis was purely driven in ---+ was mix related and I don't think there's anything unusual from our perspective to call out on the pricing front. Yes, we're managing our cash flow tightly and we would expect the flow not to have been achieved. We think we can improve further on these metrics. Well, the first thing is just to clarify, we haven't called any of that out in terms of what you are talking about. I'm not going to comment specifically on that. What we have said is that the lion's share of that $500 million will be the benefit that we will get by being vertically integrated in our SSD business, our existing SSD business. And there will be some OpEx synergies but we have not quantified that. By the way, the other thing is, is that we've indicated the $500 million will be 18 months after the close of the transaction which basically means that there will be further synergies beyond that 18-month period that we have yet to quantify publicly. Well, it's exclusive of the benefits that we will get from the existing SanDisk business. So it is additive to whatever you might happen to estimate that the existing SanDisk business would be able to generate. It is additive. I don't know if I used the word conservative. But it does include an estimate of some OpEx synergies. But we haven't quantified specifically what the OpEx versus the vertical integration benefits, we haven't quantified that difference. But we've also indicated that we would expect that number to increase over time beyond that 18-month period. Thank you again for joining us today. In closing, I want to thank all of our employees and suppliers for their commitment and outstanding execution and our customers for their continued business. Thank you so much.

2015_WDC

2016

AAN

AAN #Yes, this is Douglas. I was just commenting on that. I'll refer to your second question first. Yes, I think what we've seen is an improvement in our rate of decline. So we are still low-single-digits negative, but we are seeing stabilizing in that number, which is good. In terms of the deleverage on the expense structure, we're continuing to look at that, but we're looking at it across the organization. So it's not just store costs that we're looking to get more efficient in, it's also our regional structure and through other store support centers. So we'll continue to look at that and its asset, as well as our footprint in each of the markets we are in. Thanks, <UNK>. Good question, J. R. We will just limit it to saying that we are really happy with where the pipeline sits today. We've definitely seen an uptick in conversations across the board over the last 6 to 12 months as more national retailers become aware of the offering, the value proposition for their customers. And that's in step with ongoing positive dialogue with regional retailers. The door growth that you saw in Q4, Q1 and Q2, is really representative of a pretty broad base of growth across both those buckets, regional and national retailers. Yes, great point. When I referenced earlier the excellent performance from our operations and collections team, certainly included in that would be the performance of the customer service hubs which we have across the country. We are now at 22 hubs, and those teams are performing well, and that's providing a nice lift in our write-off performance that we're benefiting from year over year. So the teams are doing a great job. And as you know, that has to start with underwriting. So our decisioning teams are doing a great job getting us started on the right track with good decisioning up front, good decisions up front on the applications that we're collecting. And that flows through to execution for the tail-end, with the operations team. They're all doing a phenomenal job. Yes, so as you know, we launched our national partnership with Cricket in June. The launch was a success. We continue to see penetration into our store base, and deliveries increasing in that category. We're continuing to monitor it. I think the most important thing is, we are being tight with our inventories and not trying to over-buy in the category, and make sure that we are selling through what we have, and understanding the real profit margins in the category. So it's early in the Cricket relationship, but we've had good adoption, and we will continue to monitor the category. I think in terms of the rest of the year, it should be accretive to our same-store sales. But it's too early to say, really, how big that number might be. Yes, J. R. , it was between 50 and 80 basis points in Q2. It's pretty small. Good question. Ryan here. So you would see in the pipeline examples of retailers that currently exist within our base, of approximately 14,000 active doors. And as you know, across that, while we have historical strength in our core furniture and bedding, within the last couple of years have expanded outside of that to include verticals like mobile phones, electronics, jewelry, appliances. And you would see all of that if you looked in our pipeline today. Yes, sure thing. First, on the decisioning. So we invest a lot in folks to run our decisioning systems. We have teams of data scientists and statisticians who are doing a phenomenal job in that area of the business. Their mandate really is to generate consistent enhancements to that system. So there's not really a step function, so much as it is continual improvement in that area, which we saw again in Q2. And like I say, their team is doing a great job there. The confidence that we get in those results is that they are supported by consistently positive metrics across the business. If you look at those origination statistics, but flow that through the rest of the business to look at early indicators of lease poor performance, delinquencies on down the line, operations on our customer service centers, which we referenced earlier. Our estimates of mature poor performance, they all support the same positive message about the quality of the lease pool that we are currently managing. So the team is doing a great job there. Very confident in their execution. On competition, I think I'd say it remains pretty consistent with what we've seen in recent quarters. For some time now, there have been several folks following on the lead of Progressive in the virtual market, and coming to market with similar business models. And that really hasn't changed in recent quarters. Our job, and what I feel the team has executed well on, is to remain very price-disciplined. And if you saw our average pricing over time, it would reflect that. As you know, the 90-day buyout option and the low customer pricing has been differentiating features of our offering since inception. So we haven't really had to change that in response to competitive dynamics. They decided to discontinue the pilot. This is <UNK>, I'll give it a shot. And Douglas, feel free to add. We get asked this question a lot. We've been asked it for the last couple of years these macro changes have happened. But really, the one thing we've seen from a macro perspective in our numbers, has been the impact of the oil price decline in Texas that happened really this quarter, starting in last year. And other than that, we really haven't seen a big change in our customer base. That certainly hurt us last year, and we think that's improving from a number of perspectives now. But really that would be kind of view on employment. So employment in those areas obviously declined, and that hurt us. But generally, we haven't seen other macro factors like lower fuel prices necessarily helping our customer, or other macro factors hurting our customers. Well, and I'll take that. We're working on a thorough review of our entire spend structure, Douglas mentioned earlier. So that process is underway, and we aren't prepared yet to give kind of the numbers on that in any regard. But we are certainly taking a hard look across the organization to make sure that we have the right cost structure, given the demand environment that we've been facing. And in terms of variability in performance, that's something we are working on every day. We are really trying to focus our operations organization and tightening our variability and lessening the distribution of performance variants within the organization. We are also narrowing our focus on the goals that we're trying to achieve. There's lots of levers we can pull in the business, and we are just trying to narrow the focus on those levers and drive lesser variability across our units. Yes, and if there is any positive in the fact that our performance ---+ what Douglas just said is that there is variability. So with better execution, we should see improvement. And that's something that ---+ that's the reason we brought Douglas in. And we think we can move the needle there, and as Douglas said, pull that lever, plus other ones. So we are optimistic about it, but we're ---+ it's a difficult environment, so it takes some time. Sure. So I'll go first on Progressive. In the second quarter, bad debt expense was 9.5% of revenue versus 9.8% the year prior. And write-offs were 4.5% of revenue versus 6.1% in the year prior. And on the core of the write-offs, we're 3.7% versus 3.6% in the year prior. And there's not a bad debt metric in the core. Good morning. Obviously you're getting my interpretation of the success of the pilot. But I think execution in the store was a bright spot. I think it was tremendously successful, and we evolved the product a bit to excel in that environment. And I think the team did a phenomenal job on execution there ---+ both teams. We enjoyed a great working relationship with our counterparts at Walmart, and our team certainly did a phenomenal job, both in Salt Lake and in the field there, in the pilot. Certainly not a factor, as far as we're concerned. Yes, the one thing I would add to that, that Ryan mentioned. We really did innovate our product because of the pilot. And I think it will serve us well with other retailers going forward, and it probably already has. And Walmart is a process-driven organization, and that helped us improve. And those are dividends we will be able to reap over the next few years, I believe. We don't have a view on that. I think Walmart can ---+ they are a big company, they can do a lot of things. I don't know if this will be an area of focus for them or not. I don't think that factored into it, but we don't have a lot of visibility into their full decision-making process. So your guess is as good as ours on that. Yes, I mean we expect we're going to have to continue to innovate and evolve, just like the retail landscape is doing across all offerings. So we expect it will grow. We want it to grow. We do truly look at it as an omni-channel approach, in that we're partnering with the stores. And so it's just another avenue for our customers to get the product and then be serviced by our stores and our service network out there across the country. So yes, we've talked about a mid-single-digit contributor in 2016. But we expect it to continue to grow in future years. And <UNK>, that depends to some extent on what our store footprint ends up looking like. So over time, that's going to evolve, as it has in another retailers. And I don't think we know enough about what that footprint is going to look like in conjunction with e-com yet. So it really is an evolution that we're trying to make, and also do it profitably and smartly. So I mean, we certainly tag our capabilities on e-com via Aarons.com in all of our advertising. We're doing a decent amount and an increased amount versus last year on digital spend, as it relates to paid search and display and social. But we don't have like a ramped-up campaign right now on e-com. We see every time we advertise, and generally, whether it be television or campaigns, or even Addo, we can see the spikes on Aarons.com traffic. And we are working really hard to optimize conversion of those visits to Aarons.com. And so that's a lever and a dial that we can test and learn, and continue to get better at. Nothing material that we've seen. We're constantly looking at that assessing our wage versus the market, and what's going on out there. But nothing material to speak of. Thank you. Thank you. And thank you for your participation on our earnings call today. We look forward to updating you on our next quarterly call. Thank you very much.

2016_AAN

2017

NDSN

NDSN #Good morning, Walt. I'll just make a couple of high-level comments. The overall Vention business was put together through a series of acquisitions, some more focused on, I'd say, the service side of the business and some more focused on sort of the technology side of the business. And the owners in the process decided to split this up into sort of two pieces. And as we said before, we like the position where you have the opportunity to be a solutions provided to a customer where you've got differentiated capability, and we certainly so that in the Vention AT business, and that's why we were most interested in that particular business. There will be a modest ongoing relationship between the two businesses and contracts to cover that, but it's not significant in terms of the total. So they operated as fairly independent businesses. No. There's some products that go back and forth. It's a very de minimis amount and we will have agreements in place to address those, but it's not significant. As <UNK> had mentioned, there's certain capabilities with each of these sites that are important, and, quite frankly, the locations are important from a medical device, particularly front end design standpoint. So we really like the locations that we have and the presence we have in sort of the hotbed markets of the medical design space. I would say we're encouraged by the activity that we see in terms of the opportunities. I'd say we're finally starting to see some of the excrusion, the film part of the business, pick up and that shows up most in our dies business which is looking better. I'd say the injection molding part of the business has been on a strong run up until about six to nine months ago where it's slow down a little bit. I'd say that part is continuing. So I'd say we expect this to be a positive year from a growth perspective, but a lot of these are bigger projects. We're working on them now. They need to come through to have an impact in the year. But I'd say we're encouraged by what we're seeing from an opportunity standpoint, but it's on everything working in concert, much like the [Kwerties] business where we've got a couple parts of the business looking pretty attractive and other parts up against tougher comps and not quite as attractive right now. But, again, anything that's really more consumer non-durable-related is looking pretty strong and the durable piece is, I'd say, at a good level but not as strong as we might have seen in parts of last year. Thank you.

2017_NDSN

2017

BNED

BNED #Good morning, and thank you, and welcome to our second quarter 2018 earnings call. Joining us today are Mike <UNK>, Chairman and CEO; <UNK> <UNK>, Chief Operating Officer, Barnes & Noble Education and President of Barnes & Noble College; <UNK> <UNK>, our CFO; <UNK> <UNK>, Senior Vice President of Strategy and Chief Risk Officer of Digital Education; as well as other members of our senior management team. Before we begin, I would remind you that the statements we will make on today's call are covered by our safe harbor disclaimer contained in our press release and public documents. The contents of this call are for the property of Barnes & Noble Education and are not for rebroadcast or use by any other party without prior written consent of Barnes & Noble Education. During this call, we'll be making forward-looking statements with predictions, projections and other statements about future events. These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any forward-looking statements that may be made or discussed during this call. At this time, I'll turn the call over to Mike <UNK>. Thanks, Tom, and good morning, everyone. The higher-education market continues to evolve rapidly. Enrollments, particularly at 2-year colleges, continue to decline and we're experiencing rapid competitive changes. This fall, we experienced lower average selling prices on course materials for the first time in many years, driven by lower publisher prices and continued student migration to lower-cost Courseware alternatives, including digital offerings. All sectors that serve the higher education industry have market-driven pressure to change and adapt business models. This reality applies to the businesses that BNED operates with necessary changes being of both a short-term and longer-term nature. Each of our businesses, BN College, including LoudCloud's and Student Brands' digital services, MBS, with its wholesale MBS Direct virtual stores and MBS systems customer base, are all executing on plans to respond to these changes taking place in the markets we serve, including changes related to the following well-publicized challenges. There's an increasing emphasis on affordability and measurable achievement by our college partners, students, faculty and many state governmental agencies. All are demanding a higher value to cost ratio from providers of services and content. Declining enrollment trends, particularly at locally ---+ local and state-wide community colleges that have shown highly elastic negative demand correlated to very low unemployment rates in the U.S. An accelerating shift to digital and other less costly formats of developing and delivering educational content, including declining physical textbook volumes whether sold or rented, new or used, which we expect to continue to decline as a percentage of total learning formats used. For the first time, average sale prices, as mentioned, on educational units offered by publishers declined this past rush as the mix of formats resulted in overall lower pricing. Importantly, though, despite these trends, we believe that the opportunity in our industry has never been greater for BNE<UNK> We're well positioned to capture new market share and collaborate with an increasing number of schools and strategic partners. Given these dynamics, we're focused on actively transforming our business, which means successfully pivoting from our historically total reliance on a traditional bookstore management model to become a leading aggregator and distributor of both physical and digital educational content within, and importantly, also outside of the footprint of managed stores that we have. We've significantly expanded our addressable market by executing a strategy of organic growth, acquisitions, strategic partnerships and continued innovation. Our goal remains to offer the most comprehensive suite of quality educational products and services to our existing and future customers. Before moving on to segment results, I'd like to briefly highlight our consolidated results for the quarter. BNED consolidated sales of $886.9 million increased 15.1% as compared to the prior year period. Year-to-date consolidated sales of $1,242.6 million increased 23% versus last year. Consolidated second quarter GAAP net income was $48.4 million compared to $29.3 million in the prior year period. And year-to-date GAAP net income was $13.6 million compared to $1.4 million in the prior year period. Consolidated second quarter non-GAAP adjusted EBITDA was $102.4 million, an increase of $32 million compared to the prior year period. And year-to-date non-GAAP adjusted EBIDTA was $70 million, an increase of $36.1 million versus last year. Moving to our Q2 financial results and the business priorities we are focusing on in each of our 2 segments. In our Barnes & Noble College segment, second quarter 2018 sales were approximately $9 million less than last year and $2 million higher for the 6 months of this fiscal year compared with last year. This is in line with our guidance and our expectations. The comparable store sales decline was $33.8 million or a decline of 4.4%, primarily driven by lower textbook sales, which were down 5% on a comparable store basis. The lower textbook sales reflect decreasing enrollments, as mentioned, especially at community colleges, which we believe declined in the mid-single digits again this fall compared to last year as well as the increases ---+ increased competitive factors mentioned earlier. Approximately 30% of our comparable textbook sales decline relates to lower average textbook prices. Clearly, students have prioritized buying course materials not only by price, but also by ease of access. The lower course ---+ the lower cost of course materials and expanded customization options affected the mix of learning materials sold and rented in the quarter. We saw large increases in the sale of digital textbooks and smaller decreases in the sale of new physical textbooks, while sales and rentals of used textbooks decreased dramatically. General merchandise sales in Q2 decreased by $3.4 million or 1.9% on a comp store basis, while year-to-date GM comps increased by 0.1%. General merchandise sales accounted for approximately 25% of total sales for BNC for the quarter. GM sales in the second quarter are driven by traditional back-to-school categories like school supplies, computers and computer products. These categories continue to decline a bit faster than the general retail trend, offset by emblematic clothing and gift, which continued to grow. In response to these trends, we continue to develop and expand our multichannel retail experience ensuring that our customers have access to our products in our stores and increasingly online through our school-branded e-commerce sites and mobile apps. Our web orders for the quarter continued to grow, increasing 4.4% over last year, representing approximately 30% of BNC's total sales for the quarter. This channel not only provides our students with ease of access they are demanding, but highlights the value of our physical locations as more than 60% of those orders are picked up in the stores. We continue to capture new customers and sales through our True Spirit athletic and alumni-focused websites. We operate 85 True Spirit sites, which is approximately double the number we operated a year ago, including sites for Penn State, University of South Carolina, Georgetown and Liberty University. We expect to continue growing the number of True Spirit websites given their positive impact on sales for both us and our partners, with an additional 30 sites expected to launch in the coming year. We believe BNC has extremely ---+ has an extremely important industry role as it relates to inclusive access programs, which we brand as first day. Inclusive access programs effectively address the needs of students, the institutions and the publishers by providing authentic course materials to the whole class in a digital format at a discounted rate charged through the student's tuition on the first day of class. We have been investing in the systems necessary to integrate, aggregate and distribute publisher and other digital content and transact commerce through our payment system. We'll be live on campuses including Penn State, Texas Tech, FIU and USF in January of 2018 ready for the spring rush with the complete roll-out next fall. We expect to double the amount of first-day adoptions and using our scalability expect to substantially increase the sell-through of content by us and our publishing partners in a manner that is consistent with the students being benefited at the same time. As we continue to roll our first day initiatives, we are continuing to re-enforce our contractual exclusivity with our school partners by enforcing our rights as a sole provider of course materials on those campuses that have such contractual rights. Approximately 90% of our contracts provide for such exclusivity rights. The strength of our brands and our footprint enables us to reach our core college demographic, making BNED a strong partner of choice for many brand marketers. As we improve our sophistication and understanding behaviors and preferences of our customers through the data we collect, we continue to refine and better target our own marketing and are also better able to assist our brand partners in reaching their audiences with high-value offers. This fall, we are excited to partner with Target on their back-to-school strategy. Our marketing partnership, which kicked off in the fourth quarter of 2017, leverages our unique access to students and parents to promote Target's college essentials to our college campuses across the country. We and Target are pleased with the results, so we have renewed the partnership for next fall. We also continue to pursue other new marketing partnerships with brands seeking to engage the college consumer and look to increase the value of renewals on other current partnerships that we have as well. Just last week, we announced a very key strategic partnership with The Princeton Review. This demonstrates our commitment to building a comprehensive ecosystem of high-quality services that will support students throughout their academic journey. This partnership will enable us to offer The Princeton Review's test prep products and services to our network of more than 6 million students. As our partnership grows, we look forward to offering even more services that will support our students as they progress through their education. We believe that providing our students with these enhanced services to empower them to accomplish their academic and career goals will be an important competitive differentiator for BNED and help position us for continued growth. As we move forward, we'll continue to explore relationships with companies that enhance our educational services or distribution platforms or those that create compelling content offerings for our partners and our students. Regarding Student Brands and our digital services, we continue to compete and win in a marketplace for our core bookstore business, while we also continue to grow those digital offerings. We have gained significant momentum in OER Courseware adoptions with a number of institutional clients, including community colleges, 4-year public universities and 4-year private universities. This past fall, we offered 10 OER courses serving more than 13,000 students. We also recently announced key strategic initiatives for our digital business as we continue to execute on our direct-to-student model and plans. Our August acquisition of Student Brands gave us our first direct-to-student sales channel, expanding our digital footprint to include Student Brands' 20 million unique monthly visitors. As a leading direct-to-student subscription-based writing skills service business, Student Brands contributed $4.5 million of revenue and $2.4 million of adjusted EBITDA to BNC in its first full quarter of integration. Importantly, Student Brands brings us strong technology and business talent to help build our direct-to-student product base and new digital services. Another exciting strategic initiative underway is the partnership with Portland State University to co-develop a degree planning solution. PSU is an active participant and leader in the Frontier Set convened by the Bill & Melinda Gates Foundation with partnership from the Association of Public and Land Grant Universities and others. This agreement with PSU further broadens our suite of analytic solutions while allowing us to serve customers outside of BNC's historical managed stores footprint. Under this partnership, PSU and BNED will be able to help more students graduate on time, with better pathways to employment and provide longer-term planning tools to universities. Looking ahead, we're to focus on providing an unmatched retail and digital learning experience by optimizing our physical and digital assets, together and separately. Regarding MBS. Their total sales for the quarter were $134.9 million with $47.5 million attributable to MBS wholesale and $87.4 million attributable to MBS Direct. We're very pleased with the progress we have made integrating MBS and the business performance has met our expectations. MBS has significantly expanded our footprint, which now includes 6 million students served by nearly 1,500 physical and virtual stores and it's enhanced our financial flexibility and improved efficiency across the organization at the same time. We've integrated MBS and BNC's marketing teams that are pitching to prospective schools as one offering not only for virtual solutions through MBS Direct, but hybrid solutions with BNC operating in physical locations and MBS Direct fulfilling the course curriculum needs. During the second quarter, we continued to realize synergies from inventory optimization, transferring underutilized inventory from BNC to MBS, which was unable to sell a large portion of that inventory. We also continue to benefit from the supply cost management and optimized textbook sourcing that MBS provides and increased efforts to monetize both our MBS and Student Brands' customer bases through brand partnerships. Our key members in all of our businesses are relationship and service driven and they know their customers. They are adapting to changing service models that incorporate a higher percentage of digital services and products into our institutional offerings. We understand that our cost structure will need to adapt as our business does, but we'll endeavor to make our current talented workforce part of that change by empowering them as change agents in their respective college communities whether physical or virtual. We believe that campus bookstores will continue to have an important role as a community hub and student service center for the foreseeable future, and it is our job as senior leadership to work closely with all of our customer-facing team members to constantly adapt to the changes in our business offerings and model. As we head to all-inclusive models that should have much higher sell-through for us, we need to leverage that increased penetration across our various offerings for the benefit of our college partners, students, our publishing partners and our company. Before I turn the call over to <UNK>, I'd like to note that we greatly value the feedback we have received from the investment community around how we report. We're committed to continually improving and engaging with our shareholders and responding to your feedback. As always, we appreciate your continued support. In closing, we continue to be energized by all of our team members working not just within each of their own business units, but also across all of our businesses together, to create and deliver what our customers are demanding: affordable and high-quality integrated educational services and content that will result in improved student and partner experiences and outcomes. We're strengthening our core business, while developing new ones such as direct-to-student digital services that will allow us to offer services outside our managed stores footprint, with margins that, when scaled, are much higher than our historical business. We're focused on executing our strategy for change to drive results and build long-term value. With that, I'll turn the call over to <UNK> for the financial review. Thank you. Thank you, Mike. Please note that the second quarter ended on October 28, 2017, and consisted of 13 weeks. All comparisons will be to the second quarter of fiscal 2017, which excludes MBS and Student Brands, both of which were acquired after last year's second quarter. Total sales for the quarter were $886.9 million, compared with $770.7 million from the prior year. The increase of $116.2 million or 15.1% was primarily driven by revenue of $134.9 million from the MBS segment, partially offset by an $8.9 million decrease at the BNC segment, and intercompany sales eliminations of $9.8 million. The sales at BNC decreased as the comparable store sales decline of $33.8 million exceeded the sales increase related to net new stores of $21.1 million and the increases of service revenue, which includes Student Brands revenue of $4.5 million. Our service revenue includes high margin revenue from Student Brands, income from brand partnerships such as Target, along with Promoversity and LoudCloud. All of these allow us to derive new sources of revenue in and out of our footprints and further monetize our customer base, a strategic priority of the company, as Mike had mentioned. Comparable store sales declined by 4.4% as compared to a decline of 3.2% in the prior year period. Comparable store sales were impacted by lower student enrollment, specifically in 2-year community colleges, increased consumer purchases directly from the publishers and other online providers, and other more general negative retail trends. Textbook sales for the second quarter declined 5% compared to a prior year decline of 3.7%, impacted by the items previously mentioned and by lower average selling prices of course materials driven by lower publisher prices resulting from a shift to lower cost and more affordable solutions, including digital. Sales for MBS in the second quarter were $134.9 million and in line with expectations. The second quarter is the highest sales quarter at MBS Direct due to the back-to-school sales for the higher ed accounts, while wholesale is primarily filling late orders for college bookstores. Fiscal year-to-date sales at MBS were $274.9 million, compared with $302.6 million in the fiscal 2017 pro forma quarterly financials. The $27.9 million decline is in wholesale and primarily the result of a lower supply of bulk purchases of new textbooks from the 2 largest publishers, which has historically represented less than 10% of MBS wholesale supply and produces one of our lowest gross margins. MBS continues to expand existing sources of inventory as well as pursuing new sources of wholesale supply in order to replace the decreased supply from the publishers. Our rental income for the quarter was $69 million, a decrease of $3.7 million or 5.9% as a result of more affordable publisher solutions, lower average selling prices and lower supply of used inventory in BNC stores as we continue to optimize the inventory between BNC and MBS. Gross margins increased by 26.3% to $216.6 million or 24.4% of sales. The margin at BNC of 22.5% was 20 basis points higher than the previous period. The increase was primarily the result of including the high-margin Student Brands service revenue, higher rental margin rates and lower contract costs, partially offset by an unfavorable sales mix. The adjusted margin rate at MBS was 25.4%, excluding the incremental cost of sales related to the inventory step-up as part of the purchase accounting, which was fully amortized in the second quarter. Selling and administrative expenses increased by $14 million or 13.9% due to the $15 million of expenses at MBS, including $1.7 million of expense allocation from BNC to MBS. BNC's selling and administrative expenses decreased by $1 million or 1% to $100.1 million from $101.1 million. The decrease was primarily due to a $2.6 million decrease in comparable store payroll and operating expenses and $1.7 million of shared corporate overhead costs allocated to MBS. These decreases were partially offset by a $1.4 million increase in new store payroll and operating expenses net of closed stores as a result of a $21.1 million increase in net new store sales and a $1.9 million increase due to Student Brands and digital expenses. The intercompany elimination for sales and cost of sales are primarily related to the sales from MBS to BNC and wholesale commissions earned on textbooks sold to MBS from BNC. As expected, in the quarter, the gross profit elimination from the first quarter reversed and we realized $11.7 million of adjusted EBITDA as BNC sold through or returned the inventory purchased from MBS and on hand at the end of the first quarter. The fiscal year-to-date adjusted EBITDA impact is $45,000. The fiscal second quarter net income of $48.1 million or $1.03 per diluted share compared with $29.3 million or $0.63 per diluted share in the prior year. Due to the acquisition of MBS and Student Brands and their results, total adjusted EBITDA increased by $32 million to $102.4 million for the quarter compared to $70.4 million in the prior year. During the quarter, BNC contributed $71.6 million of adjusted EBITDA, while MBS contributed $19.2 million of adjusted EBITDA, and we received the $11.7 million benefit of the reversal of the gross profit elimination from the prior quarter. Fiscal year-to-date BNC adjusted EBITDA was $34.7 million and increased by $0.8 million as the contribution of net new stores, the acquisition of Student Brands and the segment allocations to MBS exceeded the impact of the comp store sales decline. Fiscal year-to-date MBS adjusted EBITDA was $35.2 million and decreased $2.3 million as compared to the pro forma financials as the EBITDA impact of the lower sales and the BNC segment allocations exceeded the favorable margin and expense savings. The effective tax rate for the fiscal second quarter was 40.6% compared with 47.8% in the prior year. The lower tax rate compared with last year reflects the reduced impact of nondeductible expenses of our executive compensation program. The income tax provision for the current period also incorporates the reduced realization of deferred tax assets associated with divesting of certain equity awards. Our cash balance at the end of the quarter was $17.5 million and we had $41.8 million in outstanding borrowings. We remained out of the facility with no borrowings outstanding for approximately 7 weeks during the quarter. The lower cash and higher borrowings compared with last year are the results of the MBS and Student Brands acquisitions, and we expect the average debt to be approximately $150 million over the course of the year. At the end of the fiscal second quarter, inventory increased by $114.2 million compared to the same period in fiscal 2017, primarily due to the inclusion of MBS, as BNC inventory decreased by $19.8 million as a result of continued improvements in purchasing and inventory management and BNC realizing the synergies related to inventory optimization by transferring underutilized inventory from BNC to MBS. Accounts payable was $19.1 million higher, also reflecting the inclusion of MBS. CapEx for the second quarter was $14.5 million compared with $11.3 million in the prior year. The increase of $3.2 million was primarily due to both new store contracts and renewals of existing stores as well as MBS. Cash flow from operating activities increased by $20.3 million due to our improvement in earnings, mostly as a result of our recent acquisitions. Currently, our BNC store count is 777, opening 0 new stores and closing 4 in the quarter. We will be opening another 6 stores in fiscal 2018 based upon the new contracts signed to date, with an additional $18.3 million of annualized estimated sales, bringing the BNC total annualized new business to $70 million. Our MBS Direct store count is 706, having signed 14 and closed 20 contracts during the fiscal year-to-date period. In addition, MBS has contracts to open an additional 4 stores, bringing the total to 18 new stores with estimated annual sales of $5.2 million. Turning to our fiscal 2018 outlook. For fiscal 2018, the company expects sales at BNC to be relatively flat, while BNC comparable store sales are projected to decline in the low- to mid-single-digit percentage point range year-over-year. In addition, the company expects consolidated sales to be in a range of $2.25 billion to $2.35 billion before intercompany eliminations. The company expects BNED's adjusted EBITDA to be in the range of $105 million to $120 million. Capital expenditures are expected to be approximately $50 million, an increase from fiscal 2017 due to the new store growth at BNC. With that, we will open the call for questions. Operator, please provide the instructions for those interested in asking a question. <UNK>, it's Mike. Definitely, there could be more. I think that what we're trying to do and the objective of what we're trying to do and what we are doing is, we're building a suite of digital services so we can go direct-to-student. I'm talking to your first point and the first question at this right now. The Princeton Review is a highly respected source of test prep and other services. I'll let <UNK> <UNK> get into specifically what they are. But to be competitive, you have to either ---+ if you want to go direct-to-student and build a comprehensive product suite of services, you either have to built it yourself or you have to do a partnership. But we determined that we're going to do a combination of those. Student Brands was the first kind of step in going direct-to-students gave us great capabilities. And by adding different legs to the stool, we will end up with a comprehensive suite of digital services we can market, both across our footprint, as you point out, and then also outside of our footprint. I'll let <UNK> talk about The Princeton Review. He did this deal, worked hard on it and understands it intimately. Now regarding the brand partnerships and the ability to do more and leverage, I'm going to ---+ <UNK>'s going to address that. <UNK>, our partnership and offensive team was having ongoing conversations with numerous either current partners such as Target with the renewal, which they were so happy with the results that we produced jointly through the back-to-school rush that they've already renewed the relationship for another year. Our pipeline of new leads is very, very strong. We're getting a lot of coverage out in that market space. So we continue to grow this business. We see it as one of our key drivers in the future as we grow BNED into a multifaceted company. Yes, I think one of the points to make about that too. And Joel's here, he runs our general merchandise business, but is that you see some of the ---+ there's a trade-off between some of these partnerships with what you do with a Target, for example, and some of the products like school supplies and those types of things that we sell inside the store. So we look at that in terms of its impact on our stores, where we offer it, where we can, I think, leverage a brand partnership the best versus how it might affect our business internally in our general merchandise business. So it's complementary, and we're not going to allow total access to all of our stores. We're going to do it in a way that's thoughtful and that balances the impact of the financial impacts as well as the strategic impact and the impact on each of our campuses that are important to us with a brand partnership versus doing it ourselves. <UNK>, it's <UNK>. Yes, so as it relates to the elimination, as we had talked in Q1, during the first quarter, MBS' selling inventory to the BNC stores that at the end of Q1 the inventory is at a high point. During Q2, we sell through that inventory, and we'll return the unsold. So in essence, at the end of Q2, we have very little owned inventory from MBS in our stores. As we go into Q3, we will be buying inventory again in November and December, building that inventory. January, we will sell it down a bit. So the elimination will be less. As we move into the end of April and through Q4, again, we return unsold inventory. And the only inventory that we have on hand that came from MBS at the end of the fiscal year is a small amount of inventory that we've purchased for the summer season that we've essentially purchased in the last week or 2 of April. But otherwise the seasonality and the increase and decrease of the gross profit elimination, we would expect to be very consistent year-over-year. Yes. This is <UNK>, Greg. Yes, we are fully price matching at every one of our locations. And I think this is ---+ I think we were doing that also last year in the second half of the year. But it was the majority of our stores last year also, Greg. It has a small impact on it, Greg, but what it's worth to us in the confidence of our student customers is far outweighed by any margin reduction. I think it was 40 basis points, <UNK>. So it was a very small amount to pay for the amount of goodwill and confidence that you generated amongst your core customer base. Well, I'll let <UNK> ---+ this is Mike, I'll let <UNK> answer that in more detail. But we ---+ it's important when you talk about digital to kind of define what you mean and even if it's in LoudCloud what their services are, Student Brands. Within LoudCloud you have an analytics-based product that, as we said during the prepared remarks, it's been adapted for different things that ---+ and we talked about Eastern Gateway, I think, last quarter. We talked about Portland State this quarter. There's a different ---+ there's a platform that LoudCloud's built that can be used to customize products for different needs institutionally. Within LoudCloud you also have OER products, which is content. And the reason I'm mentioning this is because it's important as you go to the inclusive access to realize that these digital projects can be folded into inclusive access product as well. We're working with our publishing partners, distributing their digital content and working hard to be part of their inclusive access integration and distribution. There are also things that we can do with LoudCloud's products in first day. But I'll let Kanju talk more directly to your question about what he is seeing in the market in terms of what ---+ where the demand is coming from, which is really your question. If you think about affordability, one of the interesting things about what's going on at PSU that could be replicated elsewhere is the degree planning,. Many students don't graduate in 4 years. So if you think about affordability of textbooks and other forms of curriculum, well, if you're spending an extra year or a bit longer in school, because you haven't really focused in on the requirements or your major or how to get there as quickly as possible and do it in 4 years, I mean, there's a large affordability benefit in these products as well as benefits for outcome measurement. So it's all kind of coming together in these objectives in different ways. But it's very iterative in terms of what's going on in the market right now for digital. And I think, I'll give <UNK>, his team and everybody at the table a lot of credit, everybody in our stores. We have a lot of feedback on what ---+ and Lisa Malat has got 10,000 students every week that we talk to about what do you want. And we really listen and are trying to tailor our products to what will help both the students and the institutions. So, yes, there's an increased emphasis in this earnings call in digital, because digital is coming more rapidly than we've seen it in prior years and seasons, and we're right in the middle of it. We have work to do, but we're going to ---+ one of the reasons our EBITDA guidance range is as wide as it is, is because we want to make sure we have some flexibility to invest in the things we need to invest in to grow the company in the future as opposed to trying to hit an EBITDA number that may be within a couple of million dollars here or there that sacrifices our long-term growth and long-term value of the company. And that's a kind of a long-winded way of answering your question, or trying to. But, yes, you'll ---+ we'll start to figure out how to break out digital as we go forward and show more of the light on it. Obviously, it's important from a value perspective externally as well as internally. Thank you. And thank you for joining today's call. Please note that our next scheduled financial release will be our fiscal 2018 third quarter earnings, which will be on or about March 6. Have a good day.

2017_BNED

2016

SUP

SUP #There is no funds-stated sunset on the program itself, <UNK>, so it's open. We look at market conditions and price valuations, and how that's comparing to where we've been historically, so it's circumstantial at this point in time, as to what our intentions are, as far as volume that we will repurchase. Certainly, the shares get issued out of compensation plans. We want to ensure at minimum that there's no dilution that occurs for our investors as a result of that, so that will set a floor for us, on what we want to do. But timing, I think will be circumstantial to how we see what's happening in the market. Yes, I think for North America, it's probably in the late innings of the cycle. I think the question is, is do we reach, or are we at a plateau level and stay at 17.5, or some level slightly above that, or slightly below that. That's certainly our feeling here. For Superior, I think we're in probably the third inning. We've got a long way to go in terms of both our strategy to move towards higher value-added product, improving our relationships with our customers, and improving the efficiency of the operations of our facilities. So I think we have a long way to go before we run out of things to do. No, it is something that we continue to look at and evaluate both inside the wheel space here in North America and globally, and we've also had dialogue with some guys that do aluminum products for our customers outside the wheel space, so we'll continue to evaluate that as we go forward, but job one for us is to, again, to make sure that we're as competitive as we can be and successful as we can be in the aluminum wheel space here in North America. Great thanks, <UNK>. I think that it was basically vesting. There were not a bunch of new stock grants that were given to people as we moved the headquarters. That was not a factor. You're basically looking at vesting schedules on programs that have been in place, a little bit circumstantial to <UNK>'s contract, and some loading on that. But I think that ultimately, my hope would be clearly that the performance of the Company continues to be very, very positive, and that we'll continue to see equity grants in the future that are tied to that improving performance. The performance base of our ---+ So two-thirds of the performance of the stock plan, the long-term incentive plan is performance based. One is EBITDA margin. Two is return on invested capital, and the third is total shareholder return versus the peer group, and the weights of those are 20% TSR, 40% for the other two. We are going into a new three-year plan for that right now in 2016 to 2018. We did switch one component based on feedback from our investors <UNK>, and we took out the EBITDA margin because we're still driving the short term on EBITDA performance. Some of our investors felt that, that was a little bit of a duplication of factors, so we replaced that component with cumulative EPS over a three-year period, so that will be in there for the new plan going forward. We're fully staffed. We have about 65 people here in Southfield and ---+ Yes, I think in terms of the percentage car/trucks, it's probably 70/30, and I think if you look at the next three years, 2018 that will be declining, the light truck will be declining to probably another three or four percentage point change, so we'll move closer to the market split of light truck to pass car. Correct. Somewhere between 75% and 80% of that cost is peso denominated. That's not taking into account aluminum. So labor obviously is, we're paying our employees in Mexico in pesos, our electricity cost is denominated in pesos, most of our supplies, outside contracting costs, all that type of stuff is primarily pesos. Natural gas is denominated in US dollars, that's the major non-metal cost that's in USD, and of course metal. I think historically the Company had been set up for, let's say, larger production runs, and so as you move towards the higher more complex wheel, larger, more complex wheel, this is a different skill set, the facilities weren't initially set up for that. Certainly from our standpoint, we view this as a significant change for the Company, and along with that, is going to be able ---+ we'll be able to grow our margin and conquest new business. I think somewhat it's also reflective of just the competitive dynamics, 40%-ish of the North America market is served by imports, most of those are coming out of Asia, and most of those were coming out of <UNK>a. So there is significant logistics costs to move those wheels over here. On smaller diameter wheels, which tend to be for passenger cars, the logistics cost is more competitive, and you can put more smaller diameter wheels in a shipping container than a large diameter wheel. So a natural ebb and flow of where is the market more competitive versus where is it better from a value perspective, that's also led us to gravitate towards the light truck category. It really has not been any issue of process constraints or factory constraints at all. If you look at our forecast, in terms of 19-inch wheels and above in 2015, that represented about 14% of our production, and as we look at 2018, that should be somewhere in the neighborhood of 25% to 28%. So clearly, a focus, clearly it's working, clearly, we can be competitive and drive that margin through those programs. Yes, so the move to 24/7 is part of the program to take us from essentially 11.5 million units or so million units that we were at 22, 24 months ago, up to 14 million units. And so 24/7 is a part of that, certainly internal scrap reduction is a part of that, certainly improving the OEE of our facilities is a part of that. The additional 500,000 units in Plant 15, our new facility, is a part of that. So I think we'll be there in probably another year and a half in terms of that ramp-up to 14 million units, which is perfect in terms of how we plan this out with the sales function. So even if we had 14 million units of capacity today, we don't have the orders to fill that. So this has been time to move very methodically into this, to dovetail with the sales function. As far as implementation and I guess you asked a question, <UNK>, cultural reaction to it all, it was a little bit of work at the beginning to try to get this running smoothly, so I wouldn't say that the day we flipped the switch in first departments to go to around-the-clock staffing that it went perfectly smooth, but we've learned from that. And at this stage I would say things are running smoothly, where we do have 24/7 today. So I think we particularly figured out the right way to go about it. Fundamentally, it relates to some changes in legal structure, <UNK>, and I don't want to go into too much detail about that, to tell you the truth. But we're moving some of the values of our legal entities around a bit, and then that's allowing us to adjust some of the overall tax rate, based on the jurisdictions that we're in. Great thank you very much. Great questions today and appreciate your support. Thank you. Thanks, everybody.

2016_SUP

2016

AOS

AOS #(multiple speakers) I will take a stab, and you were just there, <UNK>, so you can probably say. I don't think we have seen ---+ the data we look at where units sold over $400, we are still maintaining our share there. I think it is certainly very competitive in the lower end, and I will say the middle tier, but I think we still have very, very large market share in the high end and we haven't really seen any change in that. No, and <UNK> is right. I was there last week, in both Vietnam and in China, and the teams are excited and very upbeat about next year and where we are headed, the new products that are coming out. And so, we feel pretty good about what our guidance for China. Yes, I think it assumes the price increases we talked about. Now, a couple things. We also said on the last call that because of some project work, et cetera, you don't necessarily get all the pricing at that time and we said some of that would carry over into the first quarter, if you will. But, yes, for the most part, that does assume that. The biggest impact, as we talked about earlier, is SAP is going to add $5 million to $6 million in the fourth quarter compared to the third quarter and $7 million compared to the prior year. So that is certainly having an effect on fourth-quarter margins that we don't think going forward we have that impact. And then the stronger commercial, which was unusual for the third quarter, has ---+ stronger commercial is what it did. But again, that was due to the pre-buy. Yes, that's one way to look at it. But I guess if you talk about a 20% as your starting point and you adjust for SAP, you are over 21%, and then you adjust for a leveling off of that ---+ of commercial, you get back to that starting-point range that I talked about earlier, that 21.5% to 22%. Clearly, steel is having an impact on the margins, without a doubt. We did have a price increase, but we didn't necessarily cover margin with that. I think the quarterly market share was pretty similar, up a little bit from the previous quarter, so, again, we are forecasting what the industry is going to be. So residential is holding pretty well for us. We did introduce that product in the 55 to 90. We have gained some share in that, but I'll also tell you we are not back to where our overall commercial margin ---+ I mean, market share is, but we have made progress on that. I will try to answer all of those. The specific issue in Milwaukee was not a driver for the acquisition, but clearly the fact that there are lead issues around the country, like Flint and many other cities, was clearly an indicator for us, among a lot of other things, that there is a water treatment opportunity in the US. And we have world-leading products that take care of all of these types of pollutants, especially world-leading reverse osmosis products. So we clearly see the opportunity to bring that technology to the US. Aquasana was a great acquisition and a vehicle to get those products into consumers' hands, and using a channel that we really don't have a lot of expertise in, which we expect to grow in the future, obviously in terms of digital reach into every home. The specific instance in Milwaukee, we are working with the local government and the United Way and other agencies, especially since we live here, to get the product out and help as much as possible. That's not going to be necessarily transformational for Aquasana, but it really has a terrific impact in promoting the name and getting the name out there as being a leader in the solutions for some of the problems that we have in many of our cities. So long term, that's absolutely going to help. I think it is going to be a combination. I think cities will get involved and fund some of this. It is hard to tell, but the city of Milwaukee is getting involved. Again, I think the big opportunity is not only getting the product out there, but getting our brand name out there in terms of being a leader in this category. Aquasana is a start. We would certainly be interested in appropriately adding to that platform. And that's an ongoing ---+ and that's clearly on strategy, the way we have described our strategy. I think it's combination of two things. Traditionally, our fourth quarter in China is our strongest quarter from a sales standpoint. We think that will continue. And, yes, I would think that our advertising as a percent of sales will probably be a lower percentage than what it was in the third quarter because of those two events we talked about. So I think both of those help in effect get the margin ---+ having a relatively strong margin in the fourth quarter. We have not talked about or ---+ we're in our planning phase. <UNK> and I have talked at length. Certainly, it is our objective to grow north ---+ rest-of-world margins, and you do that with a combination of things. You leverage the advertising spend and the SG&A in China. Number two, you turn a couple of the businesses that right now we are incubating, like air purification. That is going to lose probably $5 million this year. We move that towards breakeven as we get higher sales levels. We're also incubating the commercial water treatment business, where we will lose $3 million or $4 million this year. So I think those are ways to grow margin, and then we talked about we need to get India on a path of improved earnings. So, we haven't come out with an estimate, but certainly those are some of the things we are looking at. And also, just add to that, when you talk about these incubating businesses in China, like air purification and commercial water treatment, et cetera, we usually have what I call a can-see plan, which is a multiyear plan that says here is how we're going to get ---+ here are the specific projects and here is how we're going to get our gross margins to the level that then we need for it to start contributing to the bottom line. So it isn't ---+ it is more than we hope it will get there. There is very specific things we know we have to do and are executing to get those margins up there, just like we did in water purification. We are. I will take a shot, and, <UNK>, you can jump in. Again, there isn't any real good data, but we have reasonable data in terms of our own warranty cards and things being returned, where people tell us where we ask the question as to was this a replacement or not. And in the largest cities, we think the replacement is around 50%, and in the smaller cities, probably 30% to 35%. That's the kind of range that we are seeing, from the somewhat limited data set that we have. (multiple speakers) about comfort level from the standpoint, <UNK>, that when we talk about the market, the water heater market growing at 7%, we think that's going to contribute to that. And also, what we also see is that since A. O. Smith is at the top of the food chain as a high-end brand, it is an aspirational brand. So when people replace lower-end product, very often they upgrade to the higher-end brands, which is our brand. We did expand our distribution, but I really ---+ we don't have a good way of really measuring that. We've tried to do same-store sales, but we have had difficulty because we are continually opening stores and we are continually closing stores that are inefficient, et cetera. I would tell you the majority of it is the growth in the market and that that certainly has been a contributor. Thank you for joining us today. Please take note that we will participate in several conferences during the fourth quarter ---+ Goldman Sachs in Boston on November 2; Baird in Chicago on November 8; and Northcoast in New York City on November 10. Have a wonderful day.

2016_AOS

2016

TPRE

TPRE #Thank you, operator. Welcome to the Third Point Reinsurance Limited earnings call for the first quarter of 2016. Last night we issued an earnings press release and financial supplement, which is available on our website www.thirdpointre.bm. A replay of today's conference call will be available through May 13, 2016, by dialing the phone numbers provided in the earnings press release and through our website following this call. Leading today's call will be <UNK> <UNK>, Chairman and CEO of Third Point Re. Before we begin, please note that Management believes certain statements in this teleconference might constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about expectations, estimates, and assumptions concerning future events and financial performance of the Company and are subject to significant uncertainties and risks that could cause current plans, anticipated actions and the Company's future financial condition and results to differ materially from expectations. Those uncertainties and risks include those disclosed in the Company's filings with the US Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and the Company assumes no obligation to update or revise them in light of new information, future events, or otherwise. In addition, Management will refer to certain non-GAAP measures such as diluted book value per share, which Management believes allow for a more complete understanding of the Company's financial results. A reconciliation of these measures to the most comparable GAAP measure is presented in the Company's earnings press release. At this time I will turn the call over to <UNK> <UNK>. <UNK>. Thanks, <UNK>. Good morning, and thank you for taking the time to join our first-quarter 2016 earnings call. In addition to <UNK> <UNK>, Chief Financial Officer of Third Point Re, with me today are <UNK> <UNK>, CEO of Third Point LLC, our investment manager; and <UNK> <UNK>, President and Chief Operating Officer of Third Point Re. On today's call, I will provide an overview of our financial results and an update on market conditions. <UNK> will discuss the performance of our investment portfolio, <UNK> will discuss our financial results in more detail, and <UNK> will describe the details of the share buy-back plan that our Board approved earlier this week. We will then open the call up for your questions. For the first quarter, we reported a net loss of $51.1 million, or a $0.49 loss per diluted share, compared to net income of $50.5 million, or $0.47 per diluted share, in the prior year's period. Our diluted book value per share decreased by 3.7% in the quarter, to $12.37. We generated a negative return of 2% on our investment portfolio in the latest quarter, compared to a positive return of 3% in last year's first quarter. Please note, however, that our investment manager, Third Point LLC, bounced back in April with a return of 1.8% on our investment return for the year through April is now slightly negative at 0.2%. With total net assets managed by Third Point LLC of $2.06 billion and a net invested assets-to-equity ratio of 1.53, investment returns are a key driver of our financial results. <UNK> <UNK> will discuss our investment returns in greater detail in just a few moments. In our Property and Casualty Reinsurance segment, we generated an underwriting loss of $6.6 million in the quarter and produced a combined ratio of 104.9%. This compares to an underwriting loss of $3.9 million and a combined ratio of 102.8% in the first quarter of 2015. Our first-quarter underwriting results were in line with our expectations, given current market conditions, and aligned to business on which we focus. We target less volatile, quota share business and avoid higher-risk property cat and other event-driven lines of business which we believe do not combine well with our investment strategy. While lower margin, the quota share business that we write typically generates relatively higher levels of float. Reinsurance market conditions are challenging because of the excess capital that has been building since 2008 as a result of the benign risk period that we have been experiencing. Cat activity has been significantly below average and, until recently, companies were realizing significant reserve redundancy on casualty business. I commented during our last earnings call that I was hopeful that we were nearing the bottom of this pricing cycle, given the number of companies that are now taking reserve increases. This trend has continued in the first quarter and I remain encouraged. In our Property and Casualty Reinsurance segment, we generated premiums written of $197.2 million, a decrease of 7.6% versus the prior year's first quarter. Since we focus on a limited number of large contracts, we are prone to have significant changes in premiums written from one quarter to the next. Rather than looking at quarterly results, annual results are a much better indication of our premium volume trends. Our rate of premium growth has decreased each year since our inception a little over four years ago. With more than $700 million in premiums written in 2015, and more than $2 billion of invested assets, we have critical mass and therefore in a position to increase our deal selectivity in 2016. Given the size of our average deal and normal completion timing uncertainties, it is always difficult to project our future writings. But we currently expect to generate a similar or possibly lower amount of premium in 2016 versus 2015 as we work to improve our composite ratio in a difficult market environment. I will now turn the call over to <UNK> <UNK> to discuss our investment performance in more detail. Thanks <UNK>, and good morning, everyone. The Third Point Reinsurance investment portfolio managed by Third Point LLC lost 2% in the first quarter of 2016, net of fees and expenses, versus returns for the S&P and Credit Suisse event-driven indices of 1.4% and minus 4.5%, respectively, for the quarter. The Third Point Reinsurance account represents approximately 14% of assets managed by Third Point LLC. In the first quarter of 2016, we saw a significant reversal of trends that began last summer, including short bets on China, commodity prices, and commodity-linked cyclical names and long investments tied to the strong US dollar. Many investors were caught offsides by the shifting market dynamics. We moved quickly and decisively to reposition our portfolio by covering most of our shorts and shifting our credit exposure from net short to net long, with a specific focus on energy names. Unfortunately, we failed to reposition our long equity book quickly enough and thus missed some of the market rally. The Third Point equity portfolio was down 1.4% on average exposure in Q1. Losses were primarily attributable to two concentrated positions in the healthcare sector. Aside from these positions, we saw strength in many of our core investments and initiated several new attractively valued companies during the sell-off that occurred early in the quarter. Our corporate credit portfolio is up 2% on weighted-average exposure in Q1, driven by performing credit investments in energy, financials, and TMT. Solvent credit returned 7% on average exposure during the quarter, led by our large bet on Argentine government debt. Following strong performance from most of 2015, our structured credit portfolio felt the impact of a liquidity squeeze in Q1, and was down 3.3%. Certain sub-sectors in the market were impacted more significantly than others, and our portfolio was relatively well protected from the more challenged asset classes. We have since seen a return of liquidity to the space. Preserving capital during this volatile quarter left us well positioned to take advantage of interesting situations arising from continued market dislocation. We maintain a thoughtfully constructed portfolio of event-rich equity investments, continue to opportunistically invest in credit, and believe our structured-credit portfolio offers attractive risk-adjusted returns. Now, I'd like to turn the call over to <UNK> to discuss our financial results. Thank you, <UNK>. As <UNK> mentioned, we reported a net loss of $51.1 million, or a $0.49 loss per diluted share, in the first quarter of 2016. Compared to net income of $50.5 million, or $0.47 per diluted share, in the first quarter of 2015. Our diluted book value per share decreased by 3.7% in the quarter, to $12.37. In our Property and Casualty Reinsurance segment, gross premiums written decreased by $16.2 million, or 7.6%, to $197.2 million for the quarter ended March 31, 2016, from $213.4 million for the quarter ended March 31, 2015. The decrease in premiums written was primarily due to $30 million for contracts that we made the decision not to renew in the quarter, and one $16 million contract that was not subject to renewal. Although our premiums written was down slightly period over period, we added $36 million of new business in the quarter. Net premiums earned for the first quarter of 2016 decreased by $2.3 million, or 1.7%, to $136.8 million. The decrease in net premiums earned is primarily due to $16 million of net premiums earned related to retroactive exposures and reinsurance contracts for the three months ended March 31, 2015, compared to no such earned premium for the three months ended March 31, 2016. This decrease was partially offset by a larger in-force underwriting portfolio. We generated a $6.6 million underwriting loss in the three months ended March 31, 2016, compared to an underwriting loss of $3.9 million in the prior-year period, and our combined ratio was 104.9%, compared to 102.8%. The movements in net underwriting loss and combined ratio were affected by the continued market pressure on underwriting margins. The net underwriting loss and combined ratio for the three months ended March 31, 2016, included a decrease in net underwriting loss of $0.2 million, or a favorable development for the three months ended March 31, 2016, related to changes in estimates of prior year's loss reserves and the related impact of acquisition cost, compared to a $1 million increase in net underwriting loss for the three months ended March 31, 2015. For the three months ended March 31, 2016, Third Point Re recorded a net investment loss of $40.1 million, compared to net investment income of $64.9 million for the three months ended March 31, 2015. The return on investments managed by the Company's investment manager, Third Point LLC, was negative 2% for the three months ended March 31, 2016, compared to positive 3% for the three months ended March 31, 2015. As <UNK> just covered in greater detail, the net investment results for the three months ended March 31, 2016, were attributable to losses in our long-equity and structured-credit portfolios, which were partially offset by strong performance in performing credit and sovereign credit. Outperformance from several core portfolio positions within our long-equity portfolio was offset by negative returns in two significant equity investments in the healthcare sector. Corporate expenses, or general and administrative expenses not allocated to underwriting activities, were $4.2 million for the first quarter of 2016, compared to $4.9 million for the first quarter of 2015. The decrease was primarily due to lower legal and other professional advisor expenses, and lower payroll and stock compensation expenses. Other expenses for the first quarter of 2016 and the first quarter of 2015 was constant, at $2.7 million. Other expenses represent interest credits paid on deposit and certain reinsurance contracts. In February 2015, Third Point Re USA Holdings issued $115 million of senior notes bearing an interest rate of 7%. As a result, we had $2 million of interest expense for the first quarter of 2016, and $1 million for the first quarter of 2015. Income tax expense or benefit is primarily driven by the taxable income or loss generated by our US-based subsidiaries, as well as withholding taxes and certain ---+ uncertain tax provisions on our investment portfolio, and to a lesser extent, taxes in relation to our UK-based subsidiaries. We recorded an income tax benefit of $1.9 million for the three months ended March 31, 2016, and an income tax expense of $1.3 million for the three months ended March 31, 2015. I'll now hand the call over to <UNK> <UNK>. <UNK>. Thank you, <UNK>. We've always told investors that if our shares persistently traded below book value that we would consider introducing a share buy-back program. Well, in recent months, our shares traded below book value at times ---+ a valuation that we believe is attractive ---+ and, therefore, earlier this week, our Board of Directors authorized a new common share repurchase program for up to an aggregate of $100 million of the Company's outstanding shares. We expect the share repurchases to be made from time to time in the open market or in privately negotiated transactions in accordance with applicable security laws and regulations, including rule 10b-18. The timing, form, and amount of shares repurchased under the program will depend on a variety of factors including market conditions, our capital position relative to internal and rating agency targets, legal requirements, and other factors. The repurchase program may be modified, extended, or terminated by the Board of Directors at any time. I will now hand the call back to <UNK>, who will conclude our prepared remarks. <UNK>. Thank you, <UNK>. Despite challenging reinsurance and investment market conditions, we remain confident that our total return business model will generate superior returns over time. After significant financial market volatility to start the year that caused an investment loss in our first quarter, our investment manager, Third Point, rebounded strongly in March and April and our investment returns to April are now slightly negative at 0.02%. We have positioned the Company to withstand near-term market volatility and to be one of the leading beneficiaries of any market improvement. We're at full scale, with a relatively low-risk reinsurance portfolio and more than $2 billion of invested assets. We thank you for your time and will now open the call for questions. Operator. Yes I think the point was it was a catastrophic period of underperformance relative to what the market did. Factor exposures, some concentrated positions in stocks that had big declines I think affected other hedge funds. I want to make it clear, it was not a catastrophe for Third Point. I think we did a reasonable job protecting capital and I'm never delighted to be in the minus column, but given what happened to a number of other funds this quarter it puts us in good position to deploy capital into the kind of environment that we are in. So we're seeing opportunities in distressed debt, so I want to stress we're not in a credit cycle where I think there's going to be massive opportunities due to a slowing economy and large defaults. But we are seeing a lot of dislocations in various credits and we have been scooping up some very attractive names in, we've talked about this in the past, some fulcrum securities in energy companies. On the sovereign debt front we've talked about Argentina, and there are a couple of distressed situations out there that we have been buying. I think structured credit has also ---+ it was really off only for liquidity reasons, not for fundamental reasons, so we feel good about that portfolio. And I think the most interesting space right now is just in equities that are getting oversold or just under appreciated and under owned that are in the industrial sector. And also we wrote about an out letter, companies going through transformative mergers where I think you really need to look out one to two years, and we are in a market where people have very itchy trigger fingers and they're selling or they're not taking positions until these sorts of deals are completed. Things like Time Warner Charter, Dow that we are involved in, Bud and a few other of these sort of, we call them the pro forma situations where companies are going through transformative transactions. Sorry, which two. Okay so we had three major healthcare positions. Baxter which is doing extremely well, and then the other two are Amgen and Allegan. So these are both great companies, I think Allegan has been kind of battered by the one-two punch. First the treasury changed the rules, and we ---+ the Pfizer, Allegan merger was basically broken up in a way that we really didn't expect that, we did a lot of research with public policy people and lawyers and this was an unusual situation. We felt there was a good margin of safety in Allegan because the underlying business is very good, management in Brett Sanders is excellent. So we have confidence in Allegan to get through this. The catalyst there are the sale of Teva, potential repurchase of shares with proceeds from that and I think when people are able to see Allegan kind of get back on track with clean quarters and a balance sheet that's cleaned up with the Teva transaction behind them, we expect that to continue doing well. And similar way for Amgen, it's actually ---+ it's down a little bit this year, they have a great product line, growth is good, and these are companies that are trading at valuations that have not been seen in the last decade in pharmaceutical companies, so we're confident in both those companies going forward. Yes, it's actually not that rare for us. I think we've taken a different sort of approach in Japan which is to align ourselves really with government policy. So we're not really going against the companies or against the administration stated goal of [Dovettero evanomics] which is to improve corporate governance, improve return on invested capital. And I think by being able to articulate a way forward for Seven & I, with better governance and a better succession plan, I think it became evident the Board that the course that they were taking was not the right one. And they pivoted and they promoted the person who ---+ Mr. Osaka who has done a fantastic job leading the 7-Eleven stores. But keep in mind, I think we've had positive experiences with the nuke kind of helping them improve transparency and better capital allocation. We had very productive relationship with Sony and I think mutually respectful one. One of the things we had asked for was a spinoff of the entertainment company, well they didn't do that. They really ran the company in a much better way. So I just disagree with that it's very rare, I just think our approach has been a little bit different and more cooperative with more modest ambitions as far of what we are looking to see. Yes <UNK>, we're basically fully invested. At the same time, most of the investments are very liquid, so it won't be a problem having the cash to buy the shares back. And I think one thing we really want to make clear with this, this is creating a nice option for us. We have no immediate plans to go out and buy $100 million of stock back. I think with the way our valuation goes up and down at particular points in time, buying shares back when we are substantially below book is very attractive. We also have some limitations just on the amount of float we have, on how much we could actually buy back at any point in time. So there's no ---+ don't expect any immediate action. This is in no way is a reflection of we want to take money out of managed account and buy shares back, that's not the case at all. <UNK>. Yes, so <UNK>, the money we use to buy back the shares will come out of our separate account. So there's no cash at Third Point, other than a few million dollars for operations. So if the shares trade substantially below book value we will take money out, buy back the shares because we view it just as a relatively good investment opportunity. The plan allows for us to buy back shares in private transactions, but we haven't had any discussions with our private investors. So the intention is to buy back in the open market. <UNK>, it's a tougher question to answer because it's relative attractiveness. But when our shares trade below book value, we think they are cheap and when we buy them our book value per share increases, so it's immediately accretive. And so at below book value we believe it's attractive relative to investment opportunities in the separate account. Yes, can I jump in on that one. It's sort of an apples and oranges question. It doesn't affect ---+ the Third Point returns will be the Third Point returns, and if you can create those returns at a 10% discount then it just accelerates the ---+ it will just amplify the returns from the portfolio, as opposed to investing in Third Point at book value. Yes and <UNK>, just a point I want to think again, we have no great plans to go out and do a big amount immediately. I think this is a great option to have for us as our value goes, our stock price goes up and down, so it's just a great option. And given the float and the restrictions on how much we can buy anyway, we really can't do anything in a major way, but it's just really, we think a smart option to have. Yes, new business was we did a, about $30 million mortgage, quarter share of a mortgage insurance company. And then we have a small Lloyds quota share of political risk were the two new items, and the rest of the business was renewals of business already on the books. Yes and 90% of it is mortgage. We've written the private mortgage insurance business since our start. We started out with magic, almost day one, so this is steadily built. The numbers, kind of the amount of the mortgages out there and the mortgage insurance, they're really big numbers. So they kind of dwarf our property-casualty surplus, so we expect to ---+ the current deals we have in place, we expect them to grow. I don't think we're going to see a lot of new contracts coming on the books, but the ones that are on the books I think what we're hoping is that the quota shares really become part of the capital structure of the mortgage insurance companies, given the restrictions on them. We haven't done any of the GSE business. And that clearly is a growing area for other companies, but to date we've done none of those. I think one factor there is, we like ---+ the private mortgage insurance companies have a lot of expertise, right there, they're very good at it. We also have some contracts on other reinsurers that we think are very good at analyzing this business. So we like getting that second set of eyes on it. And I think one of the concerns we have on the GSE business is you pick up a fair amount of potential earthquake exposure, particularly in California on that. I think people are aware of, I'm not sure they really take that into account as an exposure on that business. I don't think so, <UNK>. We're watching it, we are seeing ---+ it's a very competitive market. We are seeing many companies be very aggressive now, but it's an unsettling time. With various companies or lines of business with reserve increases, we're still benefiting, the industry is still benefiting immensely from the dying cat experience. But the number of multiple single digit, but still multi-billion dollar losses, $1 billion here, $1 billion there, pretty soon you're talking about real money. I mean, it's just $2 billion here, the hailstorms in Texas the earthquake in Japan, we are watching although we don't have any exposure, this fire in Canada. It's certainly not a market turning event but it's going to be very big insure. So we're starting to see that happening and then who knows what happens for the rest of the year on a more major scale. I will just say that we're constantly examining new lines of business, merging growing lines of business like cyber. But we are very reluctant to jump into a line where we might think we will do better and where we just don't understand and can quantify all the risks. Yes, I think every company probably this is an accurate statement, just about every company in the world is looking at the book of business going things are tough, what else can we be doing out there. And we just totally reemphasized to ourselves daily, there are very few pots of gold out there, there's no great vacuums of demand where demand for reinsurance is so great we could jump in and make a killing. Everybody in the market, it's a very challenging time. I think what you've seen in our brief four year history is out-of-the-box we wrote a fair amount of nonstandard auto and the Florida homeowner quota shares that either excluded or limiting the cat. We like that business, we thought it wasn't volatile, small but pretty stable margins, neither business generates much float. Those two areas have become very competitive and that has become a much smaller percentage of what we are doing. So a mortgage business we like because of the duration. Also that we didn't write any in the first quarter, we like loss reserve deals. We've written a substantial number of larger loss reserve deals where the duration on those reserves were five plus years, so we really like that. We do have some professional liability now, quota shares of people writing that business. And that business at 100 or below 100 plus or minus, given the duration of the claims, is also very attractive to us. So I think <UNK>, we can go offline I can give you specific percentages, I don't have the right here, but that short tail business for us has over the four years has become a smaller percentage of the total and I expect that to continue to shrink. We thank everybody for calling in. And we'll talk in three months.

2016_TPRE

2015

DIS

DIS #So <UNK>, as it relates to virtual MVPDs. I was listening to your question about Shanghai and I almost forgot the first question. We have a lot of leverage because of these channels, actually. I don't think anybody can successfully launch a distribution business without the channels that this Company owns, frankly. And whether they run them as loss leaders or not, I don't think that really has much of an impact on us. And I think that generally, new entrants into the marketplace are going to create new opportunities, either because they attract more consumers or they offer an experience to the consumer or a price-to-value relationship that's more attractive than the existing distributors. I just think it's a good dynamic for us. I also mentioned earlier navigation. If a product comes forward that is more robust in terms of user interface, that's great for us. If our product can be found more readily, used more readily, enjoyed more readily, I think that it will increase consumption. And that's one of the reasons why it's not always just about price for us, it's about the experience. As it relates to Shanghai, I don't know ---+ <UNK> and <UNK>, you want to grab this. It's not something we want to provide specific guidance on at this point. We have obviously with our film strategy created and will continue to create huge value for the theater owners here in the United States and around the world. And clearly, with the hand that we've got ---+ Disney and Pixar and Marvel and Star Wars ---+ our discussions in terms of the rates that we get paid or the splits have factored in the films that we release. But I do not want to get specific about how much more we could get or what the nature of the discussions are. So I want to emphasize again the investment this Company has made in its motion pictures and the results are evident in terms of the value creation proposition to the theater owners. In terms of the strategy and the impact that Alan Horn has had, what we set about to do early on was to focus on our core brands and then to acquire others that we thought had similar characteristics. So we focused on Disney and we worked to strengthen the Disney output, particularly in animation. We purchased Pixar in part to do that. And we bought Marvel, because we really believed in that brand in the movie business. And then obviously, Star Wars. And Alan's charge is to help manage those brands on the motion picture side and to make sure that as a Studio, we are focused on quality. And I think the results since he joined us have been stunning. He is a tremendous movie executive. He not only knows the business well, but he manages our business extremely well. And I think the results that we've seen in that business in these last few years are in part the result of what he's brought to the Studio from a experience and from a talent perspective. So we are very focused on those brands. We are focused on improving the quality of the product in a relentless way. We are focused on delivering value, not just to the Disney shareholders, but to the distributors worldwide. And I think the growth that we've seen in that business these last few years is a result of all of that and we believe that that should continue. When you look at what we have in the pipeline, whether it's in Marvel films, including Iron Man this summer and Captain America and two more Avengers films and diversifying to Black Panther and Captain Marvel or what you know what we have that I mentioned earlier on the Star Wars front or what's going on in animation from both Pixar and Disney Animation. We've got a tremendous original film from Pixar this summer called Inside Out and another one called Good Dinosaur later in the year. First time in a calendar year we've ever released two Pixar films. And then we got Toy Story IV, Incredibles, and Cars and Finding Dory, which is a sequel to Nemo. Tremendous hand. So I think you're going to see over the next 5 years to 10 years ---+ certainly 5 years ---+ a real growth from the Studio because of all that. <UNK>, I'm not going to give you ---+ we don't break out the individual businesses that make up our cable affiliate revenue. But I will only reiterate something we've said before. The launch of the SEC Network was one of the best launches of a new network in cable history. And we continue to be very, very pleased with its progress and how we ---+ how fans have accepted and embraced this new network around, of course, what is arguably college football's strongest conference. Well, I actually think, <UNK>, that my ---+ I guess my view about the world in general as it related to those acquisitions wasn't specifically related to what you just cited, but it was I guess more related to looking at a world that was going to expand in terms of its voracious appetite for quality content and brands. And I thought technology was going to be more friends than faux in terms of offering us opportunities to reach customers, either directly or through third parties. I also thought technology was going to give us the ability to make better product, whether it was at theme parks or on the filmed entertainment side. And I thought markets were going to develop that were going to create compelling opportunities for us. I think China is a great example of that, whether you look at it from a Shanghai perspective or whether you look at it from a movie perspective. So I just thought the value of high quality intellectual property in the entertainment space was only going to increase because of a variety of different developments in the world. It was that simple. And I saw in Marvel and Pixar and Star Wars/Lucas great intellectual property in known and valued brands that were only going to benefit from the changing dynamics in the marketplace. And they were brands that as a Company, we felt that we would be great stewards of because of the stewardship we'd had of the Disney brand over decades. All right, thanks, <UNK>. Thanks, everyone, for joining us today and for accommodating the change in the schedule. We will be around all day to answer any follow-up questions. Note that a reconciliation of non-GAAP measures that were referred to on this call to equivalent GAAP measures can be found on our investor relations website. Let me also remind you that certain statements on this conference call may constitute forward-looking statements under the securities laws. We make the statements on the basis of our views and assumptions regarding future events and business performance at the time we make them. We do not undertake any obligation to update these statements. Forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. This concludes today's call. Have a good day, everyone.

2015_DIS

2018

BPFH

BPFH #Thank you, Keith, and good morning, everyone. This is <UNK> <UNK>, Director of Investor Relations at Boston Private Financial Holdings. We welcome you to this conference call to discuss our first quarter 2018 earnings. Our call this morning includes references to an earnings presentation, which can be found in the Investor Relations section of our website, bostonprivate.com. Joining me this morning are Clay <UNK>, Chief Executive Officer; and Steve <UNK>, Chief Financial Officer. This call contains forward-looking statements regarding strategic objectives and expectations for future results of operations and financial prospects. They are based upon the current beliefs and expectations of Boston Private's management and are subject to certain risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. I refer you also to the forward-looking statements qualifier contained in our earnings release, which identified a number of factors that could cause material differences between actual and anticipated results or other expectations expressed. Additional factors that could cause Boston Private's results to differ materially from those described in the forward-looking statements can be found in the company's filings submitted to the SE<UNK> All subsequent written and oral forward-looking statements attributable to Boston Private or any person acting on our behalf are expressly qualified by these cautionary statements. Boston Private does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the forward-looking statements are made. With that, I will now turn it over to Clay <UNK>. Good morning. Thank you all for joining the call this morning. In the first quarter, our company generated net income of $22.7 million or $0.27 per share, compared to $0.22 per share on an operating basis last quarter and $0.17 per share in the first quarter of 2017. Return on average common equity for the quarter was 12% and return on average tangible common equity was 15.2%. Overall, we are pleased with this quarter's results. Our company demonstrated positive operating leverage of 470 basis points as pretax, pre-provision earnings increased 23% year-over-year. Driving operating leverage was strong revenue growth, with expense growth in line with our expectations. The Private Bank and our market-linked fee businesses offered balanced contributions to revenue growth, as net interest income increased 7% year-over-year and Wealth Management & Trust segment revenue increased 12% year-over-year. Our affiliates contributed year-over-year revenue growth of 5%. Our non-interest expense during the first quarter, despite being impacted by seasonal compensation expenses, came in very much in line with expectations following investments in staffing and technology in 2017. A lower federal tax rate added further benefit to our bottom line. At the same time, the Private Bank continues to demonstrate very strong credit quality in the form of lower Criticized and Classified loans and a provision credit. I'm especially pleased by the progress we see at Boston Private Wealth, which continues to demonstrate improved flow, stability, strong revenue growth and margin improvement. The last thing I would like to highlight in my introductory comments is our successful completion of the sale of Anchor Capital. On April 13, we completed the sale of our ownership interest in Anchor. Anchor's financial results are included in our first quarter results, but for presentation purposes, Anchor's assets under management are excluded from our AUM commentary. As you will recall, we will recognize a tax expense of $11 million to $12 million in our second quarter results and the net financial impact of deconsolidating Anchor will increase the company's Tier 1 common equity by approximately $34 million to $35 million. With this introduction, I'd like to turn the call over to Steve. Steve. Thank you, Clay, and good morning, everyone. My comments will begin with Slide 3, which provides a summary of our key performance metrics. As you will recall from the prior quarter, our fourth quarter 2017 results included charges related to the divestiture of Anchor, including impairment of goodwill and federal tax reform. Our commentary today is based on operating results, which have been adjusted for those notable items. A full GAAP to operating basis reconciliation can be found at the end of the presentation. Slide 4 shows consolidated revenue trends. Total operating revenue for the quarter was $97.1 million, a 1% linked quarter decrease and an 8% increase year-over-year. Our primary source of revenue, net interest income, increased 7% year-over-year and was flat linked quarter at $57.4 million. Total core fees and income decreased 2% linked quarter and increased 9% year-over-year. The linked-quarter revenue decline in our market-linked fee businesses was driven by fourth quarter performance fees in the Investment Management segment. Year-over-year revenue growth was driven by 12% growth in our Wealth Management & Trust segment. On Slide 5, we show a detailed breakout of our consolidated expenses. First quarter adjusted operating expenses, both on a linked quarter and year-over-year basis increased 3% to $70.9 million. The linked quarter increase was primarily driven by seasonal payroll expense, while the year-over-year increase was driven by investments in staffing, occupancy and information technology. Amortization of intangibles declined linked quarter by $700,000 as a result of classifying Anchor as held for sale. Excluding amortization of intangibles, total operating expense increased by 4% year-over-year, in line with our previous guidance. Slide 6 shows the consolidated income statement for the first quarter. Pretax, pre-provision income on an operating basis was $26.3 million, a decrease of 9% linked quarter and an increase of 23% year-over-year. Operating net income of $22.7 million represents a 10% linked-quarter increase and a 45% year-over-year increase. The company's effective tax rate for continuing operations for the first quarter decreased to 21.5% as a result of the Tax Cuts and Jobs Act. We expect the company's effective tax rate for 2018 to remain at 22% for the full year. Excluded in the calculation of the full year tax rate is the $11 million to $12 million expense we will incur during the second quarter related to the Anchor divestiture. Slide 7 shows the past 5 quarters of average loan balances and deposit balances by type. Total average loans during the quarter increased 6% year-over-year to $6.5 billion. Residential Mortgage continues to show the strongest growth at 11% year-over-year and 2% linked quarter. Average total deposits during the quarter increased 1% year-over-year to $6.4 billion. Average non-interest-bearing deposits accounted for 29% of average total deposits in the first quarter of 2018, unchanged from the fourth quarter and the first quarter of 2017. Slide 8 has been updated to show a 5-quarter trend of net interest income and net interest margin trends for the consolidated company. The table on the top reconciles reported net interest income to core net interest income by adjusting for interest recovered on previous nonaccrual loans. Net interest income for the quarter increased to $57.4 million, primarily driven by higher yields on interest-earning assets and higher asset volumes, partially offset by higher cost of deposits and borrowing volumes. Core net interest margin on a fully taxable-equivalent basis decreased to 2.94% from 3.02% in the prior quarter, primarily due to a lower tax benefit on tax-exempt income. Core net interest margin on a non-FTE basis increased 3 basis points to 2.90% from the fourth quarter of 2017. The bank's cost of interest-bearing deposits increased 6 basis points linked quarter from 53 to 59 basis points and the all-in cost of funds including DDA increased 8 basis points, from 52 basis points to 60 basis points. Slide 9 provides detail on our asset quality. This quarter, we booked a $1.8 million provision credit, which was primarily driven by a decline in Criticized Loans and improved loss rates, partially offset by loan growth. The chart below shows improving asset quality during the quarter, as Criticized Loans finished the quarter at $124 million. Special Mention loans decreased $24 million linked quarter, driven by a combination of pay downs and credit upgrades. ALLL as a percent of total loans finished the quarter at 110 basis points, down from 115 basis points in the previous quarter. On Slide 10, we show the Private Banking segment, excluding the Wealth Management & Trust portion of our bank. Total revenue at the bank was flat linked quarter and increased 8% year-over-year driven by 7% growth in net interest income. Total operating expenses were $39.6 million, an increase of 3% linked quarter and 13% year-over-year, driven primarily by investments in staffing, occupancy and information technology. I will now turn it back to Clay, to discuss our Wealth Management & Trust, Investment Management and Wealth Advisory segments. Thank you, Steve. Slide 11 contains financial information for the Wealth Management & Trust segment, which operates under the Boston Private Wealth brand. Total revenue increased 3% linked quarter and 12% year-over-year to $12.3 million reflecting higher levels of assets under management. Operating expenses decreased 9% linked quarter and 23% year-over-year driven by decreased compensation, employee benefits and professional fees. Segment EBITDA for the quarter was $2.6 million with an EBITDA margin of 21%. On Slide 12, we show both new business flows and net flows at Boston Private Wealth for the past 5 quarters. New business flows for the first quarter were $238 million, which are above the 5-quarter average of $188 million and net flows for the quarter were $77 million. Slide 13 shows AUM net flows for all of our business segments. Reported results from the Investment Management segment have been restated to exclude Anchor Capital flows during the past 5 quarters. In the first quarter, the Investment Management segment showed net flows of negative $15 million and the Wealth Advisory segment had positive net flows of $136 million. On a consolidated basis, including Boston Private Wealth, the company's net flows overall, were a positive $198 million. On Slide 14, we show our Investment Management segment, including contributions from Anchor. Total revenue decreased 7% linked quarter due to $900,000 of performance fees received in the fourth quarter while increasing 5% year-over-year driven by higher levels of assets under management. Operating expenses, net of fourth-quarter adjustments for the Anchor transaction-related goodwill impairment and legal expenses, decreased 1% linked quarter and increased 2% year-over-year. The Investment Management segment first quarter 2018 EBITDA margin was 26%, slightly below our corporate target of 30%, due to a correction of trading errors in the quarter and elevated transaction-related legal fees. Moving to Slide 15. Or Wealth Advisors reported total revenues of $13.6 million, flat linked quarter and an increase of 6% year-over-year. Operating expenses increased 29% linked quarter, 12% year-over-year. The 29% increase is driven primarily by bonus adjustments for prior years that were recorded in the first quarter of 2018 as well as a retirement plan adjustment credit in the fourth quarter. First quarter 2018 segment EBITDA margin of 24% is below our corporate target of 30%. First quarter margins absent adjustments would have been in line at 30%. This concludes our prepared comments on first quarter 2018 performance. We'll now open up the line for your questions. Wanted to start just with the deposit flows this quarter and pricing, and if you could just give a little more color there on kind of what were the drivers. Yes. I'll start and then I'll have Clay, add to it. In the first quarter, we always ---+ that's always our seasonally weakest quarter in terms of deposit growth. So what ---+ we are not surprised by kind of the 1% year-over-year growth in the linked quarter growth trends. I think on the deposit cost side, they're up 6 basis points linked quarter. We're in the part of the cycle now where the increases in rates are starting to translate into higher deposit cost. That's not unexpected. I think we've done a pretty good job kind of maintaining discipline on the rate volume trade. And I think on a relative basis, our incremental betas are holding in pretty well. So Clay, if you have anything to add. I agree with everything <UNK> said. The only thing I'd add, <UNK>, and I know all of you in the call are looking at a broad industry universe. Environmentally, it's very clear that the long awaited kind of deposit repricing event is beginning to unfold in the industry. In our case, we think it's too early to make a call on what the new normal is on deposit growth because our first quarter is historically pretty lumpy. A lot of our private partnership clients and private company clients have big ins and outs around tax season and year-end bonuses, et cetera. So frankly, we've been ---+ we've probably been watching pricing, maybe a little more closely than volume, because there's noise in the volume. But I think this dynamic is a big thing to keep an eye on. We're watching it like a hawk. We have a range of responses in mind depending on how events unfold this year. And so the driver thus far, has it been more exception pricing or have you guys made changes to the rate sheet. Maybe some color there. And then if you could connect ---+ marry that with the loan-to-deposit ratio. I understand there's some seasonality in terms of flows that you will have throughout the year, but where ---+ what's kind of a maxim that you won't cross there. I mean, from the pricing kind of more color on that, it's very client-specific and client segment-specific. So when we look at price adjustments, we're very prescriptive on how we approach the different client segments and different products. To your point, we're not the type of institution that runs specials or product specials from time to time. So we're not seeing broad-based kind of pricing dynamic changes. In terms of kind of regionally, we see pricing pretty consistent across the regions. Again, it's really on the client segment-specific analysis that we do it. And on loan-to-deposit ratio, for the quarter, is on an average basis 102%. And we can see that drift up a little bit depending on seasonality like we said, we see a lot of deposit build in the back half of the year. So we keep an eye on it. We're not too concerned at 102%. Confident that deposit pipeline is building nicely and that ---+ will normalize back to the 100% range over the year. Okay, great. And Clay maybe just one more on just overall profitability and kind of you've had your historical targets there. Any adjustment with the sale of the business plus lower tax rates now. Where do you think that we're going to shake out and what are you kind of aiming for going forward. Good question, <UNK>. I'd comment the following way. I don't think our thresholds have changed. We basically, in effect, just took the reset tax rate and kind of adjusted our profitability norms right in line, if you will. The other dynamic though is, with the sale of Anchor, our historic spread between return on tangible common equity and return on stated has narrowed, because of the reset of goodwill. But our ROTCE and ROE targets remain very much in line with our historic guidance but adjusted for those 2 factors. Alex, this is Steve. No, right now, I think, we're still comfortable with that guidance. Obviously, we've talked about deposit growth being the regulator on the loan growth clearly, especially with the loan-to-deposit ratio now a touch above 100%. Within the loan categories, we saw continued strength in mortgage this quarter. CRE kind of trending in line with where we'd expect. C&I is a little weak and there's a couple of things going on there. We had a couple big pay downs in the quarter that brought down the balances. We had to re-class of about $13 million from C&I into construction. And then just the competitive environment on C&I is really tough. So we're seeing a lot of deals that ---+ pricing spreads and just terms is not something we're comfortable doing right now. So I guess, right now we're still comfortable with what we talked about last quarter, but obviously, deposit growth is going to be the key regulator on that. Our current thoughts on that, Alex, is flattish to just slightly up, just given pricing dynamics and given our loan portfolio where it sits today. Yes, I mean, we talked about this last quarter when we first announced the divestiture. We're kind of still working through all the options we have at hand. So again, we'll relook at the capital stack, but obviously, we've been very supportive of the dividend and where it is. Obviously, with an 8% to 10% organic growth rate, we'll use some capital to support that. The share repurchase, that's really replacing the repurchase program we had out that expired back in February. And if you recall, we used about half of that authorization, while it was outstanding, and we've been pretty opportunistic in how we approach share buybacks. So the valuation needs to make sense for us to be in the market. Chris, like I said, I think, we're considering all those options now. Those aren't callable until June. So between now and then, we will continue to look at all our options and if it makes sense at that time, that's something we'll definitely consider. Yes, those are good numbers to use. Yes, the way I would think about the kind of expenses for the rest of the year, Chris, I take '17 actuals, back out Anchor, we disclosed that back in December, when we announced divestiture I believe, so you have the full year look, so that'll have the adjusted kind of like-for-like expense base in the new world order, if you will. Grow that 4% to 5% and just add back a quarter of Anchor and then obviously, you have the higher seasonal comp in the first quarter, but I think all of that should give you what you need to get a sense of how expenses play out for the rest of the year. Correct. I guess, from my view, I'm pleased that the quarter gives us a good start to the year. What I was most looking for was positive evolution of the bank balance sheet. Boston Private Wealth performing in line with the expectations we have had from the start and finally, critically important to demonstrate operating leverage after our expense step ups last year in staffing and technology. In that regard, I see things in the quarter that make me feel good about the year going forward. I think our most closely watched item is where this call began with your questions, evolution of the deposit base and the effect that has on our revenue build is something we're monitoring very closely. But all in all, I saw things in the quarter that I've been looking for and things that I like. Thanks for your interest and we'll be talking with investors now as we get into IR season.

2018_BPFH

2016

ATR

ATR #<UNK> I can take that one. When we put together the CapEx guidance at the beginning of the year, we are working off of a budgeted number. At that time we had out there the projects for the Congers facility even though we had not started. So the $10 million for our original guidance was already baked in there. The pullback from $165 million to $155 million was a couple things, one a little fine-tuning once we've gotten further into the Mega integration process. We were not quite sure until recently how much that was ---+ how much spend there was going to be before the end of the year. Secondly, it really reflects our cautious guidance in Q3. As we have done in the past we have been pretty good stewards of capital. When we see business slowing down we look for areas where we can pullback. Not only on general operating cost but also in the capital area. It reflects both of those things. This was a facility that does annodizing that is basically coatings or transformation of color to metals. The facility is in France. There were three, in the site, there were three production units. One is where the fire significantly destroyed. I am very positive that no one got hurt in the facility. We had no environmental issues around that. We've done an outstanding job, and I really congratulate the people that have been involved in this on our side, is making sure we have supply. Because these are subcomponents that go into our products. To be able to continue to supply customers. Right now we do not think one of a material impact on our customers as a result of this. The fire itself got started as a short in an electrical component. You're right, we've had one of the several years ago, but we are again going back and reinforcing all of our fire safety protections systems on all our facilities worldwide. Overall we do not think the impact is going to be, when you consider insurance side et cetera, going to be material to Aptar, but as we saw anytime you get into this you can get cost in one period and reimbursement in another. And right now it's hard for us to estimate what that split could be. Right now, I'm going to go from second quarter to third quarter; we are seeing a slight drop both in Europe and in the US. Again, you've got to take this in other parts of the world it may be slightly different, but that is our biggest user. So it's a couple 2% to 3% down right now. There's still quite a bit of volatility in those. That was in the injection side. We were up 8% in the quarter on our injectable business. Maybe I misspoke on this, <UNK>, what I'm saying is as you've said our margins for pharma have been outside of our normal range for the last several quarters. Due in part to very strong Rx sales that have been double digits for the last several quarters. What we do is, and I think this is a strength of our pharma business, being in both prescription, consumer care, healthcare, as well as injectables. While was still seeing growth we're now seeing that growth among both in consumer healthcare and injectables, which carry a bit of a lower margin profile. I think we will be coming down from being over our estimates to be more on the high end of our long-term targets. I think it would be too early of a reaction. I want to reiterate we're still very positive about the Asia area growth platform for us. I can tell you <UNK>, one of the things we've been looking at is the need to potentially expand in Asia. Today we are in one large, several different facilities and one in Suzhou, China, we're looking at whether should we be expanding in Guangzhou. So I'd say it's more a of growth look for us than a contraction. But certainly we will end up monitoring where we're going to be on the food and beverage side over the next 6 to 12 month. No. We're just now <UNK> starting to get into that process. It's really going to be very much project dependent. At this point I do not foresee any major bricks and mortar or any thing other than potential expansions that <UNK> just eluded to there. I would say we probably would be in the ballpark of where we are today, $165 million, but I would really have to see some of the details, which we won't be getting now for a couple months yet. Thank you very much. I think what I'm going to be doing, I've told the Board this, I will be flexible in terms of making sure that there is a smooth transition. I think the Board is diligently working to try to find the successor, again, either from an internal or external candidate side. So I will have some flexibility, it's not a hard stop at year end. From my perspective that is not something that makes a lot of sense for the Company or for me. Let me come back and take two parts. First of all you're right, we have ended up coming back, our new operations have been expanded in France. The mixing machine is in and we're going through the qualifications. We actually are expecting to ship commercial product out of that starting in the third quarter, ramping up to the fourth. What will be doing in North America will effectively adding about 10% to 15% to potential capacity. I think it's our most important side it's really going to improve the service, the quality, et cetera for what is a potentially significant ---+ what is a significant US market. For us it's a growth platform, so will probably be able to get another 10% to 15% in terms of potential sales out of the addition. We should be done with the construction of that in Congers towards the end of this year and then qualifying customers as we go into next year. On the CapEx as we get into the year we are better to fine-tune what are the immediate CapEx needs. I mean I think <UNK>'s comments are much more medium to longer term focused. And the CapEx is ---+ I was focusing on the next six months. What we're putting in CapEx in the next six months is not necessarily where ---+ the growth that <UNK> is alluding to is really investments that we have made in the past and current project activity. Again I would reiterate to that, <UNK>, we continue to, we've never not invested when we see good growth projects. And that will continue to be the Company's profile going forward. Let me come back and do it the second. Certainly what we are seeing in Asia is completely disconnected from the Brexit side. That is more of a local market issue. In general for us with Brexit, and I think this is true for most of the companies that I have had a chance to talk to, if you look at our profile while we have manufacturing in the UK it tends to be relatively small. So the devaluation of the pound on the immediate side didn't have a material impact for us. What I think Brexit is doing in the short term is probably not causing much disruption. But what it is doing is putting a certain amount of uncertainty in the marketplace. I wouldn't tell you it is necessarily helpful, but in the short term we do not see any major material negative. It will be interesting to see as we get into the Olympics if you start to see travel downturn. Certainly as <UNK> alluded to when he talked about market, we're actually seeing pretty strong growth throughout Latin America. We don't think that the Zika virus per se has a lot of negatives. What I do think you're going to get is that there wasn't much insecticide used in Latin America in prior years. We think that's probably going to be a trend that's going to continue now that they are using it, and they are going to need to continue that. I look back to this like the hand sanitizer issues when we had the Avian flu. All the sudden you have a base that moves up from a level of 100 to 115 that stays there. So I do think insecticide, insecticide sprays will continue to be, maybe not have the same growth we had this year, but won't go back to where they were in the past. That's a good question, <UNK>. It's one that we're going to continue to follow-up. We will talk a little bit more about it at analyst day. One of the things you bring up is a real strength of Aptar's and that's the diversity of the business. You've not seen just one market being up or down, we've seen volatility and using that in a positive term between the various markets. We are going to be taking a look at it across where our growth targets are. But I think again the diversity of our business is the strength to be able to help drive not only growth, but also the margin profile that we have seen improve across all three of the business segments over the last year to year and half. It will depend on, it's a good question <UNK>, but it will depend on the segment that it is in. As we've seen some destocking in pharma, we saw a little bit in beauty and home a couple years ago. Typically for us they tend to be one to two quarters, that'd be the impact. But again everything is going to be dependent on the region and the particular customer. One explanation if you look at it is just pure mathematics. If you look at the size and beauty and home segment, which is where we have fallen short of the sales target, that is our lowest margin. The slowness that we have experienced in the last 18 months in beauty and home also has a positive influence on the mix of the margin as pharma and food and beverage have grown. The converse is true as well, that is one of the positives coming out of Q2 is we're starting to see beauty and home come back to within the range of their long-term sales growth. I think part of that is just pure math. I think the other thing and going back, I will take a little bit on top of what <UNK> has said, I think we've done an excellent job as a Company taking a look at our cost controls over the last and this is across all three segments. We have done a very good job of doing that. That's helped. Certainly the other thing I wouldn't underestimate has been resin and let's call it raw materials on a broad base. Raw materials you saw margin improvement last year. Certainly you don't have the year on year improvements because raw materials have not been a material part this year. But that has also helped us. Going forward, we are not expecting a major deterioration in the margin and while we are at some of those target for couple segments. At least in beauty and home we've still got a ways to be able to get there. I'm still pretty optimistic that we're going to be able to get to that. Let me go back and see if I can try to do with each of those. On the 10% to 15%, I think it is more 10% to 15% of overall Stelmi, because this is one piece of the whole manufacturing process. It is bigger than just the US side. It adds capability. And frankly what we're up and running in the states, while we will be dedicating most of that capacity to the US, there is nothing that would say we couldn't ship that to other parts of the world. Secondly in terms of the new production going on in France for Congers, this would be an additional piece of dedicating that new growth. That is the key side, we're seeing 8% to 9% growth in our injectable market. Looking back this is a way to help facilitate that growth. Again, some of that will end up using for Congers, some will be used for the rest of the world. Lastly I actually think what were doing in Congers in terms of in terms of breaking down some of our business actually makes entry into other areas of the world much more economically feasible, rather than building a whole new production facility. I think this is an excellent strategic move in terms of our overall growth and really helps us as we go for the next 5 plus years. Again what I am going to do is we have up couple on the personal care side. One I touched upon in my remarks. We're seeing on the dermal side because we talk pharma as a growth area for us. We have two new projects, one for acne, and one for a red skin condition that has come back, and both of those are using Mega products. Both of those end up coming out of the prescription side. Certainly Mega was working on those, but our regulatory knowledge really helped them get across the finish line. We're also seeing some really interesting opportunities in Asia and also going into Latin America on future projects using the Airless technology. <UNK> we have about $37.5 million from memory sake left on the existing authorization. We will look at that with the Board at future Board meetings as we do each time on whether we're going to go for another extended authorization. After that we will evaluate the situation where we're at. Certainly the share price where it is today, we'll have to take that into consideration whether we look at in ASR or Dutch auction or whether we just do open market transactions. We're committed to the consistent capital application approach. It's something we evaluate on a regular basis. Great Andrew, thank you. This concludes our call today and I'd like to thank everyone for joining us.

2016_ATR

2016

TRIP

TRIP #Yes as you all know, we don't provide a formal guidance but we have made the comments that ---+ a few comments. One is we see our comp easing in the second half. This is the comps from the IB rollout but also the meta-comps that we have highlighted before. We are also commenting though that there are recent softer trends that we have highlighted and they make us more cautious as we look at the rest of the year. And then to answer the pricing question, the instant book price is generally speaking be best price that we get from all of our instant booking partners which is frequently the hotel itself, chain or independent, and then likely one or more of the Priceline companies and then perhaps another or a different OTA. I have said many times that instant book price is not actually the best price in our meta-auction and so since travelers the world over care most or care hugely about price, when our instant book price is not the best price, we are generally not featuring it at the top of the page because we know it is not what users are going to want the most. Our goal is going to continue to sign up independent hotels, chains, online travel agencies, resellers, every possible partner who is able to take the booking for a hotel so that when you come to TripAdvisor and use the instant book product you will see TripAdvisor having as good a price as any of our meta-partners and frankly as anyone across the web has. And so we measure ---+ getting technically here ---+ we measure the meet, beat, lose ratio of how our instant book price compares to our own meta-auction to know how many times a smart traveler should be picking instant book option because it is equal to the best price in the meta-auction. Thanks, <UNK>. Two good questions. We are not at the point to release total supply, direct supply numbers. I think we talked about having the vast majority of the chains on board and we have quite a few independent properties. One of the nice points of that independent property piece is that so many of them are hearing about us through their channel partner or aware of us because they are responding to reviews and so they are actually going through our self-service module to sign up. And if that independent hotel uses an Internet booking engine that we support and we support well over 100 now, it is pretty easy for that property to come on in, put in their credit card, hit a few buttons and away they go. And then they are able to take direct bookings via TripAdvisor. And again, they like it, feedback is good. We have had the strongest desire to be as broad as we can with instant booking so our natural focus has been the big chains because they can bring on thousands of properties at once and of course, the big OTAs and we have a super partnership with the Priceline brands and so you have seen both not only booking.com but also Priceline and Agoda appear in our auctions, not only in the US but in many more markets as well. And as we expand all of that inventory to that OTA relationship, we are delivering instant book to more customers in more languages. So the question of the instant book conversion via supplier direct versus an OTA, it is a little hard for us to measure simply because it is apples to oranges. The big chain supply we have tends to be kind of the big names, the high confidence and in general those tend to convert quite well, oftentimes better than a good OTA partner because there is some ---+ near as we can tell, some brand preference for the supplier direct. It is a little more nuanced when it comes to the individual properties signing up, whether the consumer preferences an OTA versus the independent. I'd leave you with the generalized statement that if the independent or the supplier direct has excellent content in our system, so good room descriptions, good photos and absolutely have equal pricing, then the supplier is likely to get a higher share of the bookings. When we ask ourselves what matters the most ---+ I want to be very clear ---+ it is price. So hoteliers who are very good at making sure their own website has the best pricing and that is what is shown on our site reaps the benefits of that where pricing is variable across different of their partners, then the hotel itself will lose some of the bookings because consumers prefer the cheapest price simply put. The monetization gap that we currently have so global monetizes roughly at about 30% of ---+ phone, not the tablets, the phone monetizes roughly at 30%, one-third of desktop and we have seen that improve over time. It is better today than it was a year ago and we continue to believe that we are well-positioned to continue to make improvements and we lead with our mobile product. So as we think into the future, we do anticipate that we see further conversions of the monetization of the phone and desktop. Where that will exactly land is a little difficult to predict at this point. And I would caution folks that sometimes when you hear us and others talk about mobile, it includes tablet. We try to be clear when we talk about our phone monetization being one-third because tablet for us looks pretty close to desktop. Sure. This is <UNK>. Absolutely the biggest factor is the consumer building a habit and the expectations of being able to book with us on the app. So there is the macro and I think almost every travel company at least will talk about how the phone bookings monetize less per booking than desktop because the phone is still used at least in my opinion for the lower decision support purchases. It is the easier hotel, it is the one night, you know what you want, there is less research involved. And the heavier more expensive purchases are happening, the less commoditized purchases still are happening more on the desktop. As users' comfort grow on the phone, as phone apps become even better, that will lessen and the average price of what is booked on the phone will come closer to desktop. Average price is a good proxy for average amount that any of us make on those bookings. For us, the habit of booking and rebooking and rebooking on the phone, on the app specifically, is going to be what we believe drives our future monetization model. We kind of have the best of many worlds because we have this awesome meta price comparison engine on any device that allows the traveler to make sure they are getting the best deal and we have moved into the transaction business so that they don't have to go anywhere else to get that best deal. They can book right on TripAdvisor If you believe as we do that it is going to be an app world and to many, it is already in app world, to Facebook is already in app world but in that sort of travel purchase, it is moving in that direction. Our app being able to help people find what they are looking for, make sure they are getting the best price, click off in a meta model if they are not getting the best price, use their stored credit card to easily book when we do have the best price so that they made the travel research, they made the travel purchase, now they are taking TripAdvisor on the road with them in that single app to deliver that next experience of what am I going to do when I get there. Where am I going to eat, how can I make all those reservations. And that app world means my overall revenue per shopper A, gets amortized over all the different stuff that we sell, not just hotels. But B, building that app because we have earned the spot on your phone makes that monetization because of the repeat usage that much better over time. And it is true that on TripAdvisor desktop, we have been phenomenally blessed with so much traffic, so much trust, so much awareness around the globe but the desktop website isn't that sticky. It has been our challenge to get people who do the price comparison on Trip, who read the review reviews on Trip to not immediately pop over and book somewhere else such that we have completely lost the credit. And that is not a complaint against any of our partners that we deserve all that credit, we are trying as hard as they are to correctly attribute the credit to us. On the app with instant booking, we don't have that challenge anymore because we have built the habit, people come back and finish their booking right on Trip. Yes, you are correct. If you look at the drivers in order of importance, the number one driver was the instant booking impact in the second quarter, consisting both of the booked revenue impact from the lower monetization IB, as well as from the revenue recognition. The number two driver indeed was the shift from desktop to the phone, and we are not sizing the individual impacts of all those drivers, but it was a significant impact. We are not breaking out that in specifics. We have said overall, the monetization on the phone is 30%, one-third of meta. We're not breaking that down between IB on the phone or IB on the desktop. What we like about that phone aspect is we continue to see our best repeat rates on the app, we continue to see the strength of the habit, kind of more people booking four and five times on the phone than on mobile web or desktop. And if you look at the app experience verses mobile web or desktop, you see that we are pushing harder on instant book as the best and easiest option. When you look at the folks who are logged in, already members on the app huge, huge percentage of people that are clearly identifying themselves as TripAdvisor members and happy to book. Combine that with the constant increase in credit card storage, the constant repeat bookings and it takes time but we are pretty happy with how that picture is shaping up on the app. We are going to face, to be clear, a continued headwind of the shift over to mobile because even though our mobile monetization rate is growing and the app usage is looking really strong, it is still coming from such a smaller rev per shopper base than desktop. But that is one of the reasons why we launched IB or the whole concept of instant book in the first place was to kind of solve this problem so that we would be in a phenomenally strong position in an app world in a few years. Yes. I don't want to ---+ I will put a finer point on it than we have already done. We did see as we called out, a softness really into <UNK>ne more than in April and May in the particular quarter and we have seen that softness continue into <UNK>ly and as I said before, usually we see a very significant spike in <UNK>ne and <UNK>ly that is seasonal. We have seen that much to a lesser extent this year. We've talked about what we believe are some of the headwinds that we are looking at. It is difficult to size the total impact of the macro. We have seen obviously impacts, localized impacts, in the particular markets that were impacted and we can size those to some extent. But we believe there is something larger going on in the travel environment that is harder to quantify. So we have seen that in <UNK>ne and <UNK>ly. When we say, when we look at the rest of the year that we are more cautious, it is really because it is difficult for us to forecast how much of that <UNK>ne, <UNK>ly weakness is going to persist throughout the end of the year and that is the reason for our cautiousness. Thanks, <UNK>. So because of the Priceline group relationship and the fact that we have all of their inventory, I would say the bookable properties number is huge, covers just about everything we want because you think of how strong the Priceline group companies are covering basically most interesting bookable hotels. We have always looked at our meta auction by hey ---+ as a percentage of page views, how many of the properties that we have do we have a commerce link for and that number has been quite steady for several years and I think the number now that we have this 0.5 million bookable properties is going to be pretty steady. Priceline generally has most if not all of the rooms at a property so we don't generally go down to the room level count. But if you think of our inventory as the super set of the Priceline brands plus the Expedia affiliate network brands via Tingo plus Get a Room, plus the other suppliers that we have signed up, in total bookable properties, I can kind of say at least in English, I can kind of say check mark, got all that matter. I can't say check mark yet on do we have the best price on all of those properties because Priceline as strong as they are on pricing doesn't always have the best price and that is why people generally shop around on the net. They are very, very good at it. TripAdvisor has the opportunity to be even better because when Priceline has a great price for a property, we can take from them, when the hotel itself is a better price, we can take the price from them and they can both be instant book partners. So I wouldn't look at or I don't care much about at this point the trajectory of bookable properties, I care more about how we are doing by way of content and pricing for those properties and then the expansion into as many languages as we can support. Thanks everyone for joining the call. I want to thank all of our employees around the globe for their continued hard work. Everyone is doing a great job for us. We appreciate that and we look forward to updating all of you on our progress next quarter. Thanks very much.

2016_TRIP

2016

MMM

MMM #Hi, <UNK>. <UNK>, for the total year we guided approximately $0.10 benefit. Our view is that will be quite evenly distributed over the four quarters. For the first quarter, roughly one quarter of that $0.10 benefit. That's inclusive of the impact of the most recent portfolio action that we announced a few days ago with a small business in our industrial business. <UNK> ---+ You're trying to get us in to give quarterly guidance, right. <UNK>, we've talked about the organic growth that we are expecting in the first quarter. That is a quarter that I would expect will be more challenged also from an earnings-per-share growth. Everything else being equal, there's not one outlier that will compensate for what we've already said about the organic growth in the first quarter. Our appetite is pretty well reflected by the 4 to 6 guidance that we stated. I will reiterate our approach is there's a certain amount where we're in the market every day buying, and then there's a portion that we are flexing up and down depending on the relative value we see of 3M stock. We continue to follow that play book in how we repurchase our shares in 2016. Hi, <UNK>. We have ---+ as you know, we work on those platforms daily with our customers. I think that when we have laid out our plan for the year, we have good understanding relative to when new introductions will come and our position on them. We have a good position, as you know. We got a hit now, of course, not because of that. We were spec'd out on most anything just because the market was down. It's estimated to be down in Q1, as well, as you have seen in media. I think we will see an uptick coming in the second half of the year, hopefully with orders coming in. We say in terms of end of second quarter is where we will start to see orders coming in to us for launch later in the year. Yes. Well, we are aware of competition in terms of technologies to LCD, such as OLED, which is the one you referred to. We have known that for a long time. That's also one of the reasons why we realigned our organization to form our display materials and system business in early 2014. There's an integration of those businesses into what I would call display technologies, which is a goal for the future for us to expand into. We have already products that is going into equipment that they're using all that. We are not behind in any ways. We have on every equipment today that they're using OLED, we have multiple applications in them. There's more to come in that area. But we have been working on this area for quite some time, and that's part of our model, right. That's why I would say the strength of 3M through our technology platforms, this is exactly what it is. I see more opportunities as you go ahead over the longer term as we are working with our customers on it. Yes, <UNK>. That 150, that's still a good ball park. There's a lot of things that are going into that, including our estimate of 1% to 3% organic growth. Some productivity coming from things such as our business transformation investment, our pension expense, as well as some strategic investments. All in, we're seeing many of those things play out exactly as we guided in December. The 150 is still a good number. Yes, it is very strong. I think there is a couple of things that is important to think about relative to 3M and our position in the market. We have ---+ we are very strong in United States in our consumer business, so we have a stronger and better penetration in United States than we have outside of United States. That is also then talking to our opportunities as we move ahead to expand more with consumer outside of United States. If you look upon United States specifically, and you look upon data and facts, which is a key indicator for us relative to potential growth rates, we all know that there is a challenge on IPI as we go into 2016, and the facts there is saying that it's a slower Q1, Q2, maybe Q3, and the Q4, it will pick up again, on IPI year over year. If you look upon retail sales index, it's actually different. It's very robust as we go in already to Q1 and Q2 and for the rest of the year. I would say that our business there is in a good position, and we feel very good about it. We have very good brands. We add a lot of value into the channels, and we are managing a lot of categories in that business. The same goes for health care. Health care is the same. Health care for us ---+ I'm not talking US versus outside of US there. I'm talking about developed economies versus developing economies. 80% of our portfolio in health care is in developed economies, meaning developing is still a huge opportunity for us, and we are growing very well there, and our margins are very high. I think that's coming back to, in times like this, where you see some challenges in some economies around the world, if that's in industrial or electronics or even in safety, we have the advantage that we have domestic-driven businesses in consumer and health care that this carries on. You saw that this quarter. Again, health care had almost 5% organic local currency, the strongest for the year and with margin expansion. It's a fantastic business for us. The same go for consumers. We feel very good about them, and it's sustainable. I think that's the important thing. It is a sustainable business model for us based on world-class product solutions. Good morning, <UNK>. No, I don't ---+ I would say that there are certain pieces in our business that are doing very well. I can ---+ 3M Purification is doing extremely well, had a growth rate in the quarter of 10% and for the full year 8%. Automotive OEM is doing very well for us, had a growth in the quarter of 7%, and in fact for the whole year is around 7%. Then I think that some ---+ where the pressure is yes now I would say general manufacturing. Then that goes broad-based, right. I don't ---+ I will not say short term. As we are talking here in the next quarter or next five months, I don't see that we will see a big tick up. I think it will be very similar in Q1 versus Q4. Some businesses doing very well, automotive OEM and purification doing extremely well. But we have also to think about it in terms of growth on a global base. So United States there was pressure this quarter, down 6%, but we were growing in many other cases around the world. I think that's important to think about in terms of us as a global growth company. We had organic growth in India, China. We grew 6% in China. If you think about that, it's a big market ---+ second biggest subsidiary for 3M outside of United States, and the second biggest economy in the world. Still for us, our industrial business in the quarter, 6% growth. We had 3% growth in Japan, and United States was an issue. I think we have to balance it out in terms of how we look upon the future here. We have decided, and we are a global growth company. I will say that as you go into the year, we should see an uptick coming into the second half of 2016 for industrial. Yes, <UNK>, the benefits, in fact, will not be second-half weighted. From a comp standpoint, yes, with the fact the charge all came in the fourth quarter of 2015; but the actual benefits going forward will be quite evenly weighted across the four quarters of 2016. Thanks, <UNK>. No, they are sustainable. If you think about it, you're going to look upon the facts. We have now for three to four years outgrown the automotive production on a global base. Our growth is always more robust than the total output of cars produced. That is indicating that we penetrate and take more application per car. That is sustainable by definition due to the fact that we provide solutions that is helping automotive industries with technology conversion. Don't view us as a commodity player that is coming in. He has to try to replace someone. For us it's about technology conversion moving you to the next level on your specific retail in order for you to be able to compete in the market place. That is sustainable by definition, and that's what 3M is all about. I would not say, today, that I see any differentiation with someone becoming much stronger geographically, some other weaker geographically, in terms of production of cars. That is were we play, right. We just sign in and spec in always at the headquarters of companies ---+ if that's in Germany, Japan, or United States. Then where the car is produced, that is where we have the teams to put the application in place. It's a type of development and deployment. I don't feel there is any differentiation there on a geographical basis. But our model is sustainable. Thanks, <UNK>. Thank you. To wrap up, 2015 was an important year for 3M, as we made investments and took actions to prepare ourselves for the future. As a result, we are well-positioned to drive efficient growth and create greater value for our shareholders in 2016 and beyond. I thank you for joining us, and we look forward to seeing you all here in St. Paul in March. Have a great day.

2016_MMM

2015

HLIT

HLIT #If <UNK> has got something more specific to weigh in, but I would say not significantly different than historic proportion. I'll give you the color, <UNK>, that it was actually a somewhat stronger than historically normal quarter from a production and playout perspective. But that's kind of at the edges. In general, the video processing is a portion of the of the whole ---+ is consistent with the last several quarters' average when we were breaking out that level of detail within video. And I guess if I could add to that, I would say, even over the last few quarters while we've had a dip in video, the production and playout portion remained fairly steady. It was really video products that decline, and ---+ (multiple speakers), yes, and it's really those products that rebounded this quarter. Video processing. And that's consistent with our dialogue around a pause, trying to figure out HEVC, trying to figure out Ultra HD, and also trying to figure out the virtualization and how to best really master the operationalization of that. The turn down that we saw didn't happen from the very beginning of the quarter. So I think we do acknowledge that there is possible further down side on the Cable Edge business in the quarter. And It's not our ---+ 20%. I'm trying to go through the math quickly in my head, and I guess that seems more than what we would anticipate in a down side scenario. I guess put differently, even in the worst case, I don't imagine down another 20%, <UNK>. That being said, I do want to emphasize that on the video side, as I entered a moment ago and in the context of someone else's question, while we do expect video to improve, probably not another 13%. And while it's encouraging to see the external factors, demand factors having flipped, it's actually off to the races. So with HEVC and Ultra HD and the like, we think that there's going to be same steady ramp and demand on the video side. And therefore, we expect the video to continuously increase, not at the same pace as we saw this past quarter. Exit was $88.5 million. And I think you should ---+ we did taper the share repurchase into this year as we got closer to $100 million in cash. And all things equal, we would think about repurchasing in the same levels over the last couple of quarters. So with continued repurchase, we still have ---+ I don't have the number right off the top of my head. We have plenty of room left in our repurchase pool, if you will, and we expect to continue to repurchase it at I would say current levels. That's why we also call out HEVC compression. Historically, the two have been really linked together. But an interesting dynamic is that we now see a number of operators, cable, telco, as well as some broadcast and media companies looking to use HEVC in the near term for traditional HD and even SD content as they look to drive better efficiencies in their mobile networks and in their streaming infrastructure, et cetera. So we do have a view. We've had a couple of announced customers using HEVC technology for those services, and so we do have a view now that HEVC will be more of a near-term driver even before Ultra HD really kicks in. <UNK>, we have $56 million left on our repurchase. Let us end the Q&A session there. And let me simply conclude by thanking you again for joining us, and reiterating that we believe our technology vision, our strategy, our focus on execution, and the opportunity in front of us as being both real and very compelling. We remain well positioned and firmly committed to delivering earnings growth this year, as well as well into the future. We really do appreciate your support, and we look forward to keeping you updated on our progress. Thank you very much, everyone.

2015_HLIT

2015

TUP

TUP #And again, that really does speak to ---+ back to the China situation. We're not sitting in a showroom waiting for people to come in and buy a car. Our people are ---+ they're taught to go out. It is a push business. It's not a pull business. That's a great question. Guys, thank you very much for the time today. I'll tell you what we've thought about doing, is coming up with very much like what we learned from doing this webinar. We want to give you kind of a look in the future on the things we're talking about and that we've shared with our people out there. What we have to do is measure it with ---+ we certainly don't want to share all the things with competition, but we've got so many things. This 20/20 work team that we've had now for 2.5 years. Great ideas that they come out with. They've been working through these. And I really think you're going to see the adjustments to our business model that will get us to this $5 billion in sales. So thank you very much.

2015_TUP

2016

FLO

FLO #Thank you. Good morning, <UNK>. Yes, <UNK>, if you look, for the quarter, we did see a ramp-up in the routes held for sale in primarily ---+ some of that's in new markets, some of that's in core markets. What we did was, as we were making enhancements to our overall distributor agreement, we did pull back some on selling territories. But we've completed most of those enhancements, and now we're moving forward with offering many of those routes for sale now. So, in Q2, you'll see us selling some of those territories, and you'll see a reversal of the impact of some of that in Q1. I mean, really, not getting into any specific market or specifics about the agreement, I would say, generally ---+ again, we've put in some enhancements in how we're using that agreement as we sell new territories going forward. But as far as specific numbers, we would not want to disclose that. <UNK>, I would add that, from an operational standpoint, there's a lot of excitement in the markets, where we are actually now able to convert to independent distributors. Many of the prospective distributors have been on standby for too long, and lots of excitement about being able to go ahead and convert to the independent distributor model in these markets. Basically what has happened is, in the fourth quarter, we implemented price increases, really reflective of higher promotional prices, starting in the middle of the fourth quarter. That continued ---+ those price increases continued to be implemented on our side, moving through the first quarter. And the comment was, from a competitive standpoint, the pricing really did not change. And so, that is the reason ---+ if you look at the graph in the deck, that's the reason for the increase in the gap between our price and the market price reported by IRI. The market stayed the same. We increased price, and the market stayed the same. That's our assumption. Yes, thank you. Thank you, Ellen. At Flowers, we have the right team, the right products, and the right strategy to drive shareholder value. We operate both from a strong competitive and financial position that allows us to invest in the business while also returning capital to our stakeholders. We remain confident that we're taking the right strategic steps to keep the Company positioned for long-term profitable growth. Thank you for your time this morning, and this will conclude our call.

2016_FLO

2017

IVR

IVR #Good morning, and thanks for joining Invesco Mortgage Capital's Third Quarter 2017 Earnings Call. Management team and I appreciate your participation today and we look forward to sharing our prepared remarks and receiving your questions during the Q&A session that will follow. I'll begin by providing a few highlights for the recent quarter and our outlook, if I transition the call to <UNK> <UNK>, our Chief Investment Officer, who discuss our investment portfolio more detail. I'm joined on today's call by Lee Phegley, our CFO; <UNK> <UNK>, our President; and Dave Lyle, our CEO, who will be available to answer questions during the Q&A session. I'm pleased to announce that IVR delivered another solid quarter, with core earnings per share of $0.44, an increase of $0.03 per share or 7.3% over the prior quarter while book value increased modestly to $18.34. This produced an economic return of 2.6% for the quarter and brought our year-to-date economic return up to 11.8%. This strong performance was highlighted by the mid-quarter issuance of $287.5 million of our Series C Preferred Equity. We were successful in investing all of the preferred equity issuance proceeds in assets with accretive ROEs before the end of the third quarter, which contributed to the incremental improvement in earnings, though the full quarter benefits are yet to be realized until the fourth quarter and beyond. Book value was up modestly during the quarter as we once again realized the value of our diversified portfolio. While credit risk transfer bond spreads widened in response to the potential impacts on collateral from Hurricanes Harvey and Irma, this was offset by contributions from a legacy residential mortgages, commercial mortgages, as well as agencies. I'll draw your attention to the graph on the bottom of Slide 4, which shows that our book value volatility continues to fall, which reveals an important part of our value proposition. Importantly, our book value volatility also continues to fall at a faster rate than our peer group average over the past nearly 5 years, on a rolling 3-year basis. On Slide 5 I'd like to point out some key performance metrics in relation to our peers. Over this or any calendar year or annualized timeframe during the past 3 and 5 years, we have delivered economic returns that have outperformed our peer-group average. Well just to illustrate how the volatility of our book value has fallen over the past nearly 5 years, the box in the middle of Slide 5 shows our book value performance compares. In each period, we've outperformed and I point out the 5-year number in particular. While our book value has been relatively flat over the past 5 years, down less than 1%, our peers on average have lost nearly 19% of their book value. Finally, we compare dividend performance, not only did we increase the common stock dividend during the quarter, we've been successful in earning that dividend. Our core earnings per share has been in line or above the credit dividend level during 10 of the past 12 quarters. Before I turn the call over to <UNK>, I'll take a few minutes to discuss the factors that contributed to our increasing core earnings as well as our outlook for the next few quarters. As I pointed out earlier, the accretive benefit from the issuance of preferred equity was a tailwind during the quarter and will continue to benefit us going forward. We are still seeing very good investment opportunities in 30-year agencies and in select subordinated CMBS, with hedged ROEs in the low teens for each. We believe prepayments fees will continue to slow as the housing market feels the impact of seasonal factors, and this will be supportive of returns on both agencies as well as residential credit. There are 2 other factors which are interrelated that will combine to help support the positive trajectory of our earnings stream. Our commercial loan book, which now stands at $300 million, is beginning to pay down. While there are many aspects of that asset class that we like, return opportunities have diminished as new entrants have flooded the market. Whereas we are realizing returns in the LIBOR plus 8% to 9% range during 2013 to early 2016, returns on new loans have contracted notably. So as these loans mature, we are recycling that capital back into much higher yielding assets. Related to that, we issued a $400 million exchangeable note in 2013 that is coming due in March of 2018. One of the reasons we're issuing that note was to provide stable financing to the commercial loan effort. Over the course of 2017, we have paid down almost $250 million of the note and will pay off the remaining balance prior to maturity date in March. This also serves to positively support our earnings per share outlook as we are replacing relatively expensive fixed-rate financing with lower cost Repo. As far as our broader outlook, we remain positive on the fundamentals that underpin our residential and commercial credit books. Our credit portfolio is well seasoned, and as such, has benefit from the impressive property price increases across both residential and commercial collateral, because spreads have continued to tighten, we have been extremely selective in adding to our existing credit book. Agency mortgages have also been well supported despite the fact that the Fed has begun to taper its portfolio. The slow pace of this reduction has been more than offset by increased demand from commercial banks. While we believe that agencies will come under some pressure as the Fed taper picks up steam later in 2018 and '19. In the near term, we believe agency spreads will remain well supported. To wrap up, we believe IVR's diversified portfolio is well-positioned for the current environment and that the positive trajectory of our core earnings stream should continue to be well supported while we ---+ while creating the potential for further common stock dividend improvement. With that, let me call ---+ turn the call over to <UNK> who will review the portfolio. Yes. Yes, I would say in terms of preferred ---+ and we just did a preferred, and I think, for where we are in our ---+ where our capital structure is now, we're pretty comfortable with the amount of preferred we have on right now. And exploring other longer-term financing options like converge and things like that, and we're always looking at that. For now, because we've been buying back the existing note over time and, kind of, in pieces as we can buy it back, and it's been a slow process and rolling it into Repo has made the most sense, but we're all always looking to improve our capital structure. Okay. Yes, I'll ---+ <UNK> <UNK>, who runs our commercial effort is ---+ and is our President, is online, I'll let him handle the CMBS portion of that. Sure. To address that, our focus has predominantly been in the BBB and B-piece portion of the capital stack. We've been ---+ positively, we've been able to go in and add loans that were originated several years ago. So since that time, property prices have appreciated, and as a result, we believe we're benefiting from what is essentially a decline in LTV ratios, but at the same time, we are also adding exposures to new originated loans as well, again, in BBB and BB space predominantly. Yes, I guess, what I would say on that note, as it pertains to commercial real estate credit is the fact that, at the top of the capital structure, we've seen notable tightening, so there's certainly no disagreeing to that. Where we have seen a little bit more of the lag has been at the bottom of the capital structure. So there, we're still finding good value and are looking for bonds that we want to hold on a longer basis and we think are still generating a really nice ROE. I would say that, on the commercial real estate mezzanine loan side, we're seeing underrating ---+ underwriting quality, by and large, holding fairly well, and that's been a positive, but one thing I would note is that yield premiums have contracted as the space has just seen a growing number of entrants. That's how we'll keep looking for opportunities on both sides. Yes, <UNK>, I'd say, you mentioned RMBS earlier, I think on the RMBS side, as far as the spread outlook, we're not necessarily expecting significant spread tightening from these levels. I think, to your point, most of the tightening is behind us, that's not to say that we couldn't continue to, kind of, grind tighter at a slower pace here for the foreseeable future. But given that much of our book was put on at cheaper levels and it's generating a book ROE, that's quite attractive. We're happy to continue to hold those assets without the expectation of kind of continue price appreciation. Yes, <UNK>, do you want to take that one. Yes, sorry about that, we ---+ yes, I think, generally speaking, we've seen financing levels for credit have been pretty steady, and we haven't seen a lot of changes within that. We have not done any sort of term facilities lately, but then we're always looking at those so when they make sense, really for the kind of assets we've owned, Repo has been the best option at least in the current environment in terms of where our financing rates are. Yes, I think, book value estimates as of last night were very flat to maybe up just a tiny bit since quarter end. So, I guess, <UNK>'s mentioned, agencies have lagged a bit and, I think, CRT has come back from ---+ has retraced a lot of the widening that we saw at the end of the last quarter and, I think, CMBS and legacy RMBS have been, I would say, relatively flat to may be a little bit tighter. But generally speaking, I think, we're flat to up just a hair. Okay, operator. Since there are no further questions, we will wrap up the call. Okay. Well thanks, everyone, for joining us.

2017_IVR

2018

CRVL

CRVL #Thank you, and thank you for joining us to review CorVel's December quarter. Joining me today will be <UNK> <UNK>, CorVel's President. Revenues for the December quarter of 2017 were $141 million, 9.6% over the revenue for the December 2016 quarter. Earnings per share for the quarter ended December 31, 2017, were $0.50, up 39% from the same quarter of the prior year. This reflects a combination of the operating effectiveness upon which we've been working as well as, of course, the impact of the new tax law change. The tax rate reduction for us is expected to take us from approximately 38% for the combination of state and federal to about 25% to 26%. Our Enterprise Comp, TPA, continued its growth and the development of its services. Results in our CERiS medical review services entity also had a strengthening quarter. The results for the quarter continued the recent demonstration of the operating improvements we have been making in the Network Solutions portion of our business. As I discussed last quarter, every quarter is impacted by, what most refer to as, onetime events. Although typically, such references are to unusual expenses, we are impacted by onetime events that are both positive and negative. Where once we could pick out an occasional item of this nature, in recent years it feels as though every quarter has some. Each is, yes, a onetime event, but every quarter has a number of such onetime events, so in the aggregate, they are really not onetime in nature. <UNK> <UNK> will provide more detail on these items. I would like to discuss them at a more conceptual level here. We believe the tax law change adds to our competitive advantage, in that it improves our cash flow and net of taxes paid relative to that of our PEO and competitors. This is due to the limitations the new legislation places upon the deductibility of interest for tax purposes. The limitation impacts any firm highly leveraged as are most of the PEO and firms. In the quarter, we also had operational issues, which adversely impacted our operating margins. We incurred some expenses related to the fair value of some of our investment in startups. We also had a philosophy of making continuous investments in technology and in the expansion of the services we can provide or the markets we serve. Such investments are important to the long-term success of the company, but inevitably result in quarters where we have short-term expenses. Ultimately, our focus has to remain long term in nature and on producing ever more productive services for our customers. Turning to the state of our markets served. The markets for all of our services remained in a healthy condition during the quarter. Strength of the current economy and related labor markets has reduced unemployment to record levels. Once such tighter labor markets have been in place beyond the initial recovery, workplace injuries have a tendency to increase. This period comes toward the end of most recoveries, as employers push into segments of the workforce less trained and less acclimated to work and should improve the market for our services. I would add that this improvement, should it occur, would be an offset to the long-term decline in claims reported, which has typified the worker's compensation market for the last couple of decades. Automation continues to be a theme in the marketplace. Last quarter, we discussed the impact technology is having to encourage outsourcing. We had a particularly busy quarter upgrading our interface to our customers. This change involved increased customer support, as we rolled out the new claims management workstation for many of our customers. This upgrade kicks off a series of regular upgrades to our interface with major customers. In turn, this is expected to make the outsourcing of key functions ever easier for our insurer partners. In our markets, most vendors sell either service or software. CorVel is unique in that our offerings include software as a pre-component of our service. This and the growth of the cloud place ever-increasing pressures on companies that either sell only service or only software. We are all aware of the movement toward distributed ledger approaches to transaction processing. Our approach is to interface with existing legacy platforms at our clients and to bring with our service free usage of a claims management workstation. This technology brings the advantages of current technology to those carrier customers wanting to extend the life of their legacy platforms and, yet, still want to access current technology. The sale of a service or a product is increasingly bundled with the software to manage the transaction and related accounting and payments processing. For the health care provider community, we also provide a portal, which presents the ledger status of their accounts receivable with CorVel and with the carriers we represent. These applications were a highly ---+ were a high priority for us last year and will remain so in the coming year. Improving the velocity and dependability of health care transaction processing is the goal of the various application launches currently underway. Separately, our sales mix continues to reflect the impact technology has had upon the relative value contributed by each form of care management. For example, our older case management product revenues have declined. This has been more than offset by the increase in our Enterprise Comp TPA sales. In fact, the automation of interfaces and record-keeping is reducing the need for consultative connection support, such as case management provided to traditional claims management. Instead, we employ our technology to connect the parties involved in a worker's compensation claim and to increasingly integrate them. This change is occurring quietly and relatively slowly, but it continues to evolve the environment in which patients find themselves as they pass through an episode of care. The Edge adjuster workstation, now being expanded incrementally each month, already serves approximately 3,000 claims professionals. CorVel is bringing outsourced business functionality to markets beyond insurance. We do this under the brand name, Symbeo. This business unit began many years ago by doing subsets of the transaction processing cycle and is now offering to do the entire payables function for large corporations. Symbeo is setting up our first facility dedicated entirely as a hub, delivering turnkey transaction processing, both within and outside the insurance industry. The broader health care market continues to be an important ---+ to CorVel's overall results and future plans. The cost of health care continues to increase at rates above the rate of increase in average incomes. New therapies, biotech cures and treatments and improved diagnostic technologies drive ongoing cost increases per employee. Thus, approaches to reducing the cost of health care tend to be eagerly reviewed. We expect to expand the scope of our service program for the health market. I'd now like to turn the call over to <UNK> <UNK>, who will discuss our operating results and product development. Thank you, <UNK>. I\

2018_CRVL

2018

FCF

FCF #Thank you, Anita. As a reminder, a copy of today's earnings release can be accessed by logging on to fcbanking.com and selecting the Investor Relations link at the top of the page. We've also included a slide presentation on our Investor Relations page with supplemental financial information that may be referenced throughout today's call. With me in the room today are Mike <UNK>, President and CEO of First Commonwealth Financial Corporation; Jim <UNK>, our Chief Financial Officer; and Mark Lopushansky, our Chief Treasury Officer. After brief comments from Mike and Jim, we will open the phone call to your questions. Before we begin, I'd like to caution listeners that this conference call will contain forward-looking statements about First Commonwealth, its businesses, strategies and prospects. Before we ---+ please refer to our forward-looking statement disclaimer on Page 2 of the slide presentation for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. And now I'd like to turn the call over to Mike <UNK>. Thank you, <UNK>, and welcome, everyone. First quarter 2018 core net income was $23.3 million (sic) [$23.5 million], a highest quarterly net income figure in the history of our company. First quarter net income produced earnings per share of $0.24, core return on assets of 1.31%, a core return on tangible common equity of 15.73% and a core efficiency ratio of 58.2%. We also raised our dividend 12.5% to $0.09 per quarter or $0.36 per year. Three tailwinds for the quarter included: first, the net interest margin improved 8 basis points on a linked-quarter basis to 3.69% and a couple of things were at work here. The December increase of the fed fund rates was absorbed positively into the loan book. Additionally, deposit pricing remain disciplined and balances grew nicely, also allowing the payoff of increasingly expensive borrowings. I think also a newly booked yields on commercial loans were greater than those that we're running off. The margin helped enable net interest income of $60.2 million, despite a decrease in ending loan balances of $31.2 million on a linked-quarter basis. For the quarter, unanticipated payoffs in commercial loans increased significantly. Conversely, average deposits increased $77.1 million, in large part due to the traction in consumer checking balances. The second tailwind beside margin was core noninterest expense and this is excluding merger-related expenses of $300,000. It was $46.5 million, which showed good progression on a linked-quarter basis. And then the third tailwind was a securities gain of $2.8 million, stemming from the liquidation of a previously written down trust preferred security pool. Some headwinds included elevated provision expense of $6.9 million, due to $7.3 million of specific reserves relating to two credits, the first of which was a local company, a $5.5 million specific reserve and an additional $1.8 million specific reserve for a commercial real estate credit. This comes on the heels of 6 consecutive quarters of really manageable provision expense. In short, and with the help of the security gain, the income statement resiliently absorbed the quarter's credit headwinds. Other notable items, we continue to see nice developments in our market extensions via our acquisitions in Northern Ohio and Central Ohio. For example, in Northern Ohio in the first quarter, our retail loans grew $7 million or about 21% annualized and our consumer deposits grew $10 million or 8% annualized. In Central Ohio, our business deposits grew $66 million on a $631 million base. We really assembled some capable teams to include commercial lending and mortgage professionals and with recently recruited presidents for both the Northern Ohio or Cleveland MSA as well as the Columbus MSA in Central Ohio. We expect to repeat the same pattern with Foundation Bank in Cincinnati, which will close legally on May 1, and the actual bank conversion is slated for later in the month. Several items here. We really like the current CEO and the team he has assembled, Foundation is a profitable 5-branch bank with strong credit and enterprise risk. The bank is just clean and is very well run. The commercial lender and the CEO there have already introduced us the opportunities in the market, where our balance sheet and commercial capabilities can really make a difference. One other item before I hand it off to Jim <UNK>, our CFO. The Pittsburgh Business Times recognized First Commonwealth as the second largest SBA lender by dollars in the Pittsburgh MSA in a story that ran 2 weeks ago. We're very pleased with our progress with our SBA initiative, which was reenergized about 1 year ago with the acquisition of Delaware County Bank in Central Ohio. Jim. Thanks, Mike. Mike has already provided you with an overview of our results, but let me provide some color on 2 other things that impacted first quarter earnings just so that you can get an accurate picture of the underlying earnings power of our company. First, in the first quarter, we experienced $2.8 million of securities gains as compared with $4.3 million in securities gains in the fourth quarter. I want to point out that these were not discretionary sales of securities from our investment portfolio. Rather, they were the result of successful auction calls of two pooled trust preferred securities holdings in our portfolio, which had been marked down ever since the financial crisis. We have no say in the timing of the auction and the success of the auction, we justify the value of the individual trust preferred securities to form the pool. But if it is successful, we are fortunate enough to get a check for the full amount of the holding at par and that\ I'm reticent to do that only because let me say what it's not. It's not heavy industry or oil and gas on the larger credit, it's a local company in Western PA. About 40 years old with about 6 years of history with us with the direct C&I credit. And the other credit is commercial real estate and the owner failed to maintain the property. With deteriorated ---+ deteriorating conditions, tenants left. The specific reserve was $1.8 million, and we expect to receive some indicative bids that will prove that specific reserve. No. Yes. Sure, I just want to be careful about that so that nobody got the wrong impression of an overly low effective tax rate. I mean, we calculate our effective tax rate at 18.91%. We just had some ---+ what you might call it true-up adjustments in the first quarter really related to the DTA adjustment in the fourth quarter and that showed up in our tax hike this quarter. So we actually called it out in the body of the text of the earnings release, and I want to highlight at the call so everyone's clear on the effective tax rate going forward. As always, we appreciate your sincere interest in our company. We have the great privilege of being on road shows and conferences with all of you and look forward to that in the ensuing year. Thank you very much.

2018_FCF

2015

HF

HF #Thank you, <UNK>. Good evening everyone and welcome to HFF's second quarter 2015 earnings conference call. Overall, we are very pleased with the firm's performance in the second quarter of 2015 and the first six months of the year. Based on our results, which <UNK> <UNK> will review in detail, we believe the commercial real estate industry continues to embrace the Company's team-oriented approach in executing capital markets transactions thereby affirming HFF's strategic plan and it's unwavering adherence to its core cultural guiding principles. Revenues in the second quarter of 2015 grew approximately 31.9% year-over-year. HFF's operating income increased 42.7% as operating margins expanded to 20.6% during the second quarter of 2015, an increase of 160 basis points compared to the same period in the prior year. As we continue to invest in our business, evident in 11.1% increase in total headcount over the past 12 months, our revenue and operating performance are consistent with our philosophy of measured, sustainable and profitable growth. Additionally, our revenue per producer during the first half of 2015 totaled $767,000, an 18.5% increase over $647,000 achieved in the same time period of 2014, which we consider a testament to the firm's team-oriented culture and the efficiencies obtained from the synergies between and among the firm's business lines and property verticals. The commercial real estate industry as an asset class remains in favor with investors. Additionally, the composition of ownership is becoming increasingly institutional, contributing to HFF's attractive position as an intermediary. This is best illustrated by the following points: First, [effective in] third quarter of 2016, commercial real estate will be re-categorized from the broader financial sector and become a standalone category as the 11th Global Industry Classification Standard or GICS trading vertical. While the private market has long recognized commercial real estate as a valid asset class, this globally recognized designation of firm's commercial real estate has earned its place among the investment portfolio of the public sector as well. For reference, the CRE industry's returns as compared to competing asset classes are set forth on slide 15. HFF believes the emergence of CRE as a core investment holding ensures the industry will continue to benefit from consistent annual allocations of capital and that investing in the asset class is necessary in order to attain a well-balanced diversified investment portfolio. Domestic institutional investors who are active in the private commercial real estate market have in the past been consistently underinvested in commercial real estate. As shown on slide 16, actual investment in the asset class is approximately 90 basis points below target as a percentage of AUM. Furthermore, as expected, these institutions are poised to further increase target allocations in the near future. Additionally, sovereign wealth funds are electing to invest in commercial real estate as a reduced exposure to public equities in private equity as shown on slide 17. As evidence of my previous statements and as illustrated on slide 18, the institutional investor participation in the private commercial real estate market continues a multi-year increase in 2015. Capital managed by institutional investors in real estate, measured by assets held within open-end and closed-end funds has increased 40% and 77%, respectively since the prior peak suggesting both increased demand for the asset class in a larger denominator of assets, which should be a positive relative to future transaction volume. Finally, the economic and social unrest in many parts of the globe appears to be increasing the flow of foreign capital into the US with commercial real estate being a beneficiary of this inflow of capital as shown on slides 19 and 20. In fact, preliminary estimates of foreign investment in domestic commercial real estate assets totaled approximately $47.4 billion during the first six months of the year, exceeding the 2014 full year total by nearly 15%. In our opinion, these trends suggest ample equity capital is poised to deploy in the commercial real estate barring any external events that would be detrimental to the US economy in large. Supporting this view as reported by RCA in transaction volumes during the second quarter of 2015 totaled $117.7 billion, an increase of 23.7% over 2014 and $254.2 billion during the first six months of 2015, a 36.2% increase over 2014 as illustrated on slide 21. The aforementioned increases in AUM for both the closed-end and open-ended fund markets suggest the market has the potential to sustain current transaction levels. Of particular note is the transaction volume likely to emerge from the closed-end fund market in the near future. As illustrated on slide 22, the average hold period for 64% of participants in the closed-end fund market is less than five years in duration due to the value add objectives and underlying compensation structures of these funds. Finally, as shown on slide 23, the $1.4 trillion of maturing CRE loans should serve as a catalyst for investment sales or refinancing transactions. However, the competition to extend these loan maturities will be intense given the liquidity in the US banking industry and the need for earning assets on balance sheet. In regard to HFF, our investment sale transaction volumes for the second quarter of 2015 totaled $8.2 billion, an increase of 20.1% over 2014 and $13.8 million in the first half of 2015, an increase of 19.7% over 2014. When adjusting for one large investment sale transaction, which closed during the second quarter of 2014, the second-quarter growth rate increases to 43.8% and the first half growth rate increases to 32.6%. As is illustrated on slide 24, HFF's investment sale transaction volume for the full year of 2014 increased 70% from 2007 as compared to a decrease of 26% for the industry. Furthermore, HFF's investment sale transaction volume for the full year 2014 represented an increase of 187% from 2006, while the industry showed a decrease of 1% for the same period. Turning to our debt placement volume, transactions for the first half of 2015 totaled $17.7 billion as compared to $11.2 billion in the first half of 2014, equating to an increase of 56.9%. As illustrated on slide 25, HFF's debt placement volume for the full year 2014 increased 37% from 2007 as compared to a decrease of 25% for the industry. Furthermore, HFF's debt placement volume for the full year of 2014 representing an increase of 45% from 2006 while the industry showed a decrease of 2% for the same period. While we are pleased with our growth in transaction volume over the last several years, we are mindful the industry has largely recovered from the trough of 2009 financial crisis relative to historical metrics. Therefore we believe future growth will be dependent on the ability of HFF to continue to differentiate and build out it's platform [in a] consolidating industry. In regard to pricing, it is widely believed that capitalization rate compression and multiple expansion have run their course as the market is currently pricing at or slightly above the long-term average spreads of cap rates above both the 10-year and the BBB corporate bond benchmarks, illustrated on slides 28 and 29. Therefore, most investors are keenly focused on fundamentals such as leasing velocity, run rates and occupancy increases. In terms of a potential impact on price from rising interest rates, most investors have incorporated same into their respective underwriting models on each purchase and have also completed various sensitivities in determining the impact to total return over the whole period. As illustrated on slide 30, in terms of geographic market preference, we expect the long-term trend of migrating up the risk curve at this point in cycle to continue as investors seek total return for a portion of their commercial real estate investment portfolio in markets outside of traditional gateway cities. Additionally, investors are increasingly focused on corporate relocation trends, long-term employment population shifts and the velocity of trades in a given market, meaning the liquidity of a market, in determining allocations to a given geography. In summary, we believe there is ample availability of capital in both the debt and equity markets to sustain a reasonable foundation for real estate transaction volumes. Perhaps, more importantly, we are encouraged by the transparency of discussions regarding obvious potential risk to asset level pricing and the associated underwriting of same. However, we are always mindful of both domestic and global macroeconomic events, which could dramatically and negatively impact both the volume and pricing levels of real estate. Commercial real estate in effect houses of the US economy and therefore its health is directly correlated to US economic health primarily defined as US job growth. I would like to thank the HFF team that generated our second quarter results, as those results are directly attributable to the efforts of this incredibly talented group of individuals. And with that let me turn the call over to <UNK>. Thank you, <UNK>. The information I will discuss today is also set forth on slides 33 through 44. Beginning on slide 33, during the second quarter, our revenue was $125 million, which is up 31.9%, principally due to the 37.8% increase in transaction volume. The increase in transaction volumes is led by 64.1% increase in debt transaction volume and 20.1% increase in our investment sales transaction volumes. We produced solid and improving operating margins and continue to maintain healthy levels of liquidity. In addition, we continue to operate a highly diversified and fully integrated capital market services platform as it relates to both consumers and providers of capital. For the first six months of 2015, no one client represented more than 1.7% of our capital market services revenue and the combined fees of our top 10 clients represented 12.2% of our cash market services revenue. Turning to slide 34 and 35, as previously mentioned, revenue for the quarter was up 31.9%. For the six months of 2015, revenue was $219.3 million, which represents a year-over-year increase of $48.4 million or 28.4%. The growth in revenue for the six months was driven by 35.7% increase in transaction volumes with debt volume up 56.9% and investment sales volume up 19.7% year-over-year. Operating income grew $7.7 million or by 42.7% to $25.7 million in the second quarter of 2015 compared to the same period last year. For the first six months of 2015, operating income improved $15.1 million. The increase in operating income for the quarter and six month period was primarily attributable to the growth in revenues. The increases were partially by increases in compensation related and other operating expenses including performance based compensation. Compensation-related expenses for the quarter and the six month period were impacted by an increase of approximately $600,000 and $1.3 million, respectively in contractual performance-based incentives for accrued transaction professionals. The operating income for the first six months of 2015 was also impacted by $2.1 million reduction in non-cash stock compensation expense. Operating margin for the second quarter of 2015 was 20.6% compared to the operating margin of 19% for the second quarter of 2014. Operating margin for the first six months of 2015 expanded 400 basis points to 16.8%, as compared to 12.8% for the same period in 2014. The increase is primarily due to the growth in revenues and improved operating leverage. The Company's adjusted EBITDA for the second quarter of 2015 was $35.3 million, an increase of $12.2 million or 52.7% when compared to the second quarter of 2014. For the first six months of 2015, adjusted EBITDA was $53.2 million, an increase of $18.2 million or 52.1%. The increase in adjusted EBITDA for both the quarter and six month period was driven by growth in operating income as well as an increase in securitization and other agency related income. Adjusted EBITDA margins for the quarter and the six month period increased by approximately 390 basis points and 370 basis points, respectively. This margin improvement is due to the increase in securitization and other agency-related income of $3.8 million and $4.8 million for the quarter and the six month periods, respectively, as well as from the growth in operating income. Cost of services as a percentage of revenue was 57.3% in the first six months of 2015 compared to 58.2% in the same period of 2014, 90 basis point improvement is primarily attributable to the fixed cost component being spread over the higher revenue base and is evidence that our cost increase as relative to growth in personnel is commensurate with our revenue increase. Operating, administrative and other expenses were up approximately $6.7 million or 14.6% in the first six months of 2015 when compared to the same periods in 2014. This increase is primarily due to the increased compensation-related expenses and other operating expenses due to higher transactional activity offset by the $2.1 million reduction in non-cash stock compensation expense. Also, as shown on slide 34 and 35, interest and other income increased $6.2 million in the second quarter, which is attributable to higher income from the initial recording of mortgage servicing rights of $2.4 million and an increase of $3.8 million in securitization and other agency related income. For the first six months of 2015, interest and other income increased $8.9 million, which is primarily due to an increase of $4 million from the initial recording of mortgage servicing rights and an increase of $4.9 million in securitization and other agency related income. We have seen significant improvement in our Freddie Mac originations beginning in the second half of 2014 and continuing through the first six months of 2015. The Company's Freddie Mac originations for the first six months of 2015 were approximately $3 billion, which is an increase of $2.5 billion or nearly 470% over the originations in the same period in 2014. Given the robust financing volumes by Freddie Mac in the first half of 2015, we remain uncertain as to whether Freddie Mac can continue this pace of financings for the remainder of 2015. The Company's effective tax rate for the first six months of 2015 was approximately 40%. Earnings per share on a fully diluted basis increased 66.7% from $0.33 to $0.55 for the second quarter of 2015, and we had an increase of 86% from $0.43 to $0.80 for the first six months of 2015. Slides 36 to 38 relate to the balance sheet and liquidity. Our cash balance at June 30 of 2015 was $169.3 million, compared to $232.1 million at December 31, 2014, representing a decrease of $62.7 million. The principal portion of this change is related to the $67.8 million special dividend payment made on February 13, 2015. During the first six months of 2015, the Company generated $24 million in cash from operating activities excluding $15.1 million decrease in client advances. The Company's use of cash is typically related to the limited working capital needs during the year and the payment of taxes. The Company has virtually no corporate level debt to service other than that related to our Freddie Mac business which is offset with the mortgage note receivable. On slide 36, I would like to point out that on our balance sheet as of June 30, 2015, we had $449.1 million of outstanding borrowings on 19 loans under our warehouse credit facilities to support our Freddie Mac multi-family business and we also had a corresponding asset recorded in the same amount for the related mortgage notes receivable. Today, 14 of these loans or $323 million have been purchased by Freddie Mac. I would like to make a few comments regarding our production volume and operational measurements, which can be found on slides 40 to 42. As noted on slides 40 and 41, our production volume increased by 37.8% or $5.3 billion for the second quarter of 2015 and $8.8 billion or 35.7% for the first six months of 2015. The total number of transactions grew by 31% or 130 in the second quarter of 2015 and 262 or 34.4% for the first six months of 2015. The Company's loan servicing portfolio grew by $9.4 billion or 26.6%, when compared to the second quarter of 2014. Slide 42 provides a historical summary of our headcount and also shows the second quarter comparison to the same period in 2014. Total headcount and number of transaction professionals as of June 30, 2015 were up 11.1% and 7.1%, respectively year-over-year. We have increased the total number of transaction professionals by 127 or 79.9% since the beginning of 2010. Slide 43 provides a summary of certain production and operational measures. The revenue per transaction professional was up approximately 18.5% for the first six months of 2015, and up 11% to $1.688 million from $1.521 million for the trailing 12 months, which is evidence of the productivity gains achieved by the Company. In summary, we are extremely pleased with the Company's operating and financial performance for the second quarter and first six months of 2015. We achieved improved operating margins and continue to make strategic investments in our business consistent with our growth strategy. We continue to believe that we have been very efficient and strategic as it relates to our management of expenses and that any incremental increase should have minimal impact to our bottom line results on a full year-over-year comparative basis provided the market continues to expand and we continue to experience revenue growth consistent with the investments made in our business. I would now like to turn the call back over to <UNK>. <UNK>. Thank you, <UNK>. As we look further into 2015, we think it's important to convey the firm's strategic plan remains unchanged from previous years in terms of continuing to build out the Company's platform to ensure the HFF offices domiciled in major markets in the US have a full complement of our existing business lines and property vertical specialties. Further, our future growth will continue to be premised on our core guiding principles, which we believe significantly differentiate HFF in the real estate industry. These core guiding principles are briefly described as follows: First is our client-centric business model which avoids business lines or product services that directly compete with the business interests of our clients, such as investment management, landlord and tenant representation and/or property asset management practices. Our capital markets professionals appreciate this lack of conflict of interest with their clientele. Second is our player coach leadership style whereby the firm's leadership mentors our transactional professionals through being engaged in generating revenue for the firm by actively originating and executing real estate transactions. Our transactional professionals prefer to be led and mentored through transactional deal flow versus managed in a corporate context. Third is our pay-for-performance compensation structure, which aligns the interests of HFF's leaderships, leadership with the performance of the firm through our profit participation and omnibus compensation plans. To further illustrate this point and as you know from our previous filings, effective January 1, 2015, we amended our office and firm profit participation plans as well as the executive bonus plan to allocate a higher percentage of the annual awards to equity which will vest over a subsequent three-year period. Fourth is maintaining an owner mentality versus an employee mentality, which is illustrated by the fact that HFF employees own more than 14% of the outstanding Class A shares of HFF. Highlighting the importance of our adherence to an owner mentality is the firm's granting of 750,000 shares in 2014 and an additional 250,000 shares in February 2015 to our leadership team and transaction professionals based on value added metrics which vest over a five-year period. Our fifth guiding principle is risk mitigation. Company has virtually no corporate level debt to service and we continue to maintain significant cash balances to fund our working capital needs, our future growth and to mitigate downside risks as occurred in 2008 and 2009. Once we have met these needs and has sufficient capital reserve to not only survive but thrive in a down market, the Company led by the Board of Directors always looks at all options regarding the highest and best use of its capital. Over the recent past, this has been illustrated by returning capital to shareholders on three previous occasions in 2012 and 2014 and recently in February of 2015 in the form of special dividends totaling $192.3 million or $5.15 per share over the last 31 months. The sixth guiding principle is maintenance of our partnership mentality whereby the governing body of HFF, its executive committee, is elected by the firm's leadership team, which is comprised of 57 individuals who run the firm's 22 offices, it's business lines and it's property type verticals. This approach to governance reinforces our team partnership culture and significantly differentiates the firm from the industry at large. Finally, our seventh core guiding principle is the maintenance of the firm's value-add philosophy, which permeates every aspect of the HFF culture. Our leadership positions, compensation awards and executive appointments are based on long-held value-add principles which were developed internally or communicated to all employees. The ability of HFF to continue to differentiate and build out its platform in a consolidating industry as well as continued expansions in real estate history at large remains the primary focus of management. We believe these guiding principles allow the firm to recruit and retain best-in-class industry professionals. [Every single] statement as illustrated on slide [22], since the beginning of 2010, the Company has increased its headcount by 382, representing a 101.6% increase and we have grown our total transaction professionals by under 127 representing a 79.9% increase. We have accomplished this profitably and at a measured pace. HFF remains committed to protecting its culture via an unwavering adherence to its deliberative hiring practices. Operator, I would now like to turn the call over to questions from our callers. Well, let me first start off by saying, <UNK>, as you know, we don't give guidance. So to speak to expectations of what that means for the second half, we cannot do that. However, what I can tell you and it's obvious that the Freddie Mac volumes were up for a lot of the seller services in the first half of the year and they were rumored to hit their mandated caps before the end of the year. So, they made some adjustments relative to the definition of what falls under the cap to try to ease some of that, but I think just given the robust nature, I think everyone would be uncertain as to whether or not that can continue in the second half. So, I think we're just highlighting the fact that it was extremely robust in the first half, the mandated cap issue has been out there. So I think it's just prudent to remain cautious about what that second half will bring. For us, as you know, we have relationships with a lot of other lending sources, so Freddie Mac is not the only lending source for us from a multi-housing perspective. Secondly, as it relates to the Freddie Mac ancillary income on our financial statements, it's primarily done in the other income line where we report securitization comp and gain on sale whenever we securitize those loans and as I've mentioned on previous calls, a lot of that is ---+ has a lag effect as it relates to when it rolls through our financials. So, we originated loans, close it with Freddie and maybe a quarter or two before the impact comes into our financials when that loan gets securitized. So, we saw that effect negatively in 2014, as our volumes decreased in 2013 into the first half of 2014. We're seeing the pick up here this year from the volume increases in the second half of 2014 in the first half of 2015. So, even if Freddie Mac originations decrease, I'm not sure what that impact will be in our second half on interest and other income, because of this lag effect. Absolutely not, <UNK>. Again to <UNK>'s point, we're extremely diverse in our debt relationships and if you look at the results of the firm from a debt perspective in 2014, when you had a little different scenario from the agencies, the fact remains that the vast majority of debt providers in the US are underallocated to multi-housing and any time that you see a shifting in agency demand or otherwise, you have ample sources of capital looking for multi-housing product in the US. So, diversification is a key point that I would mention there. And then just one follow-up, <UNK>. As you know, we don't control the timing of any of the securitizations that occur. So, even if we build up the originations and has a lot of loans that could potentially be securitized and we can earn additional other income from that, we don't control the timing of that. So, how that falls out and impacts our financial statements is out of our control. <UNK>, as I mentioned, I appreciate the question and as I mentioned on our first quarter call, we saw no diminishing in our results in Texas and that continues to remain the same. Yes, I think it's a good question, <UNK>. I think, market share is a hard number to track. We gave you indications of that in the slide deck that we've shown you primarily using MBA and RCA data, and I would also say that financial results [tend to trump] volume on that. But I think you will see some trends that emerge in the marketplace. One is consolidating industries or M&A activity would have an effect on market share on a relative basis and I think in a bull market such as what we're in now, you do have all boats rise on a rising tide, and I believe that you have some headcount and timing components that will also be affecting market share for intermediaries across the board. So, you do have a changing landscape in a changing industry relative to those three primary topics relative to HFF. So, M&A timing and headcount have to take a look at that. But, again, from our perspective, we're pleased at both our volumes and our financial performance year-to-date. <UNK>, it's a great question and thank you for asking it. As we stated on the first quarter call, we are ---+ we think the market is very constructive. We think it is measured in its standards. You could argue that there are some relaxing and some interest only periods and various other components, but in terms of LTVs and other underwriting metrics in the debt space and a full transparency of risks, it is very, very different than in the 2006, 2007 timeframe and we believe overall that the vast majority of the lending providers or the GAAP providers in the debt space in the US remain very measured, very thoughtful, very constructive in how they're underwriting the business. But also make the same statement on the equity front. So, again, you're looking at, again, relative to an 2006 timeframe, which is the most comparable period based on transactional volume, there are stark differences in the underwriting in today's market versus what was occurring in 2006, 2007, much more to the conservative. And ultimately, what is happening is the underwriting metrics and the underwriting assumptions that both debt participants and equity participants are utilizing ---+ are we think very reasonable and measured based upon historical standards of growth and essentially are just accepting lower returns in the equity market and are highly mindful of loss histories that occurred in 2008 or 2009. So, overall, we remain very ---+ we think the market in general remains well positioned in terms of its underwriting metrics utilizing to achieve book values and loan to value pricing in both the equity and the debt markets. That's a long period of time for me to say ever. I would say this, there are ---+ it appears that there has been no memory loss from 2008, 2009 with the participants in the marketplace. One may disagree with what a buyer may buy a building for on a basis play or a lender may lend on a given assignment. However, when you look at the overall I guess metrics of the industry and what we're seeing and how they're underwriting, there is full transparency of the risk and all participants know exactly the risk they are taking with multiple sensitivities on multiple metrics when they make a loan or they make a purchase, vastly different from 2006, 2007 when there was a certain naivety in the market, which we just don't see today. There is an extreme importance placed on risk and it dominates conversations in virtually every award that we're involved with. Peter, I would not read too much into that. As you know, there is quite substantial timing differences in quarter-to-quarter. So, on that particular statistic, what I would suggest is we just wait for a year-end comparative and take a look at it on that basis. In terms of the competition for talent, there's always incredibly good competition for talent, it's no different now than it has been in the past out there. So, that remains a constant. We don't break that out and disclose in terms of specifics on property types, but we've seen no real discernible difference if you look at the national data across the board in terms of product property verticals, and I'm assuming you're talking about office versus multi-housing and others. I think it's fairly consistent, <UNK>. Again, I would not ---+ no discernible change there. Been very consistent and what I would call normalized, <UNK>. I will just take the moment those since you asked a question to reiterate that one of the key growth initiatives of the firm is the build out of our platform, which has really not changed since we went public and for that matter for the last 15 years. So, strategically, it is an incredibly important growth initiative for HFF to continue to build out each one of its offices with complete complement of its business lines and property verticals. And as you know, we do [that] a little differently than some. We just do it one brick at a time and one person at a time, but it is an incredibly important initiative for the firm. As you can imagine, that's a pretty significant increase in the servicing portfolio, given the fact that you continue to have run-off of that portfolio each quarter as well. So, we're pretty impressed with it. It really ties back to the debt business overall. Yes, Freddie is a piece of that and certainly when you look at the footnote disclosure, you'll see in the queue relative to the MSR's that kind of goes somewhat ---+ it goes somewhat directionally in play with the increase in the servicing portfolio where it's coming from, but it's the three tranches we have under our MSR portfolio. We have the Freddie Mac business but life insurance companies represent a significant portion of our servicing portfolio and with the debt business up at the levels it was in the quarter and year-to-date, it's just driving the servicing portfolio up. So, it really goes hand-in-hand with what we've seen in the debt transaction volumes. As far as what we see looking out is, as you know, we don't give guidance on that, but certainly you can follow the pattern over time that it relates to the increase in the production on the debt side. From our perspective, obviously, the mix of the portfolio changes to a certain extent as you said as an impact, but I think overall, individually, we haven't seen any discernible difference on the individual tranches if you will. Thank you, everyone for joining us today and I hope that you can join us again for our third quarter 2015 call. Thank you.

2015_HF

2015

CMCSA

CMCSA #On the Stream product, we didn't have to obtain any additional programming rights for this product. Stream is a Title VI service that's delivered via the customer's IP-enabled gateway and it's covered under our existing contracts. It's not an OTT service. Concerning the voice number, we did focus a little bit more on double play this quarter, which also reduces churn, but it is always a blend of what the right offer is for the right customer base at any time. And as <UNK> mentioned, our double-play customers are up to 69% and our triple play are also up to 37%. So we are increasing both. It's just a matter of balancing the offer mix. <UNK>, I think I can take that, maybe finish the call, but feel free to jump in if I don't cover it. I don't think that your facts are right on the NBC Comcast timing, but we are not going to go into more detail than that. But I can say that one of the things that's worked really well is how well the Company is working together and that's one of the points that I'd want to end on, which is this combined portfolio of incredible companies ---+ the first half of the year and the second quarter, we couldn't be more pleased. Really broad-based results and as we talked a lot about NBCUniversal, but also within Cable, Broadband, Video results, just really pleased with the start to the year. I think our innovation in products, including Stream, but also being able to say that we've nearly doubled now the cash flow of NBCUniversal since the acquisition in 2009 is a terrific achievement and we believe we can lead innovation in the cable industry and do well by content companies and help both work together and that's what we are doing. We are shifting our focus to, in addition to innovation, to real focus on the customer service, customer experience. That's going to take years. One of my comments to some of the questions that got asked would be this is going to take a long time to see some of the results, but we are going to stay the course. And I think we feel that the transition with our chief financial officers has gone extremely well and we didn't miss a beat here and we are excited by <UNK>'s new venture and building value for our shareholders through creative opportunities, but that our priority is to continue to find profitable growth, return capital to shareholders and to keep the Company in a strong position in a sustainable way that has ---+ we've been doing since Ralph started the Company 51 years ago. So thank you all for your support and we will see you in the third quarter. Thanks, <UNK>. Thanks, everyone, for joining us. Brent, back to you.

2015_CMCSA

2015

CMG

CMG #I will take a shot at part of this, and then I think <UNK> will want to add something in. <UNK>, we have done a very thorough analysis of the traditional loyalty programs. And the problem is Chipotle already has so many loyal customers that the fixed costs of implementing a ---+ an ongoing loyalty program are so extraordinary that you had to get a pretty big incremental comp just to cover those costs, and then you had to get a comp on top of that and then maintain it for it to be profitable at all. What we found is we have been able to build loyalty through more organic methods by encouraging people to learn more about Chipotle, by piquing their interest about how food is raised, by having them come into Chipotle and be treated to an extraordinary dining experience. So we've seen our loyalty go up over the years. And we think that's a better way to do it than putting in a structural framework that we didn't think was going to be profitable at all and ---+ or maybe would be a break-even, or you have to make an extraordinary comp to make it pay out. Now having said that, the customer data is valuable. I don't know <UNK>, if you wanted to make a comment about that. We definitely treasure that information. Yes. They are very small numbers, <UNK>. The comp was 4.3%, menu pricing was 4%. Of the 0.3%, it was a very slight negative traffic. 0.3% negative traffic, and that was offset by 60 or 70 basis points of mix. And the mix improvement was generated a little bit by catering, a little bit by sides, and a little bit by kids' meals. We reformatted the kids' meals, and we are now serving a few more of them, and the pricing structure happens to be a little bit higher, especially the ones that our customers are choosing. They are choosing to build your own more frequently, and that's a little bit more expensive. So those are pieces, but they are all very, very small numbers. Well, <UNK>, I think the answer is that we do want to buy our stock back, but we don't want to just buy it back at any price at any time. We are much happier, and we think it's a better boost to shareholder value to be patient. Our stock has always been volatile. It's always had run-ups; it's always had corrections. And we think the best thing to do is [buying] the corrections, and I think the example that we just shared where over the last three months when the stock had corrected for a period of time, we bought $100 million worth. So it's many multiple times what we bought in the first quarter. Now, had we just decided to buy $100 million in the first quarter, it would have just not gone as far. And so we think it's a better way to do it. We will get more aggressive as the price does drop. We do have more cash than we need. We know that the best way to add to shareholder value is to ready these proceeds to be promoted to growth strategies just like Canada was. We know that as we open up more Chipotles, we're opening the Chipotles at extraordinary returns and a cash-on-cash return in the 70% to 80% range. We know that's the best way to capture shareholder value. With the cash that we have, we will buy back, but I think we will continue to buy opportunistically, and we think that's a better way to build shareholder value over time. Well, if you're looking at ---+ the trends that I would encourage you to look at are a three-year trend. And I talked about this on the last call, so I won't go into it again. But this current trend that we are in is the third year of a three-year trend that started in 2013. If you look at the three-year trends, the three-year stack for the second quarter is more than 200 basis points better than the three-year stack for the first quarter. I think that that's more weather-driven. So I would say right now we're not necessarily seeing an acceleration other than in respect to the worst weather in the first quarter. We still think we are being hampered by not having carnitas, and we think that could be as much as a couple hundred basis points. And so we look at it as more the year is unfolding the way we thought it was. We thought that we would do 4% in the quarter; our guidance was exactly that. We were predicting internally about 4% during the second quarter, and that's what it's doing. We had also predicted that in the third quarter, while it's early, that we would be in the low single digits, that it wouldn't be negative, that it would be close. And so things are, I would say, more playing out as we expect. So Jeff, most of our focus ---+ and the vast majority of our attention is to have the best teams we can, developing the best leaders in the restaurants, hiring and developing top performers in every restaurant because we know that there's a dramatic difference between the experience, the quality of the food, taste of the food, just the throughput, the business controls, everything when we have great leaders, restaurateur leaders that have all top performers, whether it's a culture of empowerment. And these teams can deliver high standards in every single way. And so that's still and always will be the vast majority of where our attention goes. We are testing chorizo in a market right now in Kansas City. It will ---+ it's early; we've only had it in market for several weeks right now. We just this week ---+ <UNK>, I think, started advertising. If that's something that looks like it's either attracting new customers or it's encouraging the existing customers to visit more often, that might move up in the priority list. If all chorizo does is take our existing customers and split them among additional menu items, that will be less appealing to us because that just means we have more menu items serving the same customers, and that makes it more complicated and more difficult to serve all this delicious food. So I come back to it in terms of priority. The difference between a great running restaurateur restaurant with an amazing team compared to one that has a lot of teams that ---+ <UNK> talked about the BBT, a restaurant that has a lot of themes and they have some low performers on the team and empowerment is not great. The difference in the quality and taste of the food, the difference in how clean that restaurant is, just the difference in ---+ when you walk in, you feel like you're welcomed by a team of people that know you and are glad you are there ---+ the difference when you compare that experience to a restaurant that doesn't have all top performers, it doesn't have the culture of empowerment, is dramatic. And we believe that that is the single biggest thing we can do to build our sales over time. The other thing with marketing is we still believe that ---+ we still know that there's lots of people that have never been to Chipotle. Something like 35% to 40% of people have never been to Chipotle. We know that when we study our our existing customers, that there is like 55% of our customers only come a couple times a year. And so they are ---+ the more we can educate and entertain and things like this BOGO where if we can entice customers that don't come very often, once or twice a year, to learn more about our ingredients versus competitors, traditional fast food, and get a BOGO to entice them to come in, and that causes them to say, oh my God, I haven't been here in six months, this food is delicious, and I didn't know all this information about the ingredients. If we can convert that person into coming three times a year, four times year, we think that's a big opportunity as well. So the vast majority of our attention goes on doing what we do but do it better than ever. Other than comparisons, it's really hard to tell because it feels like we're still at a disadvantage by not having pork. So it still feels like we are being held back a bit. And so ---+ but I can't point to any specific reasons why we were slightly negative in the second quarter compared to so far in July. We are happy with the results, but there's nothing specific I can point to. In terms of incremental what. The improvements we saw in this quarter were spotty throughout the country as certain teams responded really, really well to our throughput contests. But Companywide and overall, like I said in my opening comments, basically I think we were glad to hang on to the significant gains we made during 2014 where we had the very significant increases in throughput. But we didn't see an increase in overall throughput Companywide during the quarter, which it's always disappointing not to see that. But I think we are ---+ like <UNK> said, we are doing slightly negative comps. What happens I think with our teams is it's more difficult for them to break throughput records, and it becomes a little less top of mind for them as they start to focus on other aspects of the business waiting for that traffic to increase. So it certainly is a lot more fun to go out and set throughput records when they are shattering them on a daily basis. And when there is a slight falloff in traffic, even if it's the flattening of traffic even for a short time, I think that sometimes our eye is not on the ball to the degree it could be. So we do see improvements in a lot of our four pillars of execution, which is great. We see some really good 15-minute transaction numbers and records in areas. But overall, I think that I would be eager to see our teams push harder on the throughput such as to deliver even incremental increases in the third quarter. So we will keep working on that.

2015_CMG

2017

CMS

CMS #Good morning, everyone We are happy to have you with us I know that we saw many of your at our Investor Day on September 25th and we'll see many of you at EEI, so I'll be brief this morning But we do have a few updates to share, including our results for the quarter, and not to worry, we have another exciting story of the month <UNK> will walk you through the financial results and our outlook We're happy to announce that for the first nine months of 2017 we reported $1.66 of adjusted EPS On a weather normalized basis, this is up 8% from last year Despite challenging weather and storms through the year, we are well on track to meet our guidance, and we're raising our bottom end of our top ---+ of our full year guidance from $2.14 to $2.15 per share Our top end remains unchanged at $2.18 per share We're also introducing 2018 full year guidance of $2.29 to $2.33 per share, which implies another year of 6% to 8% annual growth Now this is a good opportunity for me to remind you what we mean when we say 6% to 8% For 14 years in a row, we have delivered 7%, so it would be easy to assume that we when moved from 5% to 7% to 6% to 8% we meant to imply 8% What we actually signalled is our confidence in 7%, and frankly, we took 5% off the table Our self funding model and our adaptability under a variety of changing conditions each year puts us in a unique position to deliver sustainable 6% to 8% annual growth This is why we have confidence in the midpoint of our range In years where we have particularly strong performance and don't have higher priorities for reinvestment, we could go to the high end However, our bias is to reinvest in the business and to stack the deck for next year and deliver our growth trajectory for longer We know it is both our growth rate and the consistency of it that is valued To that end, we remain unwavering in our commitment to the triple bottom line Our focus on people, planet and profit underpinned by our performance will deliver the consistent and sustainable results that you have come to expect When we say people, we are referring to our customers, our co-workers, our communities, and of course, our investors Driving economic development in Michigan is a great way to enable growth and to serve the people of Michigan We know that when Michigan wins, our business wins It's a competitive environment and these large site selection efforts and Michigan is winning In part, due to the speed of our in-house economic development team which has identified 23 energy ready sites so that when a company wants to locate here we can quickly help them find a site that's available and best suited to their needs For example, we were pleased that when Lear Corporation, a large auto supplier was looking for a place to locate a new manufacturing facility, we were ready As a result, Lear recently announced plans to invest in a new plant in Flint, a community we are proud to serve This is another win for Michigan creating approximately 450 new jobs Turning to the planet, we're thrilled with the response to our renewable tariff This program allows us to partner with our large business customers to meet their commitment to renewable energy at a very competitive price We're already looking for ways to expand this program to keep up with our customers demand and partner with them to protect the planet Finally, our commitment to people and the planet can't be fulfilled without the critical capital that you have all provided We know that pensioners, retirees and moms and pops have entrusted you with their life savings to invest in safe and reliable places We want you to count on us to be just that sort of place Therefore, we are equally committed to delivering consistent and predictable financial results We continue to progress on the regulatory agenda and look for ways to support longer-term planning The 2016 energy law creates a framework for the governor's long-term energy plan and our commission has been systematically implementing the different elements of it For example, we'll be filing our integrated resource plan required by the new law next year Combined with the commissions ordered 5-year electric distribution plan, we'll be providing a vivid picture of the future replacements, upgrades and enhancements to our large and aging electric supply and distribution system in partnership with the commission and its staff, yielding more transparency and regulatory certainty going forward Our rate cases remain on track Our gas rate case was approved at $29 million and it included and expanded $18 million capital tracking mechanism We plan to file our upcoming gas case in the next couple of weeks Our new electric rates were self implemented at $130 million on October 1st We expect a final order in March of 2018. These rate cases enable the infrastructure improvement that deliver real value to our customers and reflect the cost savings that help reduce the price of that infrastructure One way we are driving our ongoing cost savings is through the implementation of the Consumers Energy Way, our lean operating system Most of the coverage about the Consumers Energy Way has been about the benefits of those cost savings My story for this month however, demonstrates the power of the CE Way to not only reduce cost through waste elimination but also to enable better system performance and areas like electric reliability to the benefit of our customers You know we've been in business for 130 years, and yet, we still find things we can improve every single day About a year ago, we realized that our approach to improving reliability was just not working as fast as we wanted, so we stepped back and leveraging our CE Way playbook, we tackled the systemic issue in a whole new way The result speaks for themselves In spite of challenging weather and storm activity, we had our best system reliability ever recorded this quarter Our talented team tackled the problem through the use of data and applied problem solving techniques, and as a result, we improved the prioritization of capital investments on our worst-performing circuits, we actually call those our Dirty Thirty We had more targeted tree trimming and we realized that we could effectively engineer animal mitigation at our substations Yes, the CE Way even helps us protect our local critters This coordinated effort resulted in a 40% improvement in reliability for this quarter versus our last 10 year average Every dollar we spend is more effective The waste is eliminated, and our customers have a better experience I am sure this sounds simplistic, but when we apply the CE Way every day all across our system in big and small ways, we fuel our simple but powerful business model, higher value at lower cost built on our consistent past and yields a sustainable future that you and your clients can count on Now I'll turn the call over to <UNK> Good morning, <UNK> Yes, it actually will provide a lot of visibility to that, <UNK> We're really excited about having the IRP available to us It provides a framework and the certainly so as we make those long-term transitions, we are able to have alignment with our commissions and make good decisions together about balancing a variety of factors; fuel diversity, cost for customers, how we want to fulfill the RPS standards, how much energy efficiency and demand response we want, in fact, our IRP, looks like it's going to have 47 different model runs that we're undertaking right now, as we speak And so it's a complex set of variables and we're excited about what the opportunities will be provided and the transparency and frankly regulatory certainty that will be a result of it Yes, I would say, the timing is over this 10 year time horizon that we're looking at, making these transitions We have ---+ at 22% coal we're already one of the lowest in the country We feel good about that The fuel diversity of having our sites remaining is an important part of the mix And so, we'll build that into the plan And frankly, we look forward to the results of the model because they'll be informing to us about when the best time is to utilize those ---+ or to transition those plants The reality is, we've done some environmental upgrades at those facilities, so they're best-in-class environmental controls currently And so to rush any ---+ any additional retirements probably isn't necessary but they do have a natural end-of-life within that cycle So we'll be thinking through that the ---+ through the IRP, and frankly, with all of our critical stakeholders, internal and outside the company And Julian, I'll add just a couple more, just to reinforce at there's plenty We've got ---+ the CE Way is just taking shape and so we're finding operational savings across the board, around the organization Our technology adoption, so going from our traditional phone calls to our digital channels is a fundamental cost savings and cost reduction, and so part of what you're hearing from <UNK> and I here and for everyone on the phone is that we have the luxury of focus Our business model is not complex We don't have big bets, we're not betting on big outcomes We've got a series of small, focused efforts that allow us to deliver consistently And the consistency is what we know you've come to expect and we're pretty excited about the breadth and depth of opportunities that are in front of us I'll start and then as <UNK> wants to add some additional comments We have this ---+ the commission has requested a five-year distribution plan and we will ---+ we filed an initial version in August, we're receiving comments and having working sessions with the staff at the commission right now We'll be submitting a final plan in January And as through that plan ---+ and this is what I think is really a great part of what the commission is leading right now, these longer-term viewpoints of where the right investments in infrastructure exist And so what will ---+ filling in our IRP in the spring of next year in conjunction with this T&D distribution, in particular, five-year modernization plan, we'll have a really good picture about where the investment opportunities are and have some real alignment with the commission and agreement about what those investments will be And frankly, because of the age and the size and scope of our system, we have internal competition with trying to decide where best to put the dollars because there's so many parts of the distribution system and the supply system that require investment And then when you layer in our gas, our large gas system, we've got ---+ our constraint is not ‘Do we have capital we can do?’ The constraint is customer's ability to pay, which is why we put so much emphasis on reducing the cost of that infrastructure in any way possible, so that we can provide more value for every dollar that we invest And so that's where been working on And so with the five-year distribution plan and the IRP combined, we'll be able to build out that five-year investment strategy in much more detail and with a lot more certainty Yes, we do And again, it's only constrained by customers' ability to pay, so that in the 10-year time horizon, in particular, when we have these PPAs that do peel off and are at the end of their contractual life, that creates some real headroom to make additional investments without raising customers' prices beyond what they can afford And so that definitely is a key ingredient in our 10-year plan Good morning, <UNK> Good morning, <UNK> Well, okay, so we do have some significant regulatory outcomes in 2018 planned But as it relates to our guidance, our 6% to 8%, that's ---+ as I mentioned, we work every year under a variety of changing conditions, whether regulatory outcomes, politics et cetera, we always work to make sure that we can adapt to those changing conditions, and that's the strength of this business model So I think, as you're thinking about our 2018 guidance, I would stay anchored in that point that our strength comes from our simple but powerful business model It has strong CapEx underpinned by cost savings, ongoing throughout the year And then a real core competence and adaptability A lot of people do point to our business model and I love it and it's straightforward and I can see why we would But one of the core strengths of this company, and <UNK> highlighted it in his remarks, is the fact that no matter what comes we managed to work it out because we don't have big bets, because we're not waiting on one big regulatory outcome because we're not waiting on one big project to get approved, we can adapt to make those changes throughout the year and manage to deliver for all of you And for 14 years in a row, delivering 7% EPS growth We feel pretty good about our track record and what we're trying to share is that we have plenty of visibility and to being able to deliver it to again going forward I think, if anything, the IRP provides more certainty to the performance because we'll have more visibility into longer-term planning and be able to do more cost effective investments and cost effective generation, which is how our model works The heart of our model is that our system is large and aging and we have significant infrastructure replacement upgrades enhancements required And so any certainty we can have going forward allows us to most cost effectively do those upgrades and make the changes necessary We have a large and aging system between the gas and electric And so really we look forward to certainty that the IRP can provide so that we can do really even better planning than we've been able to do in the past Thanks, <UNK> Hey, <UNK> Thanks, Andy Well, thanks everyone for joining us and we do look forward to seeing you at EEI, right around the corner

2017_CMS

2015

TTI

TTI #Two data points, <UNK>. The first one is that the free cash flow was very little from working capital improvement. However, revenue increased sequentially over $60 million, yet we were able to keep, for example, receivables flat to down slightly. And therefore had no working capital burn as a result of that. So it is almost exclusively from cash earnings in the second quarter, and we think that we'll see, in the third quarter, very little from working capital improvement. Yes. We are always going to be focused on optimizing the business. The way you do that is, in the short term, with the financial results and managing the business. I think our results, compared to last year, on much lower revenue, in a market that is worse from a competitive point of view, clearly shows that we are managing it very tightly and effectively. As we continue to do that, we need to see, hopefully, some of the deferred spending by our customers will begin to reverse over a period of time. And we will get a little bit of help on the volume. But until that happens, it is just focus on the business. But we always look at the full range of options of all our businesses. This one clearly, when you look at the capital allocation, we haven't put a lot of capital back into the business, because in the short term there is not a payback for that. But we look at all the alternatives that go with that. Thanks, <UNK>. Thank you. No, the second half of the year will be slightly below those numbers. Yes. We may not have been clear in the way we described it. That 24% is looking at it versus June 30 of last year. So it is compared to where we were a year ago. But the general question, of how we are getting the through-put with the work force reduction ---+ it is several things. I think the team has done a really good job of not just reducing people and activity, but structurally changing significant parts of the Company, in terms of how we are organized, flattening the organization, consolidating facilities. At the same time, from an overall back-office point of view, continuing to centralize, and really taking a lot of the support functions out of the divisions, and bringing them into a common centralized corporate pool. So those are all structural enhancements that will continue whenever the volumes pick up. I think we also benefited, on those type of metrics, by Gulf of Mexico being a significant portion of the growth. It doesn't typically have the labor intensity of some of our other businesses. And I think more importantly, it highlights our ability to really respond to market activity, because we are vertically integrated. I think it is very important to highlight, on the fluids, that we have been building out this strategy for years and years. And when we do find a new product opportunity, a new customer opportunity, a new market expansion, our ability to respond to it is immediate. Yes. I think we have got around $50 million, in round numbers, left to do as of June 30. And we will do $4 million or $5 million, the balance of the year. We are scheduled to do most of the remainder next year. There's a couple of properties we don't operate that I'm sure ---+ may get kicked out. And I expect the majority of the work we do will be middle to the second half of the year. We certainly don't want to be working in the first quarter, with the weather; just like everybody else defers that until they get a better weather environment. So we will be pragmatic in meeting our obligations, but also being aware of the overall market environment out there, and a continued focus on the balance sheet. Yes. I think we are of similar opinion to the masses; that, that is not going to be a major solution for us. We're going to have to self-help, and do all the things we talked about from a cost and customer expansion, and the guys need to invest wisely into the areas where is there is continued strength. And that is what they are doing. I think Tim and his team over at the MLP, are very focused on leveraging our strengths. You heard <UNK> mention we will have an ERP implementation over the next year, to really get the Compressco and CSI groups fully effective and efficiently on a common system, across all the functions. It will be the same system as Tetra, and it allows us another incremental piece of efficiency. Thanks, <UNK>. Good morning, <UNK>. Yes, I think if you look at the business in the second quarter, and the progression we see for the balance of the year, overall, I would characterize it as just incredibly low demand. There is just a deferral of spending by our customers that is ---+ as you recall, it started last summer, and accelerated as the commodity prices came down, and that has continued. So there is no increase in demand taking place at all, other than the seasonality of where we are at. We had very good utilization through the second quarter, on our major diving and heavy lift assets. We expect that the majority of those assets will continue to work through the third quarter, into the fourth quarter. We have a couple of gaps on our barge schedule that we are working on filling, but that is reflected in the overall guidance that we talked about. On our P&A business, we have very wisely staffed that, and scaled that, at a much lower level than we had a year ago, because of the unpredictability of the demand. And I think that is ---+ beyond the obvious help on the cost side, I think that has helped us stabilize the business, from a labor, workforce point of view, predictability. We feel really good about that. Our diving business has real low demand. There aren't a lot of construction projects. We had a third party that we leased through the end of last year, that we had stated we released. And we don't anticipate the need for a third-party additional asset in the near term. Hopefully, next year, we will see a couple of projects come to fruition that would give us the opportunity to match a third-party lease to that particular project. But overall, other than the typical seasonal progression, where the first quarter is the worst, second quarter is significantly better, third quarter is a little bit better, fourth quarter comes down again. It is a tough business. And to get to breakeven or above in that business ---+ and again, realize we have virtually zero internal work for Maritech embedded in that business, so it is all third party, in an incredibly tough market ---+ is a real credit to that leadership team. It is not an easy job, and the guys have done a phenomenal job managing an incredibly difficult situation. Thanks. Thank you for all the questions. And again, thank you to our entire team at Tetra. Everybody in the company, around the world, did a phenomenal job in a very tough market. We are all proud of the group. And we look forward to meeting our guidance for the third quarter, and talking about it in early November. So thanks.

2015_TTI

2018

WDR

WDR #Well, I think those will be kind of reviewed on an ongoing basis. We don't have anything to announce this morning. But as part of a ---+ just kind of the realities of the industry we operate in and the consolidation of offerings across platforms and that type of thing, we're always evaluating our products in terms of their viability, their critical mass and acceptance in the marketplace. So this will be ---+ I don't anticipate anything that would be dramatic and earth-shattering on a quarter-by-quarter basis. Just more of an evolution consistent with what other investment firms are doing in terms of the current industry dynamics. So those will be more incremental and evolve over time. Good morning, <UNK>. This is <UNK>. I don't think we ---+ I don't think our experience is much different than anyone else's. The distributors are culling. Fortunately for us, I don't think it's been a meaningful percent of our assets, certainly not in the fourth and even with the movement that Morgan Stanley recently announced. So not a meaningful impact at this point. Well, this is Phil. I'd say it's generally market-driven. Equity markets, as you know, have been strong. The bulk of our assets are equity-driven. In terms of flows, maybe the only color I might offer is that, I think with respect to what we're experiencing the early part of the year from a wholesale perspective, we've seen some sequential improvement in the sales and redemption metrics. And so, as I mentioned, the fourth quarter was a little bit of a setback for us relative to the third quarter. We still are in outflow mode, but the metrics are a little bit sequentially improved versus the fourth quarter, broker/dealer trends consistent with what we've been experiencing and nothing too dramatic in institutional. So the bottom line, I'd say still outflow in the month of January, most of the improvement in total assets under management driven by the market. Okay, Bill. This is Phil. I think we have a fair amount of financial flexibility. So all of those things are ---+ I don't think any of them are mutually exclusive. I think you can count on us to be kind of persistent and active in terms of the share repurchase. We announced that at the end of ---+ towards the end of October. So as we move through the year, we expect to be active kind of on a consistent basis. Obviously, we'll be selective if we see opportunities to step that up given share price or market volatility. We can do that. If there's opportunities to pull back, we will do that as well. But that's something we're committed to over the next couple of years. Inorganic growth opportunities, other investments, that type of thing, again, our balance sheet remains very strong. The tax law changes are a positive. So all of these things, I think we will be in a position to act accordingly when the opportunities present themselves. And so, I just think it's hard to predict when these things happen, but I don't view any of them as mutually exclusive. This is Phil. I think as far as new introductions, I think it would be a combination likely of both. Some subadvisory relationships, maybe expanding relationships with existing key partners, that's a potential opportunity. Also, some organic new product introductions that we will do over time. Things that fit with our core competency. I think, we're kind of focused on things that we think we do well, and we have built a broad level of expertise. And when I think about that, I think a lot of the core equity strategies and growth-orient strategies. The international franchise has continued to do quite well with our core in emerging markets funds. Obviously, we have a strong reputation in the credit side within the fixed income markets. So I think, complementary products associated with a lot of those core competencies would probably be areas of focus. I think, potential rationalizations, I don't want to get into products or specifics. I think, just generally speaking over time and consistent with what the question earlier was about platform access and that type of thing that <UNK> was referring to, over time if you've got products that aren't at critical mass or you can't ---+ don't see the real opportunity to grow them and expand them, it gets challenging. So we want to always make sure we're constantly reviewing our resource allocation and directing our opportunities to strengthen our products in terms of resources and opportunities and growth potential. So it's always difficult, I think, to predict exactly where it'll be, but we're constantly looking at opportunities that are complementary to our core strengths. Hey, Ken, this is Ben. That's exactly the case. As we're in the midst of derisking the plan assets, we would not expect any significant volatility in that going forward for the plan assets. Yes, I think that tailors a little bit to the question earlier. I think fortunately through this transition period, we have a strong balance sheet and a lot of financial flexibility. So I think the tax benefit, we've talked a lot internally what that means for us. I don't think it really will change fundamentally how we manage the company and what our plans are and how we execute upon our strategic initiatives. But it certainly provides additional flexibility, and we're constantly looking for opportunities to begin to play offense in terms of growth initiatives. We have spent a ---+ pretty heavily investing within our investment management capabilities and building out our research staff, and I think, we'll continue to add to that in 2018. That remains a priority. But if we see opportunities, as we've mentioned in the past, with respect to bring in investment capabilities or small acquisitions or anything that can ignite our growth and give us an opportunity to play a little bit of offense, that's something we're open to. It's just difficult to anticipate the timing on those things, but we're definitely looking, and we'll just see what happens. Well, I do ---+ yes, I think it's kind of an esoteric question. But I think, the way I think about it is, where we have an opportunity here given our cash balance to opportunistically repurchase shares to be accretive over time. We also have ---+ as opportunities present to us with respect to investment opportunities that will grow our long ---+ enhance our long-term positioning, we have the flexibility to do that. So every quarter and all the time we're constantly look ---+ evaluating the trade-offs with respect to how we allocate capital. We have a current dividend level that we adjusted last quarter that I think is a really competitive return to shareholders on an ongoing basis. We have the opportunity over time to do some accretive share repurchases opportunistically. And we'll have plenty of time ---+ plenty of resources to invest that can enhance our incremental growth. So I don't want to get into a discussion of great detail, but I think this is something we're always looking at along with our board in terms of how we allocate capital and move forward. So the good news is through this transition period, we do have the flexibility to kind of pivot and do different types of things to enhance shareholder value over time. Well, I might just make one comment, then if <UNK> wants to add anything. I think the comment there would be that historically, our asset manager and our broker/dealer, our broker/dealer basically existed as an asset gatherer and just brought in assets, and the total company benefited from the management fees. I think, in today's world where clients and advisers want more choice and options, we've made a commitment to kind of evolve the broker/dealer to make it a more profitable on a stand-alone basis now that we're self-sustaining. So don't misinterpret that in terms of our commitment to the broker/dealer, because we're strongly committed to that. We're just trying to get it to be more of a competitive in today's world where clients and advisers want more choice and opportunity. I don't know, <UNK>, if you have anything to add to that. Okay. Well, thank you, everybody, for joining us and appreciate the interest, and we look forward to catching up with you next quarter. Thank you.

2018_WDR

2015

HST

HST #You know, Steve, it's a good ---+ let me deal with the second one ---+ question first. It's a good question about whether we should be orienting more as a select service. And if you look at what we've acquired over the course of the last couple of years, we have acquired some assets in that segment as a business. Given what I just said about supply, I probably ---+ and the fact that the bulk of the supply that we are seeing is directly targeted at the select service segment, I'd probably be reluctant right now, if we were in an investment mode, I would probably be reluctant to deploy a lot of capital into that space, because I think I would be concerned about the ---+ just the high degree of supply that's coming into that sector. And what we've traditionally seen over time is that new select service competes incredibly effectively with older select service. And so is the fact that you are seeing the increase in supply being so squarely centered in those segments would concern me in terms of accelerating our investments in select service assets at this point. Now thinking longer-term, as we think about where the Company would be in four to six to seven years, I would certainly expect that select service would be a bigger part of our portfolio looking out. But this is probably not quite the right time to be a buyer of those assets if we were in a buying mode. As it relates to the Q3/Q4 comparison, I think some of what you are seeing on the EBITDA side is really related to some improvements, as <UNK> highlighted in his comments, some improvements in Europe. And then you are also seeing on compensation, the low stock price at the end of the quarter, when run through the appropriate models for calculating stock compensation expense. Really, what we hope, at least, is move some compensation expense out of the third quarter and into the fourth quarter. We'll obviously see how that plays out at the end of the year, but I'm sure you could all guess how we are rooting. But that ---+ I think there was some deltas that happened as a result of that. <UNK>, what do you want to add to that. Obviously, in the fourth quarter, October certainly will be one of the better quarters ---+ or better months of the year on one hand. On the other hand, certainly, I think the ---+ our hotel forecast for October today is lower than what it was a quarter ago. And I'd say the same thing about our fourth quarter in general. Our fourth quarter in general rates to be pretty decent. But as we sit here today, I think our forecast as a hotel forecast for the fourth quarter is lower today than what it was a quarter ago. No, we did not, Joe. I don't ---+ we just don't have a number quite yet. But it's certainly been running better than what we've seen for the rest of the year, but I don't have an updated number yet for the month. You know, I think we're ---+ we are constantly evaluating a variety of different options for the portfolio. Certainly, one of the questions we've gotten before is about whether we should ---+ whether we could sell some of these assets in a portfolio sale context, for instance. And that's something we've looked at throughout the year, and the last couple of years, frankly. And we'll continue to look at. So far, the response we've gotten from the market has suggested that the tact we're taking, which is individual asset sales, is probably the most productive one in the long-term. But to the extent that the opportunity presents itself to sell assets in bulk, similar to what we did in Europe ---+ albeit that transaction took almost a year to complete ---+ then we would try to take advantage of that. You know, as you look at other types of transactions, I know that there's been a lot of discussion about spins and things like that in the market over the course of the last couple of years. I think in the current environment, when the entire ---+ all of the lodging REIT stocks are trading at a significant discount to NAV, it's hard to imagine that a spin is necessarily going to close that gap as effectively as asset sales. Because you are still going to ---+ after the spin, you are still going to have two entities that would ---+ are going to trade ---+ while you may see an improvement in multiple in general from having taken the step, I don't know that you are necessarily going to radically have those companies trade at a different multiple and a different relationship to NAV than the rest of the industry. So, all this is evolving. We frankly have only been in this sort of situation where the stocks are trading at this big of a discount to NAV for sort of half of this year. We are trying to take advantage of that as best as we can. We're trying to take advantage of the balance sheet strength that we have to deploy that right now to benefit from that. And we'll continue to evaluate all sorts of options as we work our way through 2016 and 2017. It's hard to deal with that question in the abstract, just because you need to know ---+ you ultimately need to know who is combining or who is buying who. So it's sort of tricky to say. I mean, our contract rights flow out of individual contracts or corporate level agreements with Starwood and Marriott. And so I don't know that those particular corporate level agreements are necessarily ---+ in fact, I'm fairly confident that they are not specifically affected by any transactions that might happen at the corporate level by any of those companies. So ultimately, I think our valuation of whatever might occur, whatever combinations would occur or whatever change in ownership would occur, are going to be based upon who's in charge and what their plans are for the brands and the properties that we own. Well, first of all, we don't think the cycle is coming to an end. We see solid growth in 2016. And as we look out past that point in time, assuming that economic growth continues to be at least at the levels that we've seen lately, we don't see why the cycle wouldn't be continuing past that. You know, I think there's a lot of different reasons to sell assets. In our case, it's not necessarily because we think we are timing it at the top. It's really driven more by an approach to how we manage our portfolio and a long-term perspective to reduce exposure to certain markets, and then, over time, increase it to others, is the way of managing the portfolio. I would envision that other than in those periods of time that are shortly after a decline, where we probably would be ---+ wouldn't be comfortable that we were getting fair value for our hotels, we tend to be a seller throughout a significant chunk of the cycle. So I don't know that I would read a lot into that other than this is just a continuation of a program that we've been working on for awhile. You know, and I think this is ---+ obviously, <UNK>, as you know, this is sort of a unique situation right now where we can sell assets that are sort of in the bottom sort of, call it, bottom quartile of our portfolio, assets that maybe have slower growth rates, higher CapEx issues. But we can sell those assets at sort of lower cap rates than where we trade today. Right. And then take those proceeds and either put it out in the form of a dividend or buy back our stock at, which today, is close to an 8% cap rate. And then I think lastly in terms of the notion of buying stock back at this point in time, I mean, that's something that we obviously give a lot of thought to. But I think we are comfortable, especially at these levels, that buying the stock is a good investment. And I think we are being thoughtful about how we pursue that, because nobody knows exactly what the future holds. But at this point in time, as we are sort of ---+ in effect, we are shrinking the Company with some of these sales. And shrinking and buying back stock is a way to help sort of get the benefit of that shrinkage. I don't know that we've gotten quite that formulaic about it, <UNK>. It's sort of ---+ we've been in a good position, I guess, in terms of how we thought about it since we've initiated the programs. It's been relatively easy to be comfortable that buying our stock was the best alternative for the capital that we had or that we would be generating. Now, if you go back to what we would've talked about in April, when our stock price was higher and we spoke about this, our assessment at that point in time was, as we generated capital from asset sales or from other sources, we would look at buying ---+ the returns from buying the stock relative to the returns from investing in other things, whether it was new assets or whether it would be ROI investments. And so, as you look ---+ as we look to a point in time that I hope happens sooner or later, which is that the gap closes between NAV and our stock ---+ and by the way, I'm hoping that happens because our stock is going up, of course ---+ as we get ---+ as that gap starts to close, then we will continue to evaluate what are those best options for the capital that we are generating if, at that future time, you could see an acceleration in ROI investments if those proved to be more attractive. But if, on the other hand, we are at a point in the cycle where we don't think it makes sense to make new investments or new acquisitions, then you might ---+ you would still be buying the stock back at that environment, even though the returns might not be as attractive as they are today. I think that's a good insight. It's just ---+ there's a lot of activity on the individual basis. But as you start to move up in bulk, the number of players is thinner. And I don't ---+ I haven't had an opportunity to read everything that Strategic published. But while I think they had a high level of interest, it seems like I heard that at the end of the day, there was really ---+ there were only a few serious bidders. And so that is somewhat of an indication of what you are describing. Well, I think in the near-term, that's exactly what we're doing. I mean, we're obviously going to cut all the overhead that was in Asia-Pacific region. We only have the international offices in Europe ---+ are the only ones that would be left sort of as we get into early next year. In Europe, I think we've got a number of opportunities to enhance the value of the remaining 10 hotels that we have. And I think the decision has been made at this stage, is to continue to work that portfolio and then watch for what opportunities might develop in the long run. But certainly at this point in time, as we deal with worldwide capital flows, which we are making investing in Asia very difficult to do, at least on our parameters, the best markets to focus on right now are in the US. Sure. So, as <UNK> mentioned, right, we are currently marketing $1 billion worth of assets. Certainly, I'm not sure if all of those assets will actually complete. But as we sell those assets and complete those sales in 2016, certainly that will increase our taxable income. And so, look it, I think the way we look at it is, at a minimum, as <UNK> mentioned, approximately half of the proceeds will go out in the form of a dividend. And so at a minimum, we could just put it out in a special dividend next year, which would be in the fourth quarter; or to minimize that special dividend, what you could see us do at some point next year is raise our standard dividend. And so, effectively, we've have the same dividend for the year out in 2016. But you could see us stair-step ---+ increase our standard dividend, which would effectively reduce that special dividend at the end of 2016. Look, it's too early to know that, but I think at the end of the day, you could do the math, <UNK>. Right. If we sell X number of assets and if 50% of the proceeds go into the form of a dividend, divide that by our share count, you can see what we are talking about in the form of an extra dividend. Thank you all for joining us on the call today. We appreciate the opportunity to discuss our third-quarter results and outlook. We look forward to talking with you in February to discuss both our year-end 2015 results and provide much more detailed insights into 2016. Have a great day, everybody.

2015_HST

2016

POWL

POWL #Clearly, the first quarter was burdened a little bit by project cost overruns on a transit project that wasn't anticipated and that we had ---+ our service revenues in December particularly was a little bit short of where we expected. But when you're looking at the outlook for the balance of the year, particularly the next couple of quarters, the backlog is filling in and we are pretty confident on the short-term production requirements. We have seen and are continuing to see operational improvements from an efficiency standpoint. They were somewhat masked in the first quarter; we think those will start dropping through in the coming quarters. And the overall outlook is still in line with the guidance that we had provided at the beginning of the year. So we did have a couple of bumps that held us back a little bit in the first quarter, but overall, things within the business are shaping up fairly nicely. The biggest challenge we have is the market conditions and making sure that we can fill in the backlog in the last few months of the year. It's still too early to call for 2017, but clearly the pipeline is getting tougher. Competition is getting stronger. In general, I would say the projects ---+ while there are still several projects out there, a lot of projects out there, they tend to be a smaller nature. So when you look at them in an aggregate dollar volume, it's harder to reach the numbers that we've had in the past. But overall, there is still a couple of sizable projects that we expect to close in the current fiscal year and we think that we are in a competitive position for those, but by and large we are seeing more small projects than large projects when you're looking at the next couple or three fiscal quarters. I'll bet the quantification of it ---+ it depends on how you ---+ where you want to draw the line on the issues, but there is a couple or three projects that we did incur some late costs, and in total I would say the pretax impact was in excess of $1 million, partly due to some rework that occurred late in a project, on the transit project. Then we had ---+ with some of these large projects that we've been building in the last ---+ this past summer that are beginning to ship, some of these that we've been responsible for freight to site, and we were a little bit short on a couple of those relative to what we had anticipated in our planning. So that gives a little bit of pressure. Unlike, I say, the third item, which was more of a December issue than a quarter issue, was that service in December came in a little bit lower than we anticipated, which would have benefited us in the quarter. But when we're looking at the balance of the year, we're still expecting that to be in line with the full-year expectations. First off, I would say that we haven't exited any markets. I would say that clearly we've been much more dominant in the oil and gas because of the size of the market in the last couple of years. But when you're looking at the non-oil and gas markets, the activity that we're seeing, clearly we are participating and actually seeing, I would say, marginal improvement in market opportunity in utilities, particularly in the distribution side. We've had some success there. Last year, our fiscal 2015 exceeded 2014 at this point in time. I would say that trend is likely to continue, that we think we will see good opportunities through fiscal 2016. We've talked about it in the past. We spent time and effort growing our relationships with utilities in Canada with the long-term goal of making that a secondary market for <UNK>. We are having success there. We've booked some business late last year, and when we're looking at the opportunities in front of us for fiscal 2016, we think we'll have more success. Looking at the oil and gas, the oil and gas has not gone away. We're still booking business in petrochem, we're still doing a lot of bidding activity ---+ or more budgetary ---+ in pipelines. There's a lot of activity out there, but the question is which and how many of these projects will actually be funded in the near term. But there is still ---+ I would say when you're looking at number of quotes by market sector, that's still probably one of the strongest sectors that we're seeing from a budgetary perspective for a quote. But again, most of them are budgetary. International, oil and gas is still stronger than I would say it is here. We're seeing it particularly in the Middle East; we've booked some business. And we're also booking some business in the Middle East in the generation area, so we're not fully dependent on US oil and gas, but clearly that is where the market is the softest. There's not a lot of different; it's just more issues and more people to deal with. This came on rather quickly, in fact, this downturn, and I don't think we quite saw it on a timely basis. We had some difficulty in the implementation of Oracle systems, and that caused us to back up and not make some deliveries. So we spent a lot of time on overtime and contract labor and so forth. But we are getting back to the size that we can manage and prepare for the future more adequately. It's the same ---+ it's a lot of the same people. We've got the talent. We've certainly got the energy to get it done, and I think we're on the right track and we will get it turned here very quickly. The biggest issue is communications, getting people to communicate and getting communications between departments. And we'll get there. We're getting there now. So, I'm confident that it's going to get better. There's a number of initiatives that we're undertaking. We're working with customers to improve those relationships and communications. We're strengthening our partnerships with our suppliers. Again, opening communication between employees and the various departments; greater emphasis on improving the functions of project management. Certainly we're continuing to work on cost-reduction focus areas, and we're going to pick up the pace in research and development. I'm confident we can get the job done. <UNK>, clearly we are continuing to pursue cost-reduction activities, both from a supply management. We're looking at it from an efficiency standpoint. Our capital investments that we're targeting this year are all based on cost improvements, quality, and efficiency related. So when you're looking at our guidance and our anticipated results, clearly we're looking for improvements in several facets. When you're looking at the second half of the year, which I think you're looking at are we ---+ what requirements are we going to have to overall look at our size of the organization, it's too early to call the impact there because that's strictly going to be tied to the success we have in the marketplace. And I would add an attitude adjustment helps. I don't know that it will be more dollars; it will just be to expedite some of them ---+ some of the products we're working on more quickly. Not more dollars. We just completed our stock repurchase program in December. Clearly, how we utilize our cash is something we constantly evaluate and discuss with our Board. At this point in time, there is no authorization to have a second repurchase, but we will be evaluating the best use of cash over the coming year. Hey, Thomas. How you doing, buddy. Thank you, sir. Clearly, there are several small projects going on. I would say right now when you're looking at the actual order flow, we're getting several projects that are coming in. From a larger size projects, from a capital capacity standpoint, there is at least one project that we believe will be awarded this year, probably in the coming quarter or two. And there are several others that are in the pipeline, but the others of any size, I think, will be falling into our fiscal 2017. I don't see any others that appear to be close enough to be awarded between now and the end of September. LNG, we've been fairly successful the last 12, 18 months. We have several projects that are in our backlog. There are other projects that we are currently working on. Again, there is at least one that I think that may come to an award this fiscal year, but at this point in time, we have several projects in the backlog that will be generating revenues between now and the end of the fiscal year. Down the road, I think it could from an infrastructure standpoint. Clearly, it's going to take time to see exactly how the industry responds to that opportunity and where the demand is. But when you start looking at increased exports, then you have to say there would be some opportunity for capital investments in export terminals. It's an area we will be watching closely. <UNK>, we're actually evaluating that and have been evaluating that now for a number of weeks. Obviously, one of the first things you would look at is the contract labor, which is expensive and frankly not quite as efficient as our in-house people. But at some point, we may be forced to look at our staff and certainly the workforce in the shop. It's a difficult thing in our business because we are relationship oriented and our talented and very skilled and knowledgeable employees are not easily replaced. But we will do what we have to do. I wouldn't dare give you the magnitude or so forth at this point, but let me tell you we are on top of it and we'll do what we have to do to improve the outlook for the business. Obviously, I'd rather be more focused on closing more orders, but if there are not opportunities out there, you have to deal with what's there. <UNK> has been through a number of these downturns in our 70 years of business ---+ certainly, I have ---+ and we've managed through those very effectively. Right now, our focus again is on strengthening our relationships with our customers, our suppliers, and certainly our employees. We are making progress and I'm encouraged with the attitude and dedication of our employees. We've got great people and thank you for joining us today. We look forward to talking to you at the end of next quarter. Have a good day.

2016_POWL

2016

RL

RL #Thank you, <UNK>. Yes, you are right. We're in the middle of the assessment, so I can give you some early reads which is, we need to focus. I'm a big believer in my leadership approach overall to focus and that includes our brands. So in the plan that we will come back with in late spring, I will be very detailed in terms of how I look at being focused given the multiple brands we have. What excites me though, is that the more I learn about the brand, the more I realize the strength of the brand. So, focusing on where we will win when it comes to the brands will be essential and I will come back and give you more details. When it comes to the quality of our distribution, that's also something that we are looking through in detail, and as I shared in my initial remarks, we will build Ralph Lauren into a stronger position it's ever had. That's a long-term job. I'll be able to give you more details in May, but we are looking through every single channel. And, I'm going to make sure that the plan that we move forward with enables us to drive ground strength and drive profitable sales growth at the same time. Yes, thanks <UNK>. I think the answer to that is, what <UNK> started with, which is we are in an assessment phase on all aspects of the business. And we are working through to create a strategic and financial plan that can drive shareholder value, can drive profitable sales growth and can strengthen the brand over the mid-term. We plan to share that plan in more detail in late spring. And so, we are not yet at the point where we are ready to quantify the elements of the guidance for FY17 beyond what we shared in the script this morning. But I can say, but on the buckets, is that particularly, we shared I think on the call, the FX impact that we expect next year. We remain on track on the infrastructure on both SAP and e-commerce to complete the SAP European implementation next year, as well as the e-commerce replatforming next year. And we remain on track, as I mentioned, to deliver the $110 million of cost savings from the initial global brand restructure. But we are in the assessment phase and we'll share more details in late spring. Yes, thank you, Matt. So starting with the pricing, it's going to be an important part and it is an important part of our assessment to look through our whole offering to our customers. So, given the recent very disappointing performance, we are asking, and I'm driving that we are asking the tough questions in every single area of the business. Because, what I'm determined to do with the team and with the support of Ralph, is to mask the business performance with the strength of the brand. So when I look at the brand, it's one of the strongest in the industry. And when I looked at our performance over the last couple of years, including the recent quarters, it's very disappointing. So I see a significant untapped value in both the idea behind the brand, and as well as how we drive the business. And therefore, in the way I outlined the way we approach building the growth plan for the future, there will be a customer facing component, which is about evolving the brand, evolving our product, marketing, shopping experience, and then radically improve some of our business engines. And I believe that driving brand strength for the future and driving consistent profitable sales growth and in turn, giving high shareholder return, is to strengthen both those components. Both the customer facing part and the underlying engines and have them play together. That's also what I have experience of doing from my two previous brands. Yes, absolutely. Thanks, <UNK>. When it comes to the brand, what excites me is that Ralph original idea behind the brand when he created it, it was much bigger than apparel and it was much bigger than product. It was about inviting the customers into an aspirational life, their aspirational life and being very consistent in offering authentic style, high-quality and deliver specialness in the experience. If you look at the disruptive market today, I believe that's exactly what you need to do to win, you need to be special. You need to develop ---+ deliver a value that goes beyond apparel and if you look at the customer, the customer is now in charge and the customer is living a busy life. What excites me about the original brand dish and then building that out, and why I see so much potential in it, is that we should deliver style to the customer. And we can do that and we are known to do that and why we're so loved is because we have been so consistent in delivering authentic style, quality and specialness. Okay, thanks. Let me start, it's <UNK>. Quality of distribution for me is any channel that gives us an ability to strengthen our brand and drive profitable sales growth at the same time. So, we'll come back in late spring and give you more details on how we see output folio of distribution going forward. And relative to the operating margin visibility for FY17, I think the thing that gives us visibility into that from the initial planning phase, is a number of factors, including, the full-year impact of the cost savings that we've generated from the global brand restructuring. The full-year impact of the pricing that we've taken in devaluation markets that should kick in next year. The cost savings that we're going after through the SKU and style rationalization. And, the work that we are beginning on right-sizing the Company's cost structure for next year as part of the planning process, which we will share more detail on in late spring when we come back with the plan. And I think, all of those things taken in aggregate, we have visibility to suggest that is going to result in operating margin being up versus the drag of foreign exchange that we have for next year. And fixed expense deleverage. Great. Thank you, <UNK>. Well, I come back to that it's a part of the assessment. I will give you detailed outline of how I think about these questions in May. But just initial thoughts is that my experience of driving high-performance in this industry is very much connected to finding a systemic repeatable way of creating a stronger and stronger assortment. It's still early days, but I see big untapped value potential there. When it comes to evolving assortment in terms of the balance of the assortment and in terms of sports and catering to the customer's different needs, I'm coming back to why I believe in the brand. I believe that we should give our customer access to a life and style better than anyone else. And that means mirroring what their need is and how they build up their wardrobe. We can do that more authentic, with higher quality and with more specialness than anybody else. And we can also ---+ we should think in new ways and innovative ways of how we can utilize the disruptive world we are in to actually deliver that specialness to the customer in a way that excites and delights them, but also that makes it convenient for them. And I will come back in late spring with more details. Let me start with Europe and then I will turn to <UNK> for Polo. In Europe, we delivered constant currency growth in the third quarter of 8%, so it was a pretty strong performance from a revenue standpoint. We were disrupted from the terrorist attack in Paris. We actually had a number of our stores shut down both in France and the UK for a few days and we saw the shopping pullback. But, it returned relatively quickly after that and so, that's how we were able to deliver a relatively strong result of the 8% constant currency top line growth despite that short-term disruption. Yes, and when it comes to the Polo Sport question, I tie it to getting closer to our customers. Given that we are about style and we are going to be the customer's preferred supplier for aspirational style to their wardrobe, it's about getting as close as we can to them. That's why as one of the underlying business engine that we are going to develop is a consumer insights capability that gives us the possibility to reflect. If the customer builds their wardrobe on more of an at leisure and sport component, our offering should reflect that. And it also makes me think about how Ralph has been 10 or 15 years ahead of many macro trends because we were one of the first in the industry several years back, in thinking about sports. And what we had come to do now is we have to get close to the customer, we have to evolve our offering so we reflect how they want to build their wardrobe. Yes, let me address those. The gross margin performance in the third quarter was impacted largely by the US market versus the second quarter, because in the US market, we saw a difficult, as we mentioned in our prepared remarks, fall holiday selling period. In our fourth quarter guidance, is reflected on the gross margin rate, a plan to increase markdown monies and allowances to clear excess fall and holiday inventory so that we start the spring selling season strong. I would say, that's really the driver in the gross margin trend in Q3 and Q4. With regard to FX and hedging, our hedging policy has not changed. It is consistent and so, we expect at current exchange rates to have a very small to nominal impact on translation next year in FY17, but we will have a transactional impact as we mentioned in the prepared remarks. The combination of those two, we expect to impact the results by about $90 million negatively as the favorable hedges ---+ we lap the favorable hedge benefit this year going into next year. Okay, good morning, <UNK>. Yes. When it comes to the disruption, I'm a firm believer that we're just seeing the beginning. I believe that the biggest disruption is that the customer is now in charge. The customer has better visibility and better choices than ever before. So, any company that's in the business of providing generic products or don't have any real value add beyond the lower and lower price or who, more importantly, is not close enough to the customer, will be in trouble. So that's why we are building on the strength that's made us great and we are adding an even closer focus to what's going on in the market and what's going on with the customer. Yes, thank you, <UNK>. So when it comes to department stores, they have been very important, you're right, to what has made us great from a business performance historically, and they will continue to be important to us. And yes, we are focusing in the plan we are building and coming back with the details in late spring, we are focusing on some of the underlying business engines, the [licensee]. Yes, it's early days, but I already see based on my experience that we have a lot of value unlock to do. So one is how we systematically and repeatable build ---+ how we in a systematic and repeatable way build assortment stronger and stronger. The results of our supply chain and inventory management component which is, to become much better at balancing supply and demand. And the results from an expansion strategy, which is to say, how do we grow with quality in all the different channels we have because I believe in that department stores, direct to consumer, are going to play together. And offline and online are going to play together. And again, coming back to my own experience, what I have experienced of this to drive a highly profitable global growth strategy. And, I believe we have opportunities in taking of holistic expansion approach to our brand and our business. And by doing that, unlock even more brand strength and unlock even more value in terms of driving profitable sales growth. Okay, thank you all for joining us this morning, and as always, we will be available for follow-up questions after the call. Thank you.

2016_RL

2017

EZPW

EZPW #Well, the point-of-sales system should be fully rolled out by August, September. Like any roll out, you've go to be very careful that we don't go too far to forget the training that's required, so a risk mitigant we have is we're going to parallel park both point-of-sale systems so that we don't put risk into the business. So on the point of sale, it will probably be ---+ start emerging towards the next financial year onwards. All the improvements that we are looking for, <UNK>, are actually around productivity. Can we actually get better at serving our customers more quickly and understand them better. Which should mean that we should have a much more efficient system, so it is more an operating leverage-type outcome. If we can reduce cost and increase the top line, that's the ultimate goal from any technology solution that would come through and that's what we'd be aiming for. We know that, for instance, the point-of-sale system, we have not really changed our point-of-sale system for 15 years so we know that it is a non-current type system, which is potentially holding us back with too many clicks to get through to the end of the transaction. So a lot of it is about efficiency and productivity. You will see those appear both through the cost line as well as through the revenue line. There's a lot of uncertainty down in Mexico, and it was in the run-up to the elections as well with some of the rhetoric that was going on. As I mentioned previously with the rhetoric cause ---+ it's the valuation of the peso and that increased the repatriations into Mexico. So we saw a number of our consumers have more cash in their hand than we have seen for a while so the sales were relatively strong. We think the increase in the gasoline prices will probably take some of the cash out of the hand of the consumer and provide opportunities for us to link to the consumer. It is it still a bit early to see. There's another hike that's just come through. So we will probably know more in the next 30 or 60 days as our customers typically take that period of time to adjust to such pricing changes that affect their wallet. So we think there's some mildly positive attributes to what is happening, but it's a fairly uncertain market down there at the moment. We will just have to play a wait and see game, but we think there might be some positives out of it. Hi, <UNK>, it is <UNK> here. We are expecting through the 2017 year, expecting about $42.5 million in principal payments to come in and $3.2 million in interest payments over the next 12 months. In the last quarter. Yes. Yes, that's correct, <UNK>. We've got a 32% equity hold in Cash Converters International in Australia, and we equity account their profit. And the equity account of profit this year was down on last year for the first quarter. So that's what flows through in that line. That's the bulk of it. It depends on their results, <UNK>. We are more a recipient of that outcome. No, because you have currency impact in there as well. So it's not only the business but the currency impact. So for this year, it will be probably more towards ---+ the first half will probably have a higher run rate than the second half. So you will see a gradual slide. And some of the regulatory impacts that have occurred in Australia will actually slow the earnings stream more towards the second half of the year. Are you talking about cash converters are you talking about ---+ . Typically, the first half of the year is sales season and the second half is the loan. We pick up on the loan, so you will have a bit more of a skew towards the first half with a bit more of a slowing in the second half. <UNK>, all we can do is point you to consensus, we don't give guidance in these ---+ you can pick up the analyst results and you can average that out. And that's the consensus and we don't comment any further than that. <UNK>, thanks for reinforcing that with me, but yes, I am the Chairman of that. It is ---+ what's happening in Australia with ---+ like the payday lendings not too similar to what's happening in all developed countries. They are they putting some constraints on that which we will see a slowing in the income as they move away from the short-term lending more into the medium-term lending. So, I think over the period of time it should improve, but in the short term they will have a slowdown while they transition their book. Thanks, operator. I would like to thank everyone who dialed in or logged into the webcast for their participation today. <UNK> and <UNK> are around for questions later on, so this concludes our call. Thanks for dialing in for the interest in the Company and have a great day.

2017_EZPW

2016

SABR

SABR #Thanks, <UNK>. Yes, <UNK>, it's <UNK>, thanks. You've got it right, we will have a stronger growth there. And as I mentioned, more so even in Q4 than Q3 just on quarterly seasonality. And we still expect the 17% growth for the year, so all the numbers are intact. Again, it's really just a good visibility on what we have, particularly in hospitality as that becomes a bigger portion of our business. And in airline, of course, we have across really three suites of product, our SabreSonic reservations suite, our RF Centre and AirVision. So it's really a combination of those, if you look at those three. And then in hospitality, it's really much more balanced across those than, say, two years ago where we were a little bit more reliant on airline reservations, the SabreSonic suite. So given that, all of those have attributes of where we have strong predictable sales pipeline, implementation pipeline, that we had a history with, reliable. Airlines have some adjustments to that, we move somebody up, we move somebody back. So we feel pretty good about it. No different now than what we felt in terms of the visibility, predictability that's since we came public, other than we're a little bit more balanced in those four suite of products. The three across airlines and then the hospitality in totality. (multiple speakers) <UNK> and I both liked your question. (laughter) <UNK>, take it away. I'll take a stab at it. There's always a little bit of ---+ when we see that kind of gain, a 4% gain, there's definitely some mix shift in there. As we said, we had a strong Asia-Pac growth quarter versus rest of world. We saw a return of growth to Latin America. We saw a little bit of growth in Latin America where booking fees are a little higher than North America. And as we said all along, we expect as we renew contracts with our supplier base, that we should see moderate price increases. We've talked about it at about the rate of inflation. And that's what we're seeing. So the combination mix and a little bit of renewal uplift is what's driving that. We haven't kicked that forward too far, <UNK>, but we did see a good quarter from an average price perspective. Hi, <UNK>, this is <UNK>. Just a reminder, in travel network we said for our medium-term guidance that it's around 40%, not 42%. We moved the 42% down to 40% with the full integration and acquisition of Abacus was the primary driver for that. What I pointed out in Q2 and for the rest of the year is we are actually doing a little bit better this year than what we expected, so we are in between that 40% and 42%. But again, we expect it to be closer in the medium term to 40% than 42%. That allows us to have the right kind of [flexibility] to invest for total revenue growth, total margin growth and total free cash flow that maximizes the business. I think we're demonstrating we're playing that well. We'll be in between those ranges a little bit here this year and next, but that's just a reiteration of what we look a little bit further out. Real happy with the performance of travel network in the first and second quarter to date. On the solutions side, again, as we've talked about this year, in the high 30%s. We are tracking to that quarterly. You have some variation here as we've seen in Q1 and Q2, then we pick up a bit. And then moving forward, we had said previously that 2017 would be at the very high end of the 30%s. That wasn't a limit. We talked at our Investor Day where we updated our medium-term outlook and expectations. And say we have visibility from there into the low 40%s margin on the solution business. And again, I believe we remain intact for meeting those expectations. We said that we can consistently grow share. We haven't forecasted out where share will land but we've said we'll be a consistent grower and we still believe that. So we'll stand with that we think we can take share everywhere in the world. Yes, there are some quarterly ups and downs, but we expect overall that our trend line will go up. <UNK>, the new wins will lag a bit so it doesn't have a big impact on our expectations this year. This year remains intact with or without those, and then just another thing, as I say, cements the foundation going forward, as I mentioned in terms of our proof points around the sustainability of incremental, sustainable, profitable market share growth. I think we've commented as much as we ought to. We said we had a window here that we feel comfortable with and we're working through that process. We've broken out those in our K and you can see those and do the ---+ we have got the math of what last year was. Again, as we said, in overall solutions growth, we expect hospitality to be growing faster than the average of those two and that's the case. So everything intact on there, nothing to add from what we talked about before, <UNK>. Appreciate it The answer is yes, we see more of a softness on the business travel side. And I think it's been there's been softness in segment-specific areas. You certainly have seen now a multi-year softness in the energy sector where I would say trips went away, not looking for cheaper fares. Companies always look for the best available fares on the trip that's needed. And in our world, it doesn't matter whether they ---+ in fact, we want to help them find the best available fare for the trip. So we're not sensitive to those price fluctuations on the airline side, we get paid on a per-booking basis. But energy sector trips went away. In the financial sector, trips have also gone away. So in the year there's been a lot of cost cutting as banks, and banks in particular, have had earnings shortfalls and they've cut costs. And travel is one of those expenses that is early in the queue when broad cost-cutting is going on. That's primarily the big sectors that we've seen. But in the US it's been soft now for quite a while on the business travel side. I think that flows into the big corporate markets around the world, as well. Not anything new there. I think the new thing around the macro is, as <UNK> mentioned, a pullback in capacity. capacity will still grow but we see airlines pulling back some of that capacity growth that they forecasted coming into the year. <UNK>, this is <UNK>. On the leisure side, yes, there is good growth. In particularly the North American market we've seen the dynamic that we talk about in the businesses. Airlines are using price selectively on markets to keep their planes very full. So you see the load factors continue to be very high. They use the price, particularly primarily on the leisure to stimulate that demand. Again, that doesn't flow through to us because we get paid on a per-booking fee and that's the beauty of this model. We're seeing that work and we pick that up through our great position, for instance, like Expedia, the biggest air travel booker in North America. They pick up leisure and they also have a business side in Egencia, so we see it both ways there. Thanks, <UNK>, this is <UNK>. The operational integration is largely complete. We have some continued things that we have to do, but for the most part I think the big chunks are complete. We've been extremely pleased with the go-to-market side and our ability to manage customers and sell in the market. We saw share gains in the first quarter. We've held steady here and we believe that we will see future share gains there. I'd like to have the same steady growth in market share in Asia-Pac as we have had in EMEA. That should be our expectation over time. And I think we have ---+ our view has been that we have even more opportunity there because we knew that the joint venture had some weaknesses in how it went to market and the consistency of how they went to market across the geography. We feel very, very good about our position there. I mentioned these five customers I mentioned are global customers and we expect in some cases to have the growth be in that Asia-Pac region. We have a little bit of work to do to get it done but we expect to see the growth there. Thanks, <UNK>. Yes, we are already the leader in the space. I mentioned it's about a $250 million TAM in the crew area. We've had very good traction. We have talked before that Singapore Airlines is our launch customer in Asia-Pacific region. We've had a number of Asia-Pacific deals come in behind that, including Garuda in Indonesia and Lion Air in Indonesia. We have some other business we will talk about as we get further into this quarter that will close in the Asia-Pac region. We've had North American business close recently. From a competitive landscape perspective, there is a lot of legacy crew systems out there. This is still a solution that in many cases that the biggest airlines in the world is sitting in a very legacy environment. Airlines don't like to touch the crew system necessarily because there's this issue, as I mentioned, very complex. It's driven by a variety of work rules that come from governments, global regulators, as well as work rules driven by contracts. So it's a complicated area and it impacts a big part of your cost base and a big part of your employee base. So changing it is not simple but, as I said, we're benchmarking in some cases two and three times better than some of the legacy benchmarks out there. We expect to get big traction here in market. Competitively we have the best solution in the market, we've validated it over and over again in the sales process. I'm just very bullish as to why we need it this morning. As an example, when you're benchmarking two and three times faster than competitors and can save an airline days at an operational recovery, the dollars in that cost justify the purchase of the solution and the cost of the change pretty easily if we do our job in teeing it up with the airlines. Very bullish on it. We'll see revenue growth there this year and certainly into next as we announce bigger ---+ not just diversity and regional deals, but I think bigger and bigger carrier deals. Hey, <UNK>, this is <UNK>. The answer is yes and yes. All good. This is <UNK>. I mentioned that as we renew these deals we look for opportunities from our customers for growth. Sometimes that's how we can serve them better or new functionality. Sometimes it's what we need to do to take them into a new market. This is a little bit of both of those. There's some deals where we have very big upsides to move business our way based on some requirements that our customers have talked to us about. In some cases it's acceleration of road map. So it's not necessarily new things but things that we're pulling in quicker. Again, I think (inaudible). This is <UNK>, Partha. It will enhance our overall offering, it's not just specific to this new customer win that is driving the acceleration. It benefits the whole Sabre Red Workspace platform. I think the industry has a long-term capability to figure out how to fill seats with low prices. I think in some markets the ebbs and flows of that vary by market. In some markets airlines have held down the price a little longer than we expected them to. I thought that was true coming in to the summer. But we are seeing price stimulate demand in other markets. Overall, we've talked about a relatively low growth macro and that's what we're seeing. But I do think as airlines continue to add capacity, which, again, they are doing, just at a slower rate than we expected, they will use price to fill up those seats. <UNK>, this is <UNK>. It's working as it should. They have got the financial strength and flexibility to do it and it's keeping their load factors up. Yes, it hits the PRASM a little bit, but all good and for our business it's working the way it should and the way we like it and gives us that both growth and stability. As I said earlier, our share year to date is up almost a full point. We expect that in the year to grow. Again, I feel like we can take share globally. We showed that in the first quarter where we had growth in all four regions of the world. That's our expectation, is that we're going to have an upward share trend over a long period of time. There's not really anything new going on there. We said that we felt like the direct and indirect moderated. And as I mentioned in my remarks, this notion around where ancillary revenue is coming from, $60 billion of revenue last year, the large majority, and when we say large majority, I mean up in the high 80s, low 90s percentile of revenues on the ancillary side are coming through the direct channel. Now some of that is sold at the airport and will continue to be sold at the airport. So things like baggage fees primarily are going to be an airport purchase. But as the airlines look at what they've done with ancillaries on their direct sites and what they can do next, next it isn't necessarily more products on their direct site. Next is driving those products through travel agencies, incenting travel agencies to sell them and pushing them through indirect channels. The technology is there to do that. There has to be some changes around how the airline airlines think about pushing those ancillaries through. Because much of the indirect channel business has many of ancillaries bundled in. You have people buying higher fare classes that already have many of the ancillaries bundled in. So they have to be more savvy about how they push those offers out. But we built out that technology to let them do that. And if they look at where the next chunk of ancillary revenue comes from, in our conversations with them, they believe it's going to be in the indirect channel. Thank you I just want to thank everybody again for joining us and wish everybody a good remainder of what's left of the summer. We appreciate your interest in Sabre and we look forward to seeing you face-to-face or talking to you soon. Thanks so much. Have a good afternoon.

2016_SABR

2016

SLB

SLB #Sorry, I couldn't hear you. What was going to be up. I think it's too early to say. I would say, as a starting point, I would say probably not, maybe somewhat in line. But I think it's going to depend on the opportunities that we have in front of us. Obviously, there is a broad range of discussions. I think for the right opportunities, I am prepared to invest more into it, but I think we will have to do that on a case-by-case basis. Well, it's a bit early to say. We are still in Q3. The absolute E&P investment numbers for next year, I think it's still early to comment on absolute numbers. I can give you some direction I think in terms of where we see the trends going and what the absolute number is going to be is going to be more a function of how the numerics of these trends play out. But we do expect, on a full-year basis, solid year-over-year growth in North America land, Russia and the Middle East. These are fairly predictable plans that we have in place. We also expect to see modest growth from the current levels, not necessarily on the full-year basis, but from current levels in Europe/Africa and Latin America and the reason for this is that there are many significant oil-producing countries in these two regions, which have record low investment levels at this stage. And we see signs that at least we are going to come off the bottom here. Whether that is going to translate into year-over-year growth is too early to say, but at least an increase from where we are today. And really the only place where we don't see any of these recovery signs as of yet is in Asia. So all depending on what the various numbers are on the three main trends pan out to be, there's a chance that revenue could be up. Obviously that's what we are hoping for and that's what we are going to work towards. And obviously market share and some of the other things that we are working on specifically around the land rig introduction, around SPM and some of the early production facility work that we do, we have opportunities I would say to come in with higher revenue in 2017, but I'm not going to commit to this as of yet. I think we need to work out the details of the plans over the coming two, three months and we can give you a further update in January. Well, so I would say that generally we are on track with both the engineering and the manufacturing of the Rig of the Future. So these two rigs are, I would call them pilots, pilot versions. They don't have all the features of the Rig of the Future, but they have a significant part of it. And we are also going to be operating them around the overall software platform of how we want to do Rig of the Future going forward. So they are manufactured in the US and that's why we would like to basically put them out in operation close to home at this stage to make sure that we can get all the support and all the feedback from their operational performance and feed that into both the engineering and manufacturing work that is going on for, I would say, the complete version of the rig, which is going to be rolled out, a number of them, in 2017. That's already in the plans for both the CapEx and the manufacturing for next year. <UNK>, do you want to comment. Okay. I'm going to take this question. As we always said that the utilization of cash, the priority will be for the growth of the business. As you know, we ended the quarter with about $11 billion of cash on the balance sheet and today, we are weighing our growth opportunities compared to return of capital to shareholders through buybacks. Our investments, the three elements of the CapEx, which remain to be very well tightly controlled, we are investing today almost 50% what we used to be at the height of the business and SPM and multi-client. So there is no other opportunities other than our inorganic growth if it proves to be a viable proposition economically and the future of the business. But, right now, our priority is the growth of the business and other than that, we will return it to shareholders. No, I don't think there is yet a big turnaround, I would say, in the exploration market, or in the seismic market, but I think we have positioned ourselves very well in both of those markets. Whatever work there is I think we are able to generally pick up on the exploration side. And I think on seismic, as I again said in July, the performance of <UNK>ernGeco in a very, very tough market is quite commendable. We do quite well on both marine and land and we have been quite opportunistic on the multi-client side to make a significant investment in several basins around the world, in particular Mexico, but also Gulf of Mexico, the US part, as well as overseas. And obviously, at this stage, we are able to generate revenue and profits from these investments, which you see very clearly in our results. So there's no, I would say, significant market turnaround, but I think it's a strong performance from the exploration-related businesses that we have, including seismic, and also within the testing services product line, which sits in Reservoir Characterization, we have won a series of early production facility projects where we have combined the capabilities that we had within the testing services prior with the processing capabilities that Cameron had. And this is again really strengthening the offering we have in this market and we see that also as a significant growth opportunity within Characterization. Yes. I would say, in the international market, we have, I would say, actively pursued market share for the past, I would say, 12 to 18 months I think with reasonable success. I think if you look at Characterization, Drilling and Production combined, take away Cameron, we have pretty solid revenue evolution in all three international operating areas in the third quarter and I'm quite pleased to see the progress we have made there. Whenever you start aiming to increase your tender win rate, which we now have been focusing on for a good 18 months or so, it takes a bit of time before that translates into actual revenue, but you are starting to see some impact of that. So there's really no main shift internationally. The main thing I was pointing out for North America is that, on the drilling side, we now have a clear path in US land towards profitability based on the technology uptake we are seeing linked to these super laterals and as soon as we can turn a profit, we are very keen to grow market share and we have basically shifted the playbook from holding the fort to going for market share in drilling in US land, but we have not yet done that for fracking because, at this stage, it is highly dilutive to our earnings and at this stage also, we are not seeing a clear path toward profitability. Yes, I think I share your view of the potential of the market and I also think we are pretty much close to the bottom of it. We have seen a significant reduction in Pemex activity over the past couple of years and while this whole industry reform has been taking place, that reduction has not been, I would say, compensated by additional investments from the emerging international players. But as these bid grounds for acreage now has progressed and with the deepwater round coming up, the first deepwater round coming up now in December, we see drilling activity picking up in 2017. Again, it might not be a dramatic comeback and we won't be back to, I would say, 2013 levels or 2014 levels anytime soon, but I think there is a momentum shift coming in Mexico. It's partly linked to the seismic work that we are doing and the related exploration activity with that, but I think also activity linked to the previous rounds that we've seen both in shallow water and on land, as well as the basic Pemex activity should pick up in 2017. Yes. So, first of all, when you are in a cyclical business, you will have to be pragmatic when you are near or at bottom of the cycle, which we are and we are basically maintaining our presence pretty much everywhere in the world at this stage, even at bottom and even though we have a number of contracts, which, at this stage, does not meet our medium to long-term return criteria. But what we are saying though is that, as we now are starting to come off bottom as oil prices are starting to move upwards, then we will need to have these discussions with the customers where we have these type of contracts and try to find a way where we can get pricing and terms and conditions and a work scope that will enable us to meet those financial return criteria at the same time as our customers can also meet theirs. So I think these are the discussions that now are taking place. This won't be resolved overnight, but we are very clear on the fact that if we are to deploy capacity investments and expertise, there has to be a return in it. And at the bottom, we are willing to compromise, but as we come off bottom, we need to basically restore the return expectations that we have as a Company and as our shareholders have in order to drive the business forward. Yes. Let me ---+ it's a good question and it's a market that's in a state of change right now, but let me just talk about deepwater in general. It's continued to be challenged and in this quarter, we saw five additional rigs get stacked during Q3 and deepwater rig utilization dropped to 55% in the month of September. So expect 2016 deepwater drilling activity as a whole to be down 33%. And when we think about that for OneSubsea and projects as we go forward, we think this year tree awards is significantly under 100 and when we look at our project list, we are tracking anywhere between five and eight awards that could happen in 2017 and those would be the larger style awards that we've seen traditionally. But our focus really now has shifted to the tieback market and we do see a lot of opportunities on that. I mentioned our eight paid FEED studies with Subsea 7 where we are doing a lot of work on the tieback side. And what we think there is that with a standardized Subsea tree, which is at a significantly reduced cost, a single-well boosting system, which we are the only ones right now that have that single-well boosting system, and then combine that with our unified control system and the installation from Subsea 7, we think we've got a very economical package to tie back one and two wells in the existing host facility. So we are in a lot of discussions around that and really it's almost creating a market right now and so we hope that we can get some more excitement and more awards around that as we transition into 2017. And then as these big projects progress and move forward, we are offsetting that with this expanded tieback market. Yes. So I think based on what we are focusing on, from a transformation standpoint, we still have a long runway to go in terms of driving asset utilization for the existing asset base. And also what we have going in our engineering programs as well to also engineer and manufacture less expensive assets is also a key part of it. So both utilization and the cost per asset I think should lead to a lighter capital intensity of our business going forward. I think you've seen the signs of it in the past two, three years and we are going to continue to work very hard on further improving on that.

2016_SLB

2016

CVCO

CVCO #Thank you, Shannon, and welcome, everyone. We will start with <UNK> <UNK>, our Chief Financial Officer, reviewing the results of the quarter and we will be happy to answer any questions following that. <UNK>. Good day, everyone. Before we begin we respectfully remind you that certain statements made on this call, either in our remarks or in our responses to questions, may not be historical in nature and therefore are considered forward-looking. All statements and comments today are made within the context of Safe Harbor rules. All forward-looking statements are subject to risks and uncertainties many of which are beyond our control. Our actual results or performance may differ materially from anticipated results or performance. Cavco disclaims any obligation to update any forward-looking statements made on this call and investors should not place any reliance on them. More complete information on this subject is included as part of our earnings release filed yesterday and is available on our website and from other sources. Net revenue for the first fiscal quarter was $185.1 million, up 14.5% compared to $161.7 million during the first quarter of fiscal year 2016. The increase was from achieving 3,395 home sales this quarter, a 17% increase from 2,902 homes during the comparable period last year. The current quarter contained one additional month of Fairmont Homes operations as Fairmont was purchased by the Company last year on May 1, 2015. Consolidated gross profit in the first fiscal quarter as a percentage of net revenue was 17.9%, down from 19.7% in the same period last year. The decline was primarily from higher insurance claim activity at our Financial Services group. As reported by numerous insurance industry participants, the 2016 spring storm season in Texas was unusually severe and included significant damage from the associated hail and wind. One of the April hailstorms was the costliest for insurance providers in the state's history with hail as large as 4.5 inches in diameter. 2016 hail damage in Texas has already met the nine year average for the entire country. The storms resulted in the Texas governor declaring a state of disaster in 31 counties. The insurance losses for the first fiscal quarter were partially offset by amounts recoverable from our reinsurance contracts. Selling, general and administrative expenses in the fiscal 2016 first quarter as a percentage of net revenue was 13.3% compared to 14.0% during the same quarter last year. The Company realized improved SG&A utilization from higher sales volumes overall. Income before income taxes of $8.4 million this quarter was slightly lower than $8.6 million during the same quarter last year. The results of each of our business segments were diverse this quarter. The factory built housing segment realized 34.2% pretax earnings growth, although this increase was offset by financial services pretax losses from high insurance claims as previously discussed. Net income for the first fiscal quarter of 2016 was $5.4 million, consistent with net income reported in the same quarter of the prior year. Net income per diluted share for Q1 2017 was $0.60, also consistent with last year's quarter. Comparing the July 2, 2016 balance sheet to April 2, 2016, cash was approximately $102 million compared to approximately $98 million three months earlier. The increase was primarily from net income and cash provided by operating activities. For other items on the balance sheet, commercial loans receivable was higher from additional floor plan lending activities during the period. Other asset and liability accounts remained relatively consistent. Stockholders' equity grew to approximately $359 million as of July 2, 2016, up $5 million from the April 2, 2016 balance. <UNK>, that completes the financial report. Thank you, <UNK>. We were certainly pleased with the results of our housing group, which performed very well for the quarter. Obviously the insurance business was a major drag on our performance. And as <UNK> pointed out, very unusual claims experience even for the industry as a whole this past year and particularly in the first six months of calendar 2016. So one might ask why be in the insurance business. And the answer is that it has been a good performing business for us since acquisition in 2011. Notwithstanding this tough last six months we have had the business has generated returns on investment in the mid teens. So, we can't do much, obviously, about the unusual hailstorm activity. We do would think that those were very unusual, some labeled as 1 in 150 year events. And so, we certainly expect better performance from our insurance business going forward as we have experienced with the past. Again housing is doing well; we are still very optimistic about the longer-term for our business. Everything one reads from analysts and in the general press certainly support the fact that entry level housing is in short supply, that conventional builders do not really see an opportunity to build entry level housing and make money doing so and so are focused higher price point product generally speaking. I think the need for affordable housing will be there and we think, again, we are very well positioned to take advantage of that over the longer-term. Certainly short-term issues, including a typical slowdown we have seen historically in this industry during a major election cycle, the presidential election cycle, we will see if that holds true again this year. But we've typically seem a drop off in traffic during that time period. However, our traffic figures recently have been encouraging and, again, we are very optimistic about the outlook for the balance of the fiscal year for our housing business. With that, Shannon, we will be happy to take any questions. Well, I think it's a combination. Certainly there is ---+ we believe that pent up demand is there. Again, people have ---+ are looking for entry level affordable housing. So we think that's certainly a major part of the case. Financing is generally available for people with a respectable credit history. Still not as robust as we would like it to be as an industry. But there are products available, FHA products for land and home, traditional mortgages on manufactured housing. For the personal property lending or chattel lending there are a couple sources available. We would like to see more activity in that spectrum of the industry. And the challenge there is that there really has not been a secondary market for lenders to sell channel loans to. So, as a result there are very few chattel lenders in the marketplace. And chattel lending, for those of you not familiar with it, is where the home is the only security for the loan. The home might be placed on private land that the owner does not want to place a lien on. Or they might be placed in manufactured housing communities of various sorts throughout the country. And in those cases the land obviously can't be secured; the home owner is leasing the land and buying the home. So they do a chattel loan or personal property loan on the home. Again, that part of the lending industry, <UNK>, could certainly be stronger than it is. And we are ---+ as an industry we are working on trying to develop a secondary market for those loans. Say that again. Well, we had a 17% increase in the number of homes sold, as we indicated. And we also mentioned that there is one month of Fairmont that is not comparable. So, while we didn't break out the specific differences there, it is only one month's worth of activity specific to the Fairmont operations. And because we don't break out factory specific operating results, we haven't added that data. But our quarterly comparison going forward will be fully comparable for you. We had, as we obviously have talked about at some length here the volume, we certainly haven't broken out the exact amount. But you can see that it's by comparison pretty significant. So no, we don't have it broken out specifically as far as the claims in any given quarter because the claims are obviously offset by various items in any given quarter including this one, it's just that the claims were excessive here. So we don't have that broken out separately, but this is the first time we have had a loss in the financial services segment and that has been driven by the claims that we talked about. We do carry reinsurance for catastrophic events. But obviously we have an initial portion of that in claims that we cover and then reinsurance covers in certain catastrophic events. So fortunately that reinsurance has proved helpful and we have received ---+ been receiving on a timely basis all our reimbursements from our reinsurance programs. But it is just the fact that the severity was so great. In Texas alone in April the multiple hailstorms that occurred were the costliest in Texas history amounting to almost $2 billion of insured losses for the history. And then there was another catastrophic event during the latter part of April which resulted in significant windstorm damages in Texas and neighboring states like Oklahoma. So, then there was a third catastrophic event in late May which included both windstorm and some flood damage in Southeast Texas. So, all these were a very unusual combination of events. But as <UNK> said, we don't necessarily report our losses incurred in that business in any given quarter. And I would also mention, <UNK>, that we got the reinsurance amounts that <UNK> referred to included in these numbers in the quarter. There is no drag or carry over from these events into the following quarter starting in July. And then on the upside we certainly have ---+ we expect to be able to raise premiums and rates going forward and that would kick in in ensuing months. Thank you very much, Shannon. Well, we will be available as usual to answer questions via phone or email. And we appreciate you being on the call and look forward to talking to you soon. Thank you.

2016_CVCO

2018

LNTH

LNTH #Thank you, <UNK>, and welcome to everyone joining us today on our conference call. I'm pleased to be with you here today to discuss our continued strong performance in 2017 and to outline for you the key pillars of our corporate growth strategy for 2018 and beyond. 2017 was another successful year for the company. We exited 2017 having exceeded the high end of our guidance for both revenue and adjusted EBITDA, further lowered our debt, the cost of that debt and the leverage ratio and finally, built a strong available cash position of approximately $76 million. These were the important corporate goals for 2017, and we are pleased to have delivered on all of them. And importantly, our strong performance in balance sheet have positioned us to invest in and execute on our plan to deliver sustainable growth and success for our company. The key pillars of our corporate growth strategy are as follows: one, enhance the growth trajectory and profitability of our core microbubble franchise; two, augment and invest in our pipeline with focus on emerging technologies; and three, pursue external opportunities that fit our objective to deliver sustainable growth and profitability. Let me start with programs already underway addressing our microbubble franchise. On a global basis, DEFINITY remains the leading echo contrast agent. We have been actively strengthening and expanding DEFINITY's IP protection, and we have also been developing an alternative formulation. Today, I am pleased to announce we are pursuing an ejection fraction, or EF, indication for DEFINITY and plan to initiate 2 new Phase III clinical trials in the second half of 2018. EF is an important measurement of heart function and critical for patient management decisions as it measures the percentage of blood leaving the left ventricle with each contraction. Currently, in echocardiography studies conducted without contrast, EF measurement is highly variable. Our clinical trials are designed to demonstrate superior accuracy and improved reproducibility in measuring left ventricular EF with DEFINITY enhanced echocardiography as compared to unenhanced echocardiography. We believe the approval of an EF indication for DEFINITY would approximately double the addressable echo patient population in which contrast could be used. In addition to our continuing IP work, the new EF indication would provide DEFINITY with 3 years of regulatory exclusivity for this indication. Also addressing microbubble franchise, I am pleased to report that we are adding specialized manufacturing capabilities at our North Billerica, Massachusetts headquarters. The decision to add this capacity serves our larger corporate growth strategy in creating a competitive advantage in specialized manufacturing. This program not only delivers cost savings and supply chain redundancy for our current portfolio but also affords us increased flexibility as we consider external opportunities. Transitioning now to our second pillar of pipeline investment. I'm pleased to announce the advancement of an internal program focused on a key emerging technology in nuclear medicine. This program targets LMI 1195, an internally discovered small molecule that, we believe, may be a first-in-class Fluorine-18-based PET radiopharmaceutical imaging agent designed to assess cardiac sympathetic nerve function. We believe LMI 1195 could become a useful tool in the diagnostic assessment of ischemic heart failure patients at risk of sudden cardiac death. Collaborations with academic centers in the U.S., Canada and Europe yielded clinical data deemed adequate by the FDA to support advancing to a single Phase III clinical trial to support our NDA submission. We anticipate initiating that trial in 2018. This trial will target patients with ischemic heart failure who are scheduled to undergo ICD implantation because of their risk of sudden cardiac death. Our trial is designed to demonstrate LMI 1195 improves the risk stratification of these patients. If this trial is successful, we anticipate filing an NDA for this agent by 2021. Heart failure affects approximately 6.5 million patients in the U.S. today, and approximately 2 million patients may be eligible for evaluation of ICD implantation. As such, we're excited about the opportunity LMI 1195 represents in the emerging modality of PET for improved patient management as well as the growth opportunity this agent represents for Lantheus. Now turning to the third pillar of our growth strategy. We are committed to pursuing thoughtful external business development opportunities that complement our current portfolio and capabilities. Following on and facilitated by our success in delivering reliable revenue growth, improved operational efficiency and cash flow generation, we are now ready and excited about pursuing opportunities that will drive our sustainable growth agenda and enhance value for our shareholders. We are actively evaluating such opportunities and have recently created an additional Board Committee to aid in that effort. Rest assured, we will be disciplined in our approach and only pursue deals that represent a strong strategic fit; are priced appropriately; create value for our investors; and ensure the long-term success of our company. Finally, I am also pleased to announce that effective tomorrow, we have added 3 new Directors to our board. We believe the skills they bring positively complement our current board. I'll now turn the call over to Jack for his financial review of 2017 and our guidance for 2018 before returning for closing comments. Jack. Thanks, <UNK> <UNK>, and good afternoon, everyone. As a reminder, the tables included in today's press release include a reconciliation of our GAAP results to the as-adjusted non-GAAP performance I'll be covering with you today. I'll begin my comments by focusing first on our fourth quarter results as compared to the fourth quarter of 2016, followed by our full year results. And finally, I will provide 2018 financial guidance. In the fourth quarter, we delivered $81.2 million in worldwide revenue, an increase of 9.3% as compared to the fourth quarter of 2016. We continued our strong DEFINITY performance with worldwide revenues totaling $41.7 million for the quarter, an increase of 22.2% over last year. TechneLite revenue in the fourth quarter was $24.7 million, an increase of approximately 1% over the prior year, while Xenon revenue for the fourth quarter was $7.7 million, an improvement of 2.7%. Finally, revenue from our other product category was $7.1 million in the fourth quarter, down from $8.2 million 1 year ago. Approximately a third of that difference was a result of the impact of Hurricane Maria on our Puerto Rico business. Moving below the revenue line, our fourth quarter 2017 adjusted gross profit margin, excluding technology transfer activities, which we refer to in our reconciliations as new manufacturing costs, totaled approximately 49%, an increase of 160 basis points over the prior year. This improvement was once again attributable to the increased contribution of our higher-margin products as well as the impact of Xenon cost savings, generated by the assumption of processing and finishing capabilities at our Billerica facility late last year. Adjusted operating expenses were $25.2 million in the fourth quarter of 2017, an increase of $4.1 million from last year. This is largely attributable to higher employee-related expenses as well as increased sales and marketing expenses in key areas. Adjusted operating income for the fourth quarter of 2017 was $13.9 million compared to $13.6 million 1 year ago. Moving below operating income, fourth quarter interest expense totaled $4.3 million, a 26.7% improvement over the same period a year ago, reflecting the lower interest rate of our debt, following our refinancing activities completed throughout 2017. During the fourth quarter of 2017, we determined, based on our in-depth GAAP analysis, that there was sufficient positive evidence that our federal and state deferred tax assets are more likely than not realizable as of December 31, 2017. Accordingly, we released the valuation allowance that we had previously recorded over the past several years, resulting in an income tax benefit of $141.1 million. These assets consist primarily of net operating losses that we will utilize to reduce future income tax liabilities. Accordingly, we do not expect to be a cash taxpayer for the next 4 to 5 years. We will utilize this expected cash savings, together with the benefits of the federal corporate tax rate being reduced to 21%, to be a significant source of funding for investments in our corporate growth strategy described by <UNK> <UNK>. Net income for the fourth quarter of 2017 was $97.1 million or $2.47 per diluted share compared to $4.9 million or $0.13 per diluted share for the fourth quarter of 2016. Our net income for the fourth quarter of 2017 reflects the income tax benefit of $85.9 million, which was driven by the release of our $141 million valuation allowance against deferred tax assets, which was offset by a $45 million provision related to the impact of changes enacted under the Tax Act of 2017. Moving on to our quarter end balance sheet, cash flow and liquidity. As of December 31, 2017, we had cash and cash equivalents totaling $76.3 million. Borrowing capacity under our revolving credit facility was $75 million, making our total liquidity, including cash on hand, $151.3 million. This will not only support our day-to-day operational needs but, more importantly, will be a source of investment capital to support our corporate growth strategy. Fourth quarter 2017 operating cash flow totaled $13.1 million compared to $12.8 million last year. Capital expenditures during the fourth quarter were $6 million compared to $2.4 million in the fourth quarter of 2016. This increase was primarily a result of investing in the specialized manufacturing capabilities that <UNK> <UNK> described earlier. Turning now to our full year results, I would like to reiterate <UNK> <UNK>'s earlier comment regarding our success in that we exceeded both our revenue and adjusted EBITDA guidance for 2017. Worldwide revenues for 2017 totaled $331.4 million, representing a 10% increase over the prior year. Excluding the impact of the $5 million up-front payment received in the second quarter of 2017 from GE Healthcare under the Flurpiridaz F 18 collaboration and license agreement, full year 2017 revenue totaled $326.4 million, representing an 8% increase over prior year. On a GAAP basis, the company recorded income before taxes of $39.6 million in 2017, an increase of $11.3 million compared to the prior year amount of $28.3 million. This improvement is primarily attributable to increased DEFINITY revenues, operational improvements as well as decreased interest expense. Adjusted EBITDA was $94.1 million during the year as compared to $78.3 million in 2016. Excluding the impact of the $5 million up-front payment received in the second quarter of 2017 from GE Healthcare, full year adjusted EBITDA totaled $89.1 million or 27.3% of revenues. This exceeded our 2017 guidance of $86 million to $88 million. We also delivered operating cash flow of $54.8 million and free cash flow of $37.2 million, both indicative of the strong financial platform we've created as we launch into 2018. Turning to our financial guidance for 2018. As stated in today's press release, we anticipate total revenue for the full year of 2018 in the range of $337 million to $342 million. For the first quarter of 2018, we expect to see revenue in the range of $78 million to $83 million. The first quarter and full year 2018 revenue guidance reflects the impact of a temporary shutdown of NTP, one of our nuclear product suppliers, due to a process issue. Necsa, the parent company of NTP, has announced that this process issue has been resolved, and we are now again receiving product supply from NTP. Our 2018 adjusted EBITDA guidance incorporates our improving operating performance as well as our corporate growth strategy. For full year 2018, we anticipate adjusted EBITDA in the range of $85 million to $90 million, representing 24.9% to 26.7% of adjusted ---+ of anticipated revenue. For the first quarter of 2018, we expect to see adjusted EBITDA in the range of $18 million to $21 million. Overall, we are very pleased with both our Q4 and full year 2017 financial performance and remain focused on driving strong financial results in 2018. With that, I will now turn the call back over to <UNK> <UNK>. Thank you, Jack. As you can see, we delivered strong results in 2017 and are excited about the initiatives we now have in place to drive our corporate growth strategy. To reiterate, that strategy includes the following 3 key pillars: one, enhance the growth trajectory and profitability of our core or microbubble franchise; two, augment and invest in our pipeline with focus on emerging technologies; and three, pursue external opportunities that fit our objective to deliver sustainable growth and profitability. We're excited about our prospects and believe we are investing in the right strategic priorities today to ensure a strong and healthy growth profile that will maximize long-term success for our company and value for our shareholders. I would like to emphasize, we remain continually committed to operational excellence and the optimization of our current business. I look forward to updating you on our progress as we move throughout the year. With that, I'll conclude my comments and open the call for questions. Operator. This is <UNK> <UNK>. I'll speak first to the decisions for our ---+ kind of, putting our own capabilities here at play in our campus, and I'll let Jack speak to the gross margin implications. As you can imagine, it just makes good corporate sense to have redundancy of supply. And so over the past few years, we've worked hard at that, as you may remember, we had a program also at Pharmalucence as an alternative supplier, but that program we brought to close for several good reasons. We've also had an arrangement underway at SBL, where we've talked about, and that's for alternative formulation. As we looked at the expertise that we have, it seemed to make to sense to us that the next level of capabilities we added right here on our campus. We are expert in microbubbles and in all the facets of manufacturing that are very complex and very necessary to have reproducible blocks of that type material and so as we assess whether our next decision should be to go outside or bring it inside onto our campus, we came to the right decision, we believe and that is to add the capabilities right here on our campus. As I said, I'll let Jack speak to gross margin implications. Thanks, <UNK>. <UNK>, it's Jack. Yes, from a gross margin perspective, as we evaluated on the prospects of bringing this stuff in-house versus the external cost of working through CMOs, reducing cost benefit and an approved gross margin under our ---+ under this initiative. So again, <UNK>, I'll speak to you the strategic reason for undertaking the program, and Jack will speak to what it means to our balance sheet, but as we looked at DEFINITY and where we serve, it seemed natural to us, as we looked at expanding the applications of DEFINITY, to look, of course, where we were most successful, and that is with the cardiac community in echocardiography. We recognized that EF measurement which, again, is ejection fraction measurement, really is a critical measure used not only in assessing cardiac patients with cardiac disease but, more importantly, in assessing that when they're being considered for other types of medical procedures such as chemotherapy, presurgically and et cetera. I can ---+ there's several examples there, and when we looked at medical claims databases to see how often that measure was being sought for those reasons and then we looked at the current level of contrast penetration, that's where we derived our calculation and our estimation that pursuing this indication would essentially double the addressable patient population currently that we see with ---+ for use with suboptimal echo. So I'll remind you of what that math is. When we talk about echocardiography studies in the U.S. market, and here we are talking about the U.S. market, we recognize that approximately 33 million echocardiography studies are done annually. And as you heard me cite previously, medical literature supports that up to 20% of those studies are suboptimal in that ---+ you ---+ it's difficult to reach diagnostic certainty and clear diagnostic certainty without the addition of a contrast agent. It's 20% of 33 million. You could say, approximately, it is 6.5 million. As we looked at what the data for medical claims-based EF measurement showed us, it suggested that that was an equal population potentially for ---+ who would benefit from the use of contrast. And that's why you say ---+ and that's why you hear me saying that it essentially doubled the approximate patient population that would be considered for contrast use. Thanks, <UNK>. <UNK>, just to your question on the R&D. So as you know, we don't provide specific expense guidance, but let me take a step back and maybe frame the larger financial picture. So as we look at 2018, we expect to leverage the strong operational performance of our company, really to reinvest in our corporate growth strategy to drive the additional future growth. And we expect to see a similar reinvestment profile through 2019 and kind of help frame this investment profile. When you think about our gross margin perspective, we expect to maintain similar gross margins that we've achieved in '17 through '18. So I think if you put those pieces together, that should enable you to kind of see the larger financial picture without me giving specific line-by-line expense guidance. Yes. <UNK>, this is <UNK> <UNK>. We were notified in mid-November that NTP ---+ the reactor in the processing facility had been asked to suspend their operations, and it was a due to a process issue. As you can imagine, this is sensitive information because it deals with a governmental oversight and governmental decision, and there was a well-defined process that was used to ensure that all safety and other operational guidances were being met. That process lasted until recently, and we were informed last week that the oversight agency, which as Jack referred to as Necsa, was ---+ had come to the decision that the operations were safe to be resumed, and we, in fact, had started receiving supply again. As we looked in 2017, as we do all the time, you understand as well as any of the rest of folks who follow us, lead us, this is a supply chain, in general, that requires a lot of oversight. And so what we did through the balance of '17 and then now into '18, as we worked very hard throughout each week to look for alternative sources of supply to best compliment what our total needs were. We were not always able to do that but as we finished '17, it was certainly apparent to us that it did not financially materially impact us, especially given the performance we were already seeing, and that's why you didn't hear us speak about it publicly. I'll quantify ---+ I'll instead speak to NTP as our supplier and put that into perspective for you. We essentially supply ---+ or receive supply from 3 reactor-processor combinations: NTP in South Africa, IRE in Belgium and ANSTO in Australia, and it's fair to say, <UNK>, that they are equal contributors on a weekly basis. They ---+ it's ---+ that's not true every day because supply come in in different days from different suppliers but essentially, it's fair to think about them as each representing approximately 1/3 of our total supply, so that's, I believe, the answer to your magnitude question. That's on a going basis. What happens when there is any type of shift or potential slight delay is we move right into, kind of, our natural second motion, which is filling in supply and asking for slight changes in supply delivery to us so that we can best make as small as possible any change in what we need to satisfy down our channel into our customers. First, let's just clarify, <UNK>, we didn't ---+ there ---+I don't think we spoke to a DEFINITY supply issue. The only issue that Jack referenced was the supply interruption from NTP, which is a nuclear supplier, and that was, of course, late 2017 and until approximately a week ago in 2018. Jack. . Yes, thanks. So <UNK>, the way to think about it, taking the consideration that my comments to <UNK> about the gross margin maintaining itself, and so when you think about the adjusted EBITDA margin, I think you can infer that the difference between the gross margin, adjusted EBITDA margin year-over-year is a result of the investments that support the corporate growth strategy. And so again, here I'm just going to clarify before I answer, <UNK>. We have an alternative formulation that we're developing for DEFINITY, but I did not say that that was the agent that was being used for the clinical trial that we will conduct for the EF indication. That indication ---+ those studies will be conducted using current generations or currently available DEFINITY, and that will be used in the clinic, and that will be part of our submission to the FDA. They are 2 Phase III clinical trials. We've already had our meetings with the FDA to discuss what value of the endpoints they should be, what size they should be. We are also submitting a SPA or a special protocol agreement for the additional clarity with the FDA as to what done ---+ needs to look like there. And as we mentioned, or in the call, if we didn't, I'm happy to mention now, we fully anticipate beginning patient enrollment in 2018 for that program.

2018_LNTH

2016

PKG

PKG #Well, I think two things. Boise was attractive to us because we absolutely needed the containerboard tons. We were at that point in 2012. And as we were buying outside tons ---+ as a matter of fact, we are buying a couple hundred thousand tons of outside containerboard to support our growth. And so the key to Boise was truly the DeRidder mill and then, obviously, the legacy brown side of the business. That being said, we have been very successful And yet, the paper business ---+ and we called this out early ---+ we felt compelled that we could improve that paper business and continue to wring costs out of it and enhance the capability. But, that being said, we are and will remain a corrugated products, containerboard business. Basically, that is our concentration. That is what we do, and that is what we will continue to focus on. As we grow our integration, which is currently at about an 87% level, we will look at how we support <UNK>'s need for containerboard tons, and that would play into other opportunities. Mexico is a good market, but we have never had the reach in terms of operating offshore. Once you start operating offshore, you have got a lot of legal and financial matters that you have to deal with. And we are not good at that. We operate here in the United States, and we just don't have the desire to start getting into that complexity. We have got plenty to do here. Go ahead, <UNK>. Well, I would say, <UNK>, one of the ---+ certainly, one of the things that I probably ---+ is a little unique to the box business today versus what it was, if you just compared it to even three years ago or five years ago. Of course, you know, the e-commerce side of the business has picked up dramatically. And that is a growth engine for us. So I think that has been an area that has probably presented some opportunities for the industry in total to help get our numbers up a little bit over what the comparable periods were. That hasn't changed. As we have said many times, we continue to support a number of our legacy customers that have bought containerboard from us for the better part of a few decades. We do supply into about 35 different countries, so we have no one big customer that we are tied to. And, if you recall from our comments, last year and this year, because the first quarter starts heavy annual shutdown season, we tend to sell less on the export side of the equation and retain those tons for our own internal consumption. But the number on a percentage basis has ranged from 8%, 10% or 12%, and we are still within that range in total. As a matter of fact, that really didn't change from last year where we are right now year to date. Well, I think, we don't consider them in the rearview mirror. Freight continues to be something of concern to us. What we have been able to take advantage of is ---+ a good example is the fact that with DeRidder fully optimized and capable of producing liner and medium and all of the key grades, we have a lot of flexibility with how we move product from our containerboard mills into our box plants. And so we have developed some really good capabilities with the carriers on how to move those tons through the various lanes in a very efficient manner. Now, also, with the fact that the economy did slow down a little bit, there has been some slight improvement in carrier availability to us ---+ trucks, that is. But that doesn't mean that pricing has necessarily improved there. It is just that we have developed a very good efficiency and capability within that side of the business in terms of how we move product. Well, the goal is always to continue to improve. We feel pretty good about where we are because what we saw of the last three months wasn't just something that happened. It was a culmination of work that has been going on in the white paper business for the last couple of years. And then, on the brown side, quite frankly, this has been going on for 20 years. And then, DeRidder, obviously, has been a key focus. So every day we will continue to enhance the capability. But we are at a very high efficiency. We work every day to maintain that high efficiency. And so that is the goal and that is what we build our basis on. <UNK>, why don't you go ahead and put some color on that one. Yes, <UNK>. Yes, demand did grow as the quarter went on. That is pretty typical for our first quarter. Second quarter starting out for the first 11 days, we are up about 1% over tough comps from the previous year. So we are pleased with where we are at this point. $50.49, the average price. We always will view share buybacks from an opportunistic perspective. And so that is truly the key word right there: opportunistic. And I have said this on the last few calls as far as acquisition opportunities, we will reserve the right to use cash, to apply it to great growth, acquisition opportunities. And so, again, if you are spending ---+ using your cash for dividends, share buyback, debt reduction, acquisitions, CapEx of some sort, and so we are very mindful of that. But, again, we are in that position right now that, with the stock is up, obviously, over that low average $50.49 acquisition of the 2 million shares that we did. So then, you look at your hand and, again ---+ so we are not going to provide any detail other than that. <UNK>, that is a tough number. I mean, again, all we can do is tell you that ---+ and history provides the answer here. We will continue to go ahead and make improvements in efficiencies and working on costs. Ultimately, I don't know what that means. You have got inflationary factors with energy, wood, hard raw materials. But with the factors that we can control, we will continue to work on these things. I think one factor that is important ---+ we are at a point with the white paper mills, we are not faced with any one enormous amount of capital requirements in these white mills. They are in very good condition. Well-capitalized. So what we do is we look at the small opportunities. But if you do 100 small things, the result can be worth an enormous amount to you. And so I am very encouraged that, all things being equal, we can continue to generate a good return for what we have invested in this white business. And it generates a lot of cash, as we have said before, and we will continue to apply improvements to it. I really can't quantify going forward what that means. Again, we are going to maintain our focus on the containerboard, corrugated product side of our business. That is where ---+ in terms of what we are really good at, what we are focused on, that is our business. That is our core business. And we are going to remain heavily involved in that. Again, the paper business, it hasn't hurt us, per se, in terms of valuation. And we are not in a position where we have to do one thing or another with that business. It is a great business for us right now as it stands, and we will just continue to operate it and generate a lot of cash with it. Thanks. Regarding the first part on the quarter-to-quarter, the $0.08, the bulk of that was the DeRidder outage. It was a massive outage last year. And not just the fact that we had the delayed number 1 work that went on and the heavy lifting on number 3, but that was a massive outage. You look total mill-wide work going on. And, as you look at this past first quarter, we had an annual outage at DeRidder. Addressed all of the things that we would normally address. And so it wasn't nearly as impactful. And so, again, the bulk of that $0.08 would come from the fact that it was just a second shutdown we would have experienced and we were putting a lot of corrective action to the mill. So yes, that was the total. Other than that, next question, please. <UNK>, why don't you go ahead and answer this. Yes, when we gave the guidance, we were talking about fourth quarter to first quarter. And, actually, labor actually was the ---+ that negative those timing items that hit you at the beginning of the year. That actually occurred, as we expected. But year over year, it was maybe not as severe as it was the previous year-over-year comparison. And some of that has to do with some of the things <UNK> has done on the hourly side of optimizing some of the things with the workforce and in the mills and somewhat in the box plants as well. So that certainly helped us year over year. Let me answer that, <UNK>. This is <UNK>. We are anticipating for the second quarter ---+ we will probably see on the containerboard sales, probably half a cent on the export containerboard, half a cent on domestic containerboard and probably about $0.01 in our corrugated products. So about $0.02 in total on <UNK>'s side of the business. No. We were fortunate because of the truly mild winter weather that we saw all the way from the International Falls/Canadian border to the Gulf Coast, East Coast, West Coast. We certainly did not have anything near that would have been a typical winter weather that would have put pressure on the wood baskets. We had a little bit of that rain issue about a month and a half ago in Louisiana, but DeRidder mill was spared. Most of that rain went to the north and much further west of the DeRidder basin. So, wood basket has been spared this year in terms of any unusual issues nationwide. Again, going into the second quarter, everything is pretty flat with where we left the first quarter. But that being said, if we get into a hurricane season in the Gulf coast and we start putting some ---+ more widespread rain throughout the Gulf Coastal region, that could change the fiber cost makeup. But, right now, everything starts in line with how we came out of first quarter. . I forgot to mention OCC. Obviously, you see it was mentioned in the publications, but keeping in mind we still are the lowest consumer user in OCC in the industry. And so on a dollar-to-dollar basis will be least impacted. <UNK>, why don't you go ahead and put some color on that. <UNK>, I would say to that, that we certainly ---+ it's certainly an impact if pulp and paper continues to rationalize the two together. But we see recycled liner board and kraft liner board as being two very different products, especially when it comes to performance. And the majority of our customer base is very performance oriented. So from the standpoint of actually directly competing with this, it is not much ---+ it is not that much of an impact. But, certainly, what pulp and paper does could impact. I can't comment on that, <UNK>. All I can say is that the two products in our opinion are very different. Regarding that, I mean, truly, all of our export pricing activities has been primarily related to currency fluctuations. And so that being said, it is pure speculation of what is going to happen this week, the next week regarding dollar versus currencies. So that is truly the impact. We did see some slight decrease from 4Q into 1Q, as we called out. But, other than that, I don't want to speculate. What was the rest of your question. We didn't quite hear. Tied to Europe. About probably less than half total offshore containerboard sales. Again, I don't want to speculate any more than one quarter at a time and where we are right now. But, all I want to say about that, truly, if the GDP and the economy starts improving in any significant manner, you're going to see, theoretically, box demand grow with it. And so it is truly a GDP economic growth relationship here. That is all I want to say about that. Yes. I will answer it this way. We talked about this in January. We have got 15,000-plus customers. And we are highly integrated. And there are various trigger points that flow through to a box. And so it is very complex and there is no one-size-fits-all there. And so that $15 and $20 change in containerboard. We are feeling that we understand what the implication is, and we have called that out. But, again, it is all I really want to say about that. <UNK>, why don't you go ahead and get into this. Well, <UNK>, this is a complex subject, obviously, when you start talking about substitution. I would contend that our objective is to give our customers what they need to perform. And not more, not less, tailored to what they need in their performance. And I think that is pretty much the direction of the industry. I think it has been stated in the past that there has been this case for over-packaging and all these other sorts of things. But I think that the statistics now support the fact that we pick up very much performance-based industry and certainly we have at the PCA. So that is what we sell and that is what, quite frankly, what our customers expect. So they don't typically get into demanding substitutions or demanding this or that or that sort of thing. And it is up to us to provide the right solutions for them. So, those that are heavily in that recycled arena, they are selling one product, primarily. And so it is a different animal, to some extent. So hopefully that kind of explains where we are. <UNK>, why don't you go ahead . Well, I am not sure I completely ---+ you might restate that just a little bit more for me, <UNK>, so I can really understand exactly what it is you are asking. It was kind of a broad question, so if you wouldn't mind I appreciate it. Yes. I get it now. That is very hard to predict. I mean, of course, we do just run to demand. That is what we do. Our excess ---+ extra capacity that we have will be utilized as we grow the business. That is pure and simple. If we make a sizable acquisition or something, that is obviously going to suck up a lot of it as opposed to organic growth. But we will continue to grow in those segments that we have always tried to grow in before. If you think about it, we are at 87% integration. And so if you did have any capacity, you would be back to where we were in 2012 as net buyers of outside containerboard tons . And so, again, we are at a pretty good balance right now running our system and being able to flex with what <UNK> needs. When we had the January call, obviously, we just had probably 11 days of consumption on <UNK>'s side of the business at that point. And we were feeling okay. But as the quarter went on, we did see demand pick up. Again, we are not economists, so I can't fully explain. But I think we were pleased with what we saw, especially coming off last year's big numbers. We had tough comps to run against last year. So in that regard, I think we are pleased. <UNK>, why do you add something to that. Yes, <UNK>. I would just say that one of the things that had taken place, if you recall, late last year, midway through the third quarter and certainly in the fourth quarter, that, as we alluded to on our calls, we had exited some business that we had gotten in the Boise acquisition. That was all part of our synergies. And I think that obviously is ---+ can help on our margin side. But we were coming out of that. And so it was a little tough for us to forecast what that impact would be, continuing to go into this year. We felt like we had it all behind us; it turns out we did. And how quickly we could turn it ---+ get back into that growth mode was important to us and, quite frankly, a little difficult to predict. With that, operator, I believe we are out of time. And so thank you, everybody, for joining us. And look forward to talking with you all in July. Have a good day.

2016_PKG

2017

PJC

PJC #Good morning, and thank you for joining us to review our second quarter results. The firm generated strong performance for the quarter led by our advisory business, which continued its string of exceptional results with a record-setting first half. Overall, the markets were conducive for our capital-raising and advisory activities during the quarter: slow, but steady economic growth; extremely low volatility; and an ample supply of capital created favorable conditions for these products. Conversely, some of the same conditions provided challenges for our trading activities. Specifically, historically low levels of volatility in both equity and fixed income markets served to dampen our trading volumes during the quarter. I would like to provide some additional color in each of business areas, starting with equity capital raising. We were pleased with our equity capital raising results. This business, which, for us, was heavily concentrated in our healthcare practice in Q1, broadened out in the second quarter with meaningful contributions from our energy and FIG teams. We see this as further validation of our strategy to diversify our businesses by expanding into those important industry verticals over the past couple of years. Through the first half of this year, we have seen a strong rebound in capital raising compared to the tepid conditions in the first half of 2016. With the [sequel] on our target markets up about 115%, our performance is essentially in line with the market. As I noted at the outside of the call, our advisory business produced another strong quarter led by our consumer team with meaningful contributions from our healthcare, energy and diversified industrials teams. Our results were consistent compared to the robust performance we recorded in Q1. This demonstrates the breadth of our platform, as investments we have made across multiple industry groups continue to produce strong returns. Results in the broader market were overweighted to a few mega deals, while conditions in the middle market segment remained conducive to strong deal activity in which we fully participated as indicated by our results. Our public finance business rebounded from a seasonally weak first quarter, with revenues up over 30% sequentially. Last year, we saw record levels of issuance in the public finance market, driven by robust refunding activity in response to interest rate levels. Some of that activity represented an acceleration of potential refundings we might have expected this year. Thus, as we anticipated, market activity is down about 15%, while we are down about 20% through the first half of 2017. It should be noted, our decline is due to an exceptionally strong Q2 last year. Moving on to our brokerage businesses. Market conditions were challenging for us in both equities and fixed income. Low volatility and capital flows out of active managers continue to put pressure on the equities business. We were essentially in line with the market with results that were flat sequentially. Our results are down compared to the second quarter 2016, which were favorably impacted by the increased volatility generated from Brexit. Our fixed income business confronted by challenging market conditions was down both sequentially and year-over-year. Markets were characterized by low interest rate levels on an absolute basis, a flattening yield curve and very low levels of volatility. Light levels of customer activity were correlated to low rates. Our trading profits were reduced by low volatility as we saw few, if any, opportunities to deploy capital effectively against the market. We continue to be measured in our application of capital in this business given these market conditions, as we are mindful that volatility could return unexpectedly. In our Asset Management business, we registered net inflows for the quarter, driven by new accounts in the products we added this year, which more than offset outflows from our value equity products. Ending AUM, however, is down sequentially as market depreciations in MLPs more than offset these net inflows. Revenues were down sequentially and up 7% year-over-year. The main driver for both of these variances was the market valuation in our MLP products, which accounts for about 1/2 of our AUM. In response to fierce market headwinds in Asset Management, we continue to broaden and remix the range of our investment strategy to improve the attractiveness of our products across a variety of investors. This year, we've added a global dividend growth product in a couple of quantitative strategies, and we're in the process of exiting our more narrow [DIPAM] value product. While we relaunch our product mix to more scalable strategies, we are remixing for our products with lower fees. Now I will turn the call over to Deb to provide some color on our financial performance. Thanks, <UNK>. Our remarks will be addressing our adjusted financial results. Our second quarter results were consistent with the first quarter, with revenue just under $200 million and an operating margin of around 15%. These results demonstrate the benefit of favorable operating leverage at higher revenue levels. With 2 very strong quarters to start the year, our revenue was up 73% ---+ excuse me, $73 million or 23% higher than our start to 2016. The revenue improvement was achieved with meaningful contributions by our equity capital raising and advisory products. Capital-raising activities were propelled by healthy market conditions. Our advisory business captured market share with strong performance across most of our industry teams, coupled with our expanded market coverage. Our comp ratio continues to hover in the 64% to 65% range. There are a couple of factors, which are leading to this level. First, our mix, which is more heavily weighted to advisory, puts upward pressure on the ratio. Second and maybe more important, we continue to seek opportunities to invest in the business organically. We believe the operating leverage produced at higher revenue levels, over time, justifies our current comp level. As we have stated previously, we expect our non-comp expenses to be in the $38 million to $40 million range per quarter. For Q2, our non-comp expenses came in at the midpoints of that range. We remain vigilant in managing our cost structure to ensure we realize the benefits of operating leverage for our shareholders. The impact of leverage in our business model is clearly demonstrated in our results for the first half of 2017. Our revenues were up 23%, while our operating income was up 66% year-over-year. We achieved this by limiting the increase in our non-comp expenses to 5% compared to the first half of last year. While results were very consistent sequentially above the operating line, our tax rate continues to fluctuate. Tax expense was again favorably impacted by the vesting of our restricted stock awards at values above their grant date prices. For the quarter, we recorded a benefit to income taxes of approximately $1.8 million. In Q1, this tax benefit was $7 million. The majority of our equity award vestings occur in the first half of the year, so we expect that the potential tax impact will dissipate throughout the remainder of the year. The final item I will address is our adjusted return on equity. We continue to make good progress as our ROE has moved ahead of our cost of capital. Over the past 12 months, we achieved an ROE of 12.4%, which included about 100 basis points from the tax benefit in the first half of 2017. And ROE above our cost of capital has been a long-term objective, and we have achieved this goal by effectively managing cost and capital as we grew revenues. I'll now turn the call back to <UNK>. Thanks, Deb. Operator, we'd be happy to take questions. So our outlook is very constructive. We have a solid pipeline, and particularly, we're pleased with the progress in both energy and FIG. With our energy platform, we really transitioned ---+ in the process of transitioning to a book runner, which has got much more favorable economics. And our FIG platform is really beginning to ramp and has some book run businesses as well that we did in the first half, but the back half pipeline is solid. Appreciate the question. And as you suggest, we're in a transition period leading up to next January. We have done quite a bit of work, and our basic belief is that you got to have quality differentiate a content, period. Number two, that you got to really be diligent about where your resources are and where they're consumed and quantify how that consumption, if you will, with those clients who tracks the payments. We've been hard at work at that and have some very good detailed data and are communicating currently, and we expect to continue to with our clients about that consumption and the balance with the revenue that's paid to the firm. So that's our track. Do think it could have an impact. But we feel like we're having the right conversations to make sure Piper is fairly compensated. From the breadth of the platform, I think we're in the zone as we continue to grow and develop subsectors in our industry verticals. I would expect some, over time, the modest expansion to cover those new subsectors. Sure. A couple of thoughts in your question. First of all is this is a fairly unique environment that's been long in duration, very, very low volatility. Low absolute level of interest rates, and now you have a flattening yield curve. That's about as tough a dynamic as you get. Our belief would be that will change over time. Probably the first thing that needs to happen is a little economic growth above the 1.5, where we've been 2. And then you might see a shift there and some increased volatility. We have a positive trading P&L for the quarter. That's really very consistent with our history. When there's some volatility and opportunity, particularly in the municipal market, we have a very strong track record of deploying capital successfully. In an environment like this, we withdrew substantial capital. It's on the sidelines, and we're going to wait to see opportunity. But I think we performed very well for the environment. And importantly, we feel like we're sitting in the right spot. Looking forward, I would anticipate you might get some volatility, and we'll be prepared for that. Maybe lastly, your tax question. I do think that has an impact. I think as we get closer to Congress really debating it and showing whether we're going to have progress or not, if they do achieve some of the tax policy, I think it would be quite favorable. Thank you, operator. Thank you everyone for joining us. Have a good day.

2017_PJC

2015

BBBY

BBBY #Thank you, Daryl, and good afternoon everyone. Joining me on today's call are <UNK> <UNK>, Bed Bath & Beyond's Chief Executive Officer, and <UNK> <UNK>n, Chief Financial Officer and Treasurer. Before we begin, I would like to remind you that this conference call may contain forward-looking statements, including statements about, or references to, our internal models and our long-term objectives. All such statements are subject to risks and uncertainties that could cause actual results to differ materially from what we say during the call today. Please refer to our most recent periodic SEC filings for more detail on these risks and uncertainties. The Company undertakes no obligation to update or revise any forward-looking statements, as events or circumstances may change after this call. Our earnings press release, dated September 24, 2015, can be found in the investor relations section of our website at, www.BedBathandBeyond.com. Here are some highlights from the press release. Second quarter net earnings per diluted share increased to $1.21, in line with our model. Net sales for the quarter increased approximately 1.7% over the same period last year, or 2.2% higher on a constant currency basis; and Comparable sales increased by approximately 0.7%; or 1.1% on a constant currency basis. The Company continues to model Fiscal 2015 net earnings per diluted share to be between relatively flat and a mid-single-digit percentage increase. Today, the Board of Directors authorized a new $2.5 billion share repurchase program to commence after the completion of the existing program, which is estimated to be in early fiscal 2016. During our call, <UNK> will review some highlights from the quarter and then provide an update on the strategic investments and ongoing initiatives that we believe will continue to position our Company for long-term profitable growth and further enhance shareholder value. <UNK> will then discuss our quarterly financial results in more detail, as well as review some of our key modeling assumptions for the remainder of fiscal 2015. Let me now turn the call over to <UNK>. Thank you, <UNK>, and good afternoon everyone. We reported positive growth in both sales and net earnings per share this quarter, while we continued to make strategic investments in our future and return value to our shareholders through share repurchases. As <UNK> said, our fiscal 2015 second quarter net earnings per diluted share increased to $1.21, on net sales of approximately $3 billion. Net sales increased about 1.7%, or 2.2% on a constant currency basis. Despite slightly lower-than-modeled top-line sales growth, we are pleased to have generated net earnings per share within the mid-point of our range. Comparable sales increased approximately 0.7%, or 1.1% on a constant currency basis. Comparable sales consummated through customer-facing websites and mobile applications grew in excess of 25%, while comparable sales consummated in the stores declined approximately 1%. Directionally, this follows the trend of strong comps in our customer-facing digital channels and relatively flat comps in stores. As we have previously pointed out, these numbers in and of themselves are directional when assessing the productivity of our various channels for reasons such as: when an item purchased online is returned to a store, it results in a reduction in store sales; or when an item is being shopped for in the store and concurrently purchased on a mobile device, it is treated as a mobile sale; or when an item is reserved online and picked up in a store, is recorded as a store sale. As our digital and physical channels continue to converge, the physical stores remain central to serving our customers and provide us a tremendous opportunity to be close to them. The ability to consult with our knowledgeable and solutions-oriented sales associates coupled with our in-store services, encourages customers to visit and spend time in our stores. Options such as reserve online pick-up in store; buy online and return to-store; and online appointment scheduling, highlight various points of interactions we have with our customers across our channels. During the second quarter, we opened a total of 6 new stores, including 2 Bed Bath & Beyond stores, 3 buybuyBaby stores, and 1 Cost Plus World Market store. We continue to actively manage our real estate portfolio in a manner that permits store sizes, layouts, locations and offerings to evolve over time to optimize market profitability. Since the start of our third quarter, we have opened 2 additional Bed Bath & Beyond stores, 1 buybuy BABY store and 1 Cost Plus World Market store. Including the 12 stores that we\ Thank you, <UNK>. I will start with a review of our second quarter results and then provide an update on some of our modeling assumptions for the remainder of fiscal 2015. Net sales for the second quarter were approximately $3.0 billion, about 1.7% higher than net sales in the prior year period, or approximately 2.2% higher on a constant currency basis. Of this increase, approximately 41% was attributable to the increase in comp sales, and the remainder was primarily from new stores and Linen Holdings. Comparable sales in the second quarter increased by approximately 0.7%, attributable to an increase in the average transaction amount, partially offset by a slight decrease in the number of transactions. Canadian currency fluctuations unfavorably impacted our comparable sales in the second quarter by approximately 40 basis points. We had originally modeled an impact of 20 to 30 basis points. Gross profit for the second quarter was approximately 38.1% of net sales, compared to approximately 38.5% of net sales in the corresponding period a year ago. Gross profit, as a percentage of net sales, decreased primarily due to, in order of magnitude, an increase in coupon expense resulting from an increase in the number of redemptions and a slight increase in the average coupon amount, and an increase in inventory acquisition cost. Also contributing was an increase in net direct to customer shipping expense. Selling, general and administrative expenses for the second quarter were approximately 26.4% of net sales as compared to 26% of net sales in the prior year period. This increase in SG&A, as a percentage of net sales, was primarily attributable to an increase in technology expenses and related depreciation. Reflecting these movements in gross profit margin and SG&A expenses, the second quarter operating profit margin of 11.7% was approximately 80 basis points lower when compared with the same period last year. Net interest expense for the second quarter of approximately $25 million related primarily to interest associated with our $1.5 billion of senior unsecured notes, and from our sale/leaseback obligations related to certain distribution facilities. Also included in net interest expense this quarter was approximately $2 million of a realized loss related to the tender of certain auction rate securities, as well as approximately $3 million of expense related to the reduction in the value of the non qualified deferred compensation plan investments. This reduction was offset by a corresponding benefit in SG&A and therefore, did not impact net earnings. Our tax rate for the second quarter was approximately 38% compared to approximately 37.7% in the second quarter of fiscal 2014. The second-quarter provisions included net after-tax costs of approximately $800,000 this year as compared to net after-tax benefits of approximately $800,000 last year, due to distinct tax events occurring during these quarters. Considering all of this activity, net earnings per diluted share increased to $1.21 for the second quarter of fiscal 2015, in-line with our modeled range. This includes an unfavorable impact of approximately $0.01 from Canadian currency fluctuations. Turning to the balance sheet: As of August 29th, 2015 our cash and cash equivalents and investment securities were approximately $767 million. Retail inventories, which includes inventory in our distribution facilities for direct-to-customer shipments, were approximately $2.8 billion at cost. Retail inventories continue to be tailored to meet the anticipated demands of our customers and are in good condition. Capital expenditures for the six months of fiscal 2015 were approximately $161 million, and included expenditures for technology enhancements, new stores, existing store improvements, and other projects. Consolidated shareholders' equity at the end of the second quarter was approximately $2.6 billion, which is net of approximately $194 million, representing about 2.9 million shares repurchased during the period. The Company's current $2 billion share repurchase authorization had a remaining balance of approximately $305 million at the end of the second quarter and is expected to be completed in early fiscal 2016. As a reminder, our quarterly share repurchase activity may be influenced by several factors including business and market conditions. And, as Steve mentioned earlier, our newly authorized $2.5 billion share repurchase program will commence after the completion of the existing program. Since our first share repurchase authorization back in December 2004 and through August 29th, 2015, the Company has returned more than $9.1 billion of cash to shareholders through repurchases, representing over 170 million shares. We are pleased to have been able to return such value to our shareholders while at the same time making significant investments in our people and technology to position our Company for continued successful growth in the ever-evolving retail environment. Now I'd like to provide an update on some of our modeling assumptions for the remaining two quarters and the full year. These include the following: For both the third and fourth quarters, we are now modeling comparable sales to increase in the range of 1% to 3%, including an impact of about 40 to 50 basis points in the third quarter and 20 to 30 basis points in the fourth quarter, due to modeled year-over-year fluctuations in the foreign currency exchange rate related to our Canadian operations. We are modeling comparable sales consummated through our customer-facing websites and mobile apps to grow approximately 25% and store comps to be relatively flat for the rest of fiscal 2015. As Steve mentioned earlier, this directionally follows the trend of strong comps in our customer-facing digital channels and relatively flat comps in stores. Consolidated net sales are modeled to increase by approximately 1.8% to 4% for both the third and fourth quarters. Assuming these sales levels, we continue to model deleverage in gross profit for the remainder of fiscal 2015. Contributing to this deleverage are increases in coupon expense and net direct to customer shipping expense. As a percentage of net sales, we continue to model the full-year deleverage to be less than it was in fiscal 2014. We are also modeling SG&A deleverage for the remainder of the year, which includes increases in technology related expenses and investments in compensation and benefits. As a reminder, SG&A in the third quarter of last year included a non-recurring benefit relating to a credit card litigation settlement, which is equivalent to about $0.05 per diluted share based on our modeled share count for this year's third quarter. Depreciation expense for fiscal 2015 continues to be modeled in the range of approximately $255 million to $265 million. Annual interest expense is now anticipated to be approximately $85 million, primarily resulting from the interest related to the $1.5 billion of senior unsecured notes and from our sale/leaseback obligations related to certain distribution facilities. The third and fourth quarter tax provisions are estimated to be in the mid-to-high 30's% range. Net after tax benefits due to distinct tax events are modeled to be approximately $3.7 million for the third quarter as compared to $16.7 million last year, an unfavorable difference of approximately $0.08 per diluted share based on our modeled share count for this year's third quarter. We expect to continue generating positive operating cash flow. Consistent with our model, capital expenditures in 2015 are modeled to be approximately $375 million to $400 million, subject to the timing and composition of projects. Our technology-related projects continue to represent a significant portion of our planned capital expenditures for the year, and include the deployment of new systems and equipment in our stores, enhancements to our omni-channel capabilities, ongoing investment in data analytics, the continued buildout and utilization of a data center in North Carolina, and the continued development of a new point-of-sale system. In addition to our technology-related projects, capital expenditures also include the opening of approximately 30 new stores company-wide, including the 12 we have opened to date, and our new Customer Service Contact Center that <UNK> previously mentioned. We believe that fiscal 2015's mix of store openings by concept will be relatively comparable to that of fiscal 2014. We will also continue our program of renovating or repositioning stores within markets where appropriate. And, we will continue making enhancements to our distribution facilities to improve capacity and productivity. Regarding our current $2 billion share repurchase program, we plan to continue to repurchase shares during the second half of this year and estimate this program to be completed by early fiscal 2016. This repurchase program, however, may be influenced by several factors including business and market conditions. We are modeling diluted weighted average shares outstanding to be approximately 165 million for the third quarter and 166 million for the full year. We are now modeling an unfavorable foreign currency exchange rate impact of approximately $0.06 per diluted share for fiscal 2015 compared to our previous estimate of about $0.05, based upon a revised modeled 2015 Canadian currency exchange rate of approximately CAD1.32 to each US dollar. This $0.06 represents approximately $0.01 in each of the first two quarters and about $0.02 in each of the remaining two quarters of the year. Based on these and other planning assumptions, we continue to model fiscal 2015 net earnings per diluted share to be between relatively flat and a mid-single-digit percentage increase. For the third quarter, we are modeling net earnings per diluted share to be approximately $1.14 to $1.21. This range results in year-over-year net earnings per share growth of approximately 5% to 11% after adjusting for the non-comparable items. These non-comparable items total about $0.15 based on this year's modeled share count and include: Approximately $0.05 due to the non-recurring favorable credit card fee litigation settlement that occurred in the third quarter of 2014; Approximately $0.08 due to the significantly lower net after-tax benefit dollars planned in the third quarter of this year as compared to last year due to distinct tax events, and Approximately $0.02 due to the modeled unfavorable foreign currency rate impact in the third quarter of 2015. We continue to execute our mission to do more for and with our customers while making strategic events to position our Company for long-term growth and profitability. Our performance year-to-date reflects not only the health of our business and the underlying strength of our balance sheet, but also the progress we've made in further enhancing our omni-channel capabilities. As we've said before, this is an exciting time for our Company, and we continue to manage our business for long-term performance. Please join us again on Thursday, January 7, 2016, when we plan to report our fiscal 2015 third quarter results. I would now like to turn the call back to <UNK>. Thank you, <UNK>. As I said earlier, we have a customer-centric culture. And in our mission to do more for and with our customers, we strive to excel in the categories for which we are best known, to excite customers with additional offerings and solutions, and to provide the highest level of service to create the best shopping experience. We are committed to making the necessary investments to position our Company for long-term success. We are and must remain flexible and nimble to be able to respond to the ever-evolving industry landscape, and we are confident in our business model and our long-term outlook. In closing, I would like to thank our more than 60,000 dedicated associates for all of their efforts which drive our Company's success. It is their passion to succeed and satisfy our customers, that enables us to continue to do more for and with our customers wherever, whenever, and however they wish to interact with us. Thank you for listening today and for your continued interest in Bed Bath & Beyond. <UNK>, <UNK> and Ken Frankel will be here tonight to answer any of your questions. Thank you.

2015_BBBY

2016

AN

AN #<UNK>. Yes, if you think about it from an SG&A perspective I'd say one of the bright spots for us and an area that we really focused on when we began to see the plateau in the fourth quarter of last year was on compensation. So we've made really good headway on compensation year over year. So that's an area that you definitely see that leverage in. Advertising has remained in good order as well. Certainly when you have growth compression it does impact on a percentage basis some of the store and overhead cost but we've worked hard to offset that. So if you exclude the hail and the timing of the stock-based compensation you have the 70% SG&A that remains around our target level. You'd like to see lower than that but in this growth pressure environment it's going to be a little more difficult. I would say digital continues to be a medium- to longer-term exercise. So we had made great headway with respect to the third-party lead generators that we had previously used. So we brought that below the 9% mark from 15%-plus historically. So continue to see great traction there, and it really helps us deliver on the brand promise. So as we've talked about we don't see separate callouts for the exact impact of digital, but I will tell you that all of the indicators continue to be very positive from those efforts. Well I'm not so sure the overall economy is as robust as you would have just described it. If I take GDP growth the last ---+ well, we don't have it the first quarter yet, but I'm not ---+ nobody's real bullish on it. It's certainly going to be I expect less than 2%, significantly less than 2% and the fourth quarter was tough. You certainly saw the Federal Reserve pullback on its plans to increase its interest rates around its concerns on the economy. So I think it's not as strong out there as you might necessarily think. And we're at a high level, don't forget we're at a high level for vehicle purchases. And is it really realistic to continue those types of increases. I would also point out I have concerns going into an election year. I have observed in the past when there's very controversial elections and it looks like we're on the road to having one of those this year that consumers sometimes hesitate around big purchases. Usually pick it up after the election but leading up to election it can be a little bit soft. So I think the economy has had a hesitation or a rough patch. We will have to see if it resumes its stride. That would be very supportive of vehicle sales to get that. So I think my sense that I called out at the beginning of the year, and I clearly was the odd man out at the party at the Detroit Motor Show to say hey everybody I don't think things are going to just to zoom along here, was a correct call. So we're adjusting. I hope the industry adjusts and it's still an environment where you can be very profitable. We get better pricing and better penetration. <UNK>, you're leading the effort at the store level. Could you talk about it please. Yes, it's a combination of things. So having our branded products is definitely a contributing factor. We've always been able to get leverage because of our size as it comes to the products but obviously taking them in-house gives us 100% of the margin versus splitting it with a third-party as well as our stores still continue to execute at a high level and we still have opportunity in select stores and select brands for continued growth. So we feel very strongly with the performance of our team in the field on driving the numbers and we continue to see upside. <UNK>, could you take that please. Yes, it's definitely driven on the PVR side of the equation. The market is extremely competitive as well as a large percentage of our domestic stores are in the energy markets of Colorado and Texas. So we kind of got a double hit there between being in those markets and the compression we had on that side as well as the compression in the PVRs due to a more competitive marketplace. And just to add, too, on the revenue side that reflects the acquisition of the Texas group which was heavily domestic as well. <UNK>, do you have those numbers there or <UNK>. So on a same-store basis our inventory on I guess a day supply is the best way to look at it. We went from 55 days to 66 days. As far as overall inventory that's approximately 1,000 units but it was mainly ---+ or did I pulled the run number. Sorry. It was 63,657 last year or 68,000 this year. So it's about a 5,000 unit increase. <UNK>, you called it out earlier. A lot of it is just based on the exit rate coming out of March. One more time. Couldn't hear you. You know, we're going to have to get that ---+ get to the exact numbers and either Robert, <UNK> or myself can reach out to you and get you a more detailed response. So we are not using price to try to get volume. We're more just moving with where the market is. We're not lowering price aggressively below-market and therefore taking the market down further. So we're just sort of at market as far as pricing. And I think our volume results are very much a reflection of the economic stress that's in the markets we're in, particularly energy which we've talked about a lot and premium luxury which is going through this challenge with overdependence on cars and trying to shift the mix to trucks. This is <UNK> <UNK>. We have 15% of our pre-owned inventory on sales hold. And I would say what has happened is that's been the same number since even into last year is that gradually the non-Takata situation has got under control, but the Takata challenge has increased to the point where I called out 60% of the vehicles on hold are Takata. So Takata is the reason the number hasn't budged. And I already talked about the steps we're taking to deal with that going forward. I haven't heard the report. Are you saying we're getting more sooner or slower. Yes, well, that's not good news. That means it's going to take longer to get the replacement parts. You know, we really need the parts as soon as possible and that would make life more complicated if the parts availability expectation has slowed. <UNK>, do you want to take that please. I'd have to get the exact number for you on that. But traditionally the vast majority of the customers do not buy out their leases and a high, high majority my gut would tell me it's in excess of 80% lease another vehicle. Thank you for joining us today. Very much appreciate all your questions. Thank you very much.

2016_AN

2016

HIW

HIW #Thank you, <UNK>. Good morning, everyone and thank you for joining us. On our first quarter call in February, we noted the disconnect between the positive fundamentals of our business and a negative tone on Wall Street. A struggling Dow Jones and declining 10-year treasury yields were factors driving that negative tone. What a difference 10 weeks makes. In that short time frame Wall Street is now reflecting a more positive tone that is consistent with the fundamentals of our business. The Dow is back up around 18, the 10-year treasury has stabilized, and investor sentiment across most asset classes has improved. Aside from this, some fear that pending CMBS maturities over the next couple of years have the potential to overwhelm the supply of replacement capital. This talked-about fear reminds us of how a high volume of defaults had been forecasted in the 2010-2012 window, creating a "once-in-a-lifetime" opportunity to acquire on the cheap, which obviously didn\ Thanks, <UNK> and good morning. As <UNK> noted, we had solid activity this quarter, leasing 902,000 square feet of second gen office space, and year-over-year asking rents continue to increase across all of our markets. Average in-place cash rental rates across our office portfolio were $23.38 per square foot, 3% higher than a year ago. Occupancy was 92.7% as of March 31, up 80 basis points year-over-year, although slightly down from year-end, due to that sale of the 96.9% occupied 1.3 million square foot Plaza, as well as two expected move-outs in Pittsburgh that I will discuss in just a minute. Given our market dynamics, we remain comfortable with our 2016 year end occupancy outlook of 92.5% to 93.5%. For office leases signed in the first quarter, starting cash rents were basically flat at negative 0.2% and GAAP rents grew a robust 9.7%. Average term of 6.5 years, five months longer than the prior five-quarter average, and leasing CapEx was $17.65 per square foot, 13.6% lower than the prior five-quarter average. We are pleased with the economics we garnered, with net effective rents of $14.54 per square foot, 5.9% higher than the prior five-quarter average. Turning to markets, our Atlanta portfolio was 92.1% occupied at quarter end, up 260 basis points year-over-year. During the quarter, we leased 251,000 square feet, including two long-term federal government renewals encompassing 212,000 square feet with the CDC in Century Center with very low leasing CapEx. We only have 198,000 square feet of remaining 2016 rollover exposure in Atlanta. This includes a previously disclosed 58,000 square foot, second quarter known move-out at Monarch in Buckhead that was factored into our acquisition underwriting. We are very pleased with the operational performance of our 1.9 million square foot Buckhead portfolio. Year-over-year asking rents are up 10% on average. After backing out near-term moveouts at Monarch, move-outs known before the acquisition. Occupancy in our Buckhead portfolio grew 240 basis points from 86.4% at September 30 to 88.8% at March 31 and is projected to increase another 200 basis points by year-end. Strong growth in Nashville continues. A 129,000 square feet of positive net absorption in the first quarter, the market's unemployment rate is 3.5%, 150 basis points below the national average. Direct market vacancy is 7.5%. Occupancy in our portfolio was 99.6% at quarter end, up 40 basis points sequentially and up 430 basis points year-over-year, and we have less than 100,000 square feet set to expire by year-end. The construction of Seven Springs II, our 131,000 square foot office building with structured parking, is well underway. This $38.1 million development is 43% pre-leased, with completion scheduled for the second quarter of 2017 and stabilization in the third quarter of 2018. The volume of prospects is strong. In Raleigh, office jobs grew 3.2%, a 100 basis points above the national average, and the office market posted yet another quarter of positive net absorption. We garnered very strong average GAAP rent growth of 18.7% on over 200,000 square feet of second gen office leases signed during the quarter. Occupancy in our Raleigh portfolio was 93% at quarter end, up 20 basis points from December 31 and 270 basis points year-over-year. Also, we are working with a sound prospect at GlenLake Five, which would bring leasing to 94% and stabilize the building well in advance of pro forma. In CBD Pittsburgh, occupancy in our portfolio rolled down from 95.7% at year-end to 91.4%, due to 96,000 square feet of anticipated move-outs at our 1.5 million square foot PPG Place. One customer, Highmark, a health insurer, consolidated into a building it owns and another customer, Ketchum, a marketing agency, relocated into a very different low price-point product. Pittsburgh's Class A CBD market is a solid 94% occupied and we have 175,000 square feet of strong backfill prospects with asking rents 5% to 7% higher than expiring rents. In conclusion, leasing volumes and the ability to push rents continue to be solid, reflecting positive momentum in our markets, the demand for our well-located BBD office product. Even with known move-outs taking occupancy to the 92% range mid-year, occupancy will rebound and average occupancy for full year 2016 is projected to be some 50 basis points higher than last year. <UNK>. Yes. So, our guidance is out there and we reaffirmed our 100 to 200 of starts. And <UNK>, we typically have projects in the size of $40 million to $50 million. So think of that in terms of two to four or five total announcements for the year. We do have the 5,000 CentreGreen project that we announced at the beginning of the year, which is in the low $40 million. As markets continue to tighten and those who are interested in relocating or expanding and need significant sized footprints, obviously new development becomes a prominent part of what their options are. We have plenty of company-owned land and obviously the balance sheet in order to accommodate that. We're currently in conversations with six different customers who would predominantly pre-lease or totally pre-lease a building. They're in different stages of conversation, chances of them all happening are slim, but chances of some of them happening are relatively strong, and we think that the price of construction continues to keep a bridle on, there being a significant amount of speculative construction done across the markets by an array of developers. Yes. So obviously it not only impacts new development, but construction costs play a role in re-leasing as well as we re-tenant spaces. We continue to see about a 0.5% increase per month in total construction pricing. Just as a reminder, it didn't abate during the Great Recession. So, this has compounded for quite some time. So clearly it's an expensive option, but there are still those who are seeking a single customer type building, and you build-to-suit, and the only way to get it in the tightening market in many cases is going to be a build-to-suit. We have seen some prospects that we've been in conversation with that once they've seen the pricing from us and some of our peers, they've decided to just double down and stay where they are, but there are still plenty that are talking about the possibility of going into something new. We've always said it's a very protracted process, because there are a number of options that they can pursue and at different pricing points, but it's safe to say that they're all 15% to 30% more expensive than if they were to stay put. Yeah, <UNK>. Look, I think it's definitely been behind, the recovery has been slower than our other markets, but I think we continue to see vacancy rates for Class A properties certainly in Tampa, they're now in the single digits. So, we do have asking rents that are up 4%, 5%, demand remains steady. I think the local economy continues to grow, so I think it's just a matter of time that we're going to see some acceleration of leasing, new leasing and all that in Tampa. In terms of Orlando, really a similar story, little slow to recover, Class A CBD vacancy rate is around 10%, so it's continued to improve, asking rents were up 4%, 5%, not a lot of large blocks of space. So, again while it has been slow to recover, we do think with the projected job growth in the next 12 months, that's going to continue to improve. Hey, Jamie. This is <UNK>. I'll start, we are very bullish on Pittsburgh. Our occupancy there, when we started, it was in the low 80's% and Andy and his team got it into mid-90s% and have held it there. Over the quarter ---+ quarter-over-quarter, we've dropped 4.3% and it was basically due to the two customers that <UNK> outlined in his script with Highmark and Ketchum. In the re-leasing of those, we expect north of 5% increase in rents and Andy currently has a pretty healthy list of about 175,000 square feet of prospects and anticipates about half of that will hit before year-end and the other half in the first half of next year. So, we feel pretty confident about the backfill, the volume of prospects, the ability to push rents. Also as <UNK> said in his scripted remarks, CBD Class A markets 94%. So the downtown market really hasn't seen an impact from the energy industry. Now if you go out into some of the suburbs, that has been a little bit more evident there, but the downtown market is not. In addition, we've been able to further energize the ground floor and some of the below grade area at PPG complex with restaurants and activities, so it's a better positioned asset today with those additional amenities and another large restaurant Craft Brewery coming on board on this year. So, we feel with the increase in energy on that ground floor, the volume of prospects that we have to backfill the space and the upside in rent, and then just the overall health of the downtown market, we remain bullish on it. Yes, I'll start and then maybe toss it over to <UNK>. We think Jamie that there is a little bit of a disconnect between how some may perceive where cap rates are. So, we have now underwritten in excess of $1 billion as we evaluate various opportunities to deploy the remaining third of the proceeds from the CCP sale. We haven't seen any movement in cap rate. I know that there has been some that's been written that even in the gateway cities that they've seen 25 bps to 50 bps relief if you're the buyer in cap rates, but we haven't seen that. And we've market-tested that in our underwritings and we've seen it in the things that we had pursued and had conversations about whether it be off market or broadly marketed. We just haven't seen any reduction in the volume of interest both in pricing and number of bidders for institutional quality better located assets within the BBDs that we're pursuing. So, maybe just a little bit of a ---+ because I know there's been plenty written that there is a perception and maybe it's tied to what's going on in San Francisco, maybe it's tied to what's going on in New York. But we haven't seen that inflection. So, there are ample opportunities there and those opportunities, which we're pursuing are also being aggressively pursued by others, and so no expected relief in those cap rates. Yes, both genres are on the prospect list to varying degrees. Yes, it covers both. Sure with regard to HCA, we've talked about this publicly a number of times, where they are going into a building in downtown. So, they have multiple lease instruments with us, there are three of them which expire in the first quarter of 2017 that total about 235,000 square feet, those leases are basically in two different buildings; they are each of about 103,000 square feet, we have a 62,000 square foot prospect for one of those which equates to about 60% of the space that they would give up in Brentwood, but it's early and would remind everybody that our Weston, where the other building is, we're 100% occupied and in Brentwood where we have 1.5 million square feet, we are 98.3% occupied. We really see good opportunity to re-lease these spaces in a relatively short period of time. If we're going to get space back, these would be the two places to get it, and we have plenty of notice and Brian, Jimmy and Jeff our team there are focused on this and as an aside, as Jimmy and Jeff try to figure out how to make a living, being 90% occupied in their portfolio, obviously they're investing a lot of their efforts to backfill those two spaces. And then the other is just that we only have 4.7% of revenues that will expire between now and year-end. So, I think that just gives us ample opportunity to focus on these bigger blocks that would be coming to us first of next year. The only other thing that I would add to that is the value-add spaces, because when we announced the acquisition of SunTrust and Monarch in September of last year, we noted that there were some known early moveouts and those were defined by us as customers who would be moving out within 12 months of acquisition that have given notice and we knew about. And there's clearly opportunity for leasing and upside there and we're seeing some momentum on all three of those buildings. Thanks, Jamie. <UNK>, I'll do the development and <UNK>, maybe you can hit on the rent. With regard to development <UNK>, we announced Seven Springs II, which is a 131,000 square feet, and we announced 100% spec and shortly thereafter Brian and team were able to secure a 43% user with a healthcare company, and so that was a positive and we also have more prospects looking at that building today, another twenty some thousand of vibrant prospects I would say. So, it's early where we just poured the third or fourth floor, it's moving along on schedule. And I think, have started a 100% spec, be it 43% now, and have others that are interested in the building, we've only poured up to the fourth floor, very comfortable with that. Regarding Virginia Springs, we are very excited to be able to bring that parcel of land into our portfolio as it was truly the last raw piece of development land available in Maryland Farms. We can get up to 216,000, 218,000 square feet in two different buildings there. And so, we are working through the process of the necessary municipal approvals to plot the buildings. If we were to go after at fast track, the earliest we could have a building COed and online would basically be the end of 2017 to very ---+ maybe first quarter 2018. So, we're now putting together the final touches on the elevations in a typical flow plates and the site planning et cetera. But it just recently came in, so it wasn't until we kind of locked up that we decided to invest significant dollars on the design aspect, but that's coming along very nicely and right here in short order our Nashville team will be armed with all the semi-gloss images that they need to have to be out marketing that. <UNK>, on the rent. <UNK>, in terms of just the market in general. I mean, I think Nashville continues to be our strongest market, we're seeing continued strong demand across many industries, rents in general are record highs in Nashville today, and at the same time vacancies at a record low. I think first quarter was the fifth consecutive quarter that the vacancy has hit a new record low. So that's enabled us to really push rents. I think, we wish we had more space to lease and more rollover occurring, but what little we have, we've been able to really push rents on a cash basis and obviously on a GAAP basis. I think rents have gone up certainly ---+ asking rents over 10% in the last probably even six to nine months. So it's pretty strong. Not materially, I mean, I think we're seeing decent activity really in all of our markets and most of our product types, both A and even the Bs. I think the Bs were slower as you would expect, maybe slower to recover in terms of leasing, but we're seeing that be steady. And the number of leases we're doing has remained steady over the last five or six quarters and that's across our entire portfolio. So, haven't really seen any softness to speak of. In terms of leasing. I got it. Look, I think overall, maybe on the lower quality assets, pricing has made, I think they probably fewer bidders and maybe there has been a little bit of pricing pull back as buyers are doing some price discovery, maybe on the B quality assets, but we just haven't seen them on the trophy side. And I think the CMBS, <UNK> more follows the lower end than the higher end and that could be part of that explanation that the fears that are out there or the wonderment that circle CMBS, it may be influencing that easing of cap rates on the lower end of the spectrum, which therefore not touching the top end. Yes, I just don't think there's been enough trades out there to really ---+ enough data points to determine that.

2016_HIW

2016

D

D #This is <UNK>. The program that was referenced was really an effort across all the businesses and the corporate support areas to drive decision-making to a lower level, eliminate layers of management, increased spans of control, and make the decision-making really more efficient by having those fewer layers. That was the focus. We took a charge of about $70 million pretax, I think $43 million after-tax, and those labor costs will be recouped as the employees move on. And so you will see a full year's benefit in 2017 and a partial benefit in 2016. In terms of ongoing O&M, we are targeting a flat to CPI gross on O&M going forward. It will probably be different year-by-year, and the only thing that would change on that of significance would be the outage period for Millstone where you might have two outages versus one in a given year. But I look for us and for you to model flat CPI growth on O&M going forward. Sales, weather normalized, for the quarter, were down about a little over 1%. We have an annual expectation of a 1% positive sales growth for the year. We still feel pretty good about that. So that was a net for the first quarter. April seems solid in supporting the 1% growth. And we had ---+ we had actually pretty strong growth in all sectors but residential. I would as always do on sales is when you are coming and comparing to a very significant weather season, we had a very strong first quarter of 2015 on weather and in late 2016, so the weather normalization process is not penny-accurate. That's why we think 1% growth is still a good assumption for us. Also, recall a 1% growth year-over-year, it only equates to about $0.04 or $0.05 a share for us. This is <UNK>. I don't think you should think about additional programs going forward. We took a one-time charge, as we always do. It's a nonrecurring event, and disclose that. And we showed on our breakdown on Slide 8 that we would expect to see lower operating expenses and labor due to lower staffing levels of about $0.02 this year for the last six months of the year. And I would expect us to see probably $0.04 or $0.05 next year, which is supportive of the growth rate that we have out there. Thank you. Thanks <UNK>.

2016_D

2016

HAFC

HAFC #The ---+ they ended the year at $28 million of total deposits, of which about a little over $23 million was DDAs, and the balance being the money markets. On the asset side, they had average loan balance of about $25 million for the fourth quarter. The ---+ in this kind of business, it's sometimes easier to pick up DDAs or the deposits first and then the assets thereafter because of the renewals, the maturities of the lines and things like that. But they are off to a very good start. Just to add on the health group, although their loan balance was around average about $25 million, actually their production was about, by commitment, over $44 million for the year. Yes. You know, we actually were ahead of the regulators in terms of the way we analyzed the CRE portfolio. So, I guess we've been expecting that the regulators are going to require banks like ours to be more focused on the way we understand the risks associated with our CRE portfolio. Our CRE concentration number is well under 300%, by the way. But the ---+ so I would say that if we are able to continue to manage the risks ---+ concentration risks properly, I think that will give us a competitive edge in that those other institutions who are over 300% are going to be hamstrung as far as being active in the CRE arena. Whereas at this point, because we don't have any regulatory issues along those lines ---+ or any other front, by the way ---+ that unless we go crazy one day and do $100 million, $200 million of CRE's which we are not, we are very well-situated to continue to mine opportunities and to grow that portfolio cautiously. But the kind of credit administration work that we've been doing in advance of this regulatory guideline is ---+ it's being received very well by the regulators. Thank you for listening to Hanmi Financial's fourth-quarter and full-year conference call. We look forward to speaking to you next quarter.

2016_HAFC

2015

IIVI

IIVI #Okay, <UNK>; this is <UNK> <UNK>. For sure, EUV is a good place to start. It's an important place to start for us. Our next is ---+ and for EUV we are making at least four different components for EUV. And we are providing them through the infrared optics business as well as the M Cubed business in our advanced products group. At M Cubed they are also making precision ceramic components for wafer stages, wafer tables, electrostatic chucks, and defectors for the backend. And there, the normal ebb and flow for the existing products in the marketplace and the growth in those products is what's pulling us along in that segment. Finally, in our military materials business, part of our strategy to diversify and to leverage the competencies that we have developed in precision optical assemblies over the years in that group ---+ we are also leveraging, highly, opportunities that exist today for precision metrology equipment, including for existing 300-millimeter ---+ and in the future, 450 millimeter ---+ applications. And maybe just to close on that, in our Photop group, Photop are also the key supplier to the semiconductor capital/metrology equipment makers that are the leading makers in the world. Okay. That's pretty hard for us to flow down. You know how there has been such a start and stop on EUV in the time and the delay. But we really probably shouldn't try to speculate on that at this moment, but as more of the news of that unwinds in the next two or three quarters, we'll share it if we get it. But we can say we are well tuned in on the EUV machine itself, and ---+ just what <UNK> said. Critical components, the three or four that we make, they are critical for the machine. Mostly from one. That's for sure. Everybody knows that leader. But we do have some front-end tools ---+ people that we supply to and another person in the bigger space. <UNK>, this is <UNK>. For sure new products are the lifeblood of the business, and that's both for sustained revenue growth as well as for profit improvement. At OFC I think you maybe were aware and saw a suite of new products which I referred to today, including our OTDR modules that perform optical time domain reflectometer measurements in both the central office and outside plant, allowing carriers to reduce OpEx and bring up advanced networks reliably. We should start to generate revenue from prototypes in this current quarter, and we expect the production revenue would begin to kick in by the end of the first half of next year. And as an example, I would expect in FY16 it would be a low single-digit million dollars of opportunity. On tunable optical filters that we talk about, this is a very compact ---+ in fact, it's the smallest tunable optical filter in the market. It dramatically reduces the noise from erbium-doped fiber amplifiers ---+ that is the amplified spontaneous emission noise. These products, or these tunable optical filters, will be used in CFP2 100G transceivers. Lead customers have already designed them in and qualified. We expect limited prototype revenue in the next couple of months. And again, we might expect by maybe the second half of 2016 to be on the low single-digit millions a year run rate. Regarding our high-power pump lasers, we will be launching in a couple weeks ---+ that means next month ---+ the industry's leading 1-watt 980 pump laser, which has the lowest power consumption, the highest power output. And we expect that EDFA manufacturers will be quite interested in designing those in. We expect that even though we'll launch it beginning sometime in May that in FY 2016, again, low single-digit millions of sales in 2016. We demonstrated the new nano-amplifier platform for next-generation optical amplifiers. That platform that you probably saw at OFC generated a lot of interest and a lot of enthusiasm by both OEMs and some carriers. That's a platform. The products that we built based off of that platform ---+ we will not be able to generate revenue in 2016, but we expect the revenue will come in 2017 based on both completion of the platform, getting it ready to manufacture. So I tried to give you a sense for some of the things that are happening. Of course, in our existing optical communications business, new products with new specs ---+ high-density array iridium-filled fiber amplifiers and the like ---+ these are considered and expected by our customers to be rolling. As part of the price we are keeping the revenue where it's at and being able to grow it. So it's kind of a replacement as well as a growth, if you will. I hope that gives you a feel, <UNK>. They've been out for a while. I think we may take the bottom end down a little bit just to overlap more with the end of the 2015 range. But having said that, we continue to have improvement in our margins ---+ you know, an important part of our ongoing strategy. It is partially because of the currency. On the last call, when we talked about currency, I said that's not really a huge exposure for us. And it historically has not been. But some of our most recent acquisitions ---+ that are also going beautifully and adding to our product portfolio going forward ---+ do have more euro-based revenue than we are used to and, as I say, has changed the margin profile. So the currency is the main driver, yes. <UNK>, are you talking about the whole Company, or are you talking about ---+. Yes. The comment <UNK> made was in laser solutions (multiple speakers). Yes. I could take a ---+ we certainly don't have a report today with our revenues broken out by region, but maybe just qualitatively I could take a shot at it ---+ ---+ if <UNK> <UNK> would like to. I would say that ---+ US, we have ---+ for our broad industrial base, it has a feeling of being strong. And so I would say US strong bookings for the business. I would say in Europe, as I already mentioned, strong. Not exactly sure, but it seems that a lower euro maybe make some products more competitive in Asia. And that could be part of what we're seeing. But for sure, there is strength in Europe. And Japan is strong. And I would say that's broadly across the Company and virtually in all markets that we are playing there ---+ industrial, communications, semiconductor capital equipment. And in China ---+ China is an interesting place. I would simply say that both from the communications, from the industrial market that we've already reported, the fiber laser market seems to be ---+ continued super-hot, even though there may be some indications of it being a little less hot than it was 12 months ago. There seems to be on every corner somebody else turning up with either a fiber laser or a direct diode laser business. With the team that we have based there, we are pretty efficient at tracking and addressing their needs. I'd only add one more comment to it, and it's not a big deal. But certainly in our wide bandgap materials group, a big portion of our business right now is headed into Japan. And that business feeds the base station business, which has seemed to be doing some build out in China. Nice business for us right now. I think it's a tricky question, and our answer is ---+ because we've changed our product mix somewhat. When we started with that business, we had a product we called a BMU that was built into some custom solutions and now we've gone more toward a standard product. And the standard product ---+ it's going to be better for us. We won't be having the different batches of production that we had. But that's there. And at the same time, the foundry that we operate or the fab that we operate ---+ as we get more volume, it does generate a better margin picture. And we expect that will continue. <UNK>, I'll take that. Our silicon carbide substrates enable high-performance, high-frequency, high-power, high-reliability gallium-nitride-based HEMT devices. Those devices go head-to-head with silicon LDMOS in this wireless base station market. And they have a value proposition which is allowing ---+ this is our understanding of the market dynamic through reading about the industry reports. Our understanding is that the value proposition for price and performance are allowing the wide bandgap electronics to penetrate the existing market, which is growing. But our understanding is that wide bandgap electronics are penetrating the market and growing considerably faster than the SAM is growing. So it's kind of a ---+ we believe that our customers are in a position to be taking share from legacy technology LDMOS. That's one theme. The other theme is 4G wireless base station growth continues. China is a hot market for it, but there are other markets that are expected to follow in their growth. Our understanding, again, from industry reports is that we could expect both India, Africa, and even Latin America in the next couple or three years to follow a similar trend. Okay. Our customers' customer is in China. All right. Thank you very much for joining us today. I'll just give it to Fran for closing comments. Thank you, everybody, for joining us. And we look forward to meeting again in the next quarter, which will be the end of our year, which ---+ we will complete a very good year, we expect. Thanks. Thanks again. Bye-bye.

2015_IIVI

2018

DGII

DGII #Thank you, Sonia. Good afternoon, and thank you for joining us today. Joining me on today's call is Ron <UNK>, our President and CEO. Ron will provide his thoughts on our business, and I will follow with the highlights of our financial performance for our second fiscal quarter of 2018. Following our prepared remarks, we'll take your questions until 6:00 p. m. Eastern. We issued our earnings release shortly after the market closed. Some of the statements that we are making during this call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance, and we speak only as of today's date. We undertake no obligation to update publicly or revise these forward-looking statements for any reason. We believe the expectations reflected in our forward-looking statements are reasonable, but give no assurance of such expectations or any of our forward-looking statements will prove to be correct. Please refer to the forward-looking statements section in our earnings release today and under the heading Risk Factors in our 2017 annual report on Form 10-K and subsequent reports on file with the SEC for additional information. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures are included in the earnings release. The earnings release is also an exhibit to a Form 8-K that can be accessed through the SEC filings section of our Investor Relations website. Now I'd like to turn the call over to Ron. Thank you, Mike, and welcome to everyone that has joined our call today. Digi had an exciting second fiscal quarter, and I'm pleased to share with my comments on our results and prospects. Our second fiscal quarter 2018 extended the positive trend established the quarter prior. In exceeding our expectations both revenue and adjusted EBITDA for the second fiscal quarter, we've begun to demonstrate our commitment to sequential improvements throughout the year. Particularly encouraging, we had strong performance in Digi's IoT Products & Services, IoT Solutions, and our newly acquired Accelerated Concepts, which results are included in the Digi IoT Products & Services business segment. Lastly, we expect our performance to improve in our third fiscal quarter. As a reminder, we transitioned our reporting to 2 business segments: IoT Products & Services and IoT Solutions. This better aligns with our value proposition, management structure and industry nomenclature. In moving away from our previous product categories, like cellular and RF, we interface with our customers more effectively and it facilitates leverage within our business, as customers who are exposed to Digi portfolio versus just 1 product family. My commentary will be centered around our 2 business segments. Our IoT Products & Services business provides OEM and enterprise products and complementary software and support services. Our objective of sustainable, profitable growth has strengthened with the addition of Accelerated Concepts to the Digi family. A few key business updates include: number one, a stronger direct sales force. Chris Bowen, our Vice President of EMEA Sales, joined last quarter finalizing our initiatives and establishing Munich as our EMEA headquarters. We are seeing results from our key account and top opportunity initiatives with a significant increase in both bookings and contributions from opportunities over $100,000 in value. We believe we have significant opportunities to improve our win rate on large enterprise deals. Secondly, we improved our channel programs. We've consolidated a few of our channel partners in both North America and EMEA to provide improved relationship management and intimacy. We have seen our channel sales increase, which provides evidence to back this approach. Third, improved new product introduction, or NPI. This remains one of our top opportunities to improve. We are driving strong collaboration and alignment surrounding our NPI process, including the identification, definition, development and launch activities. We are optimistic about the results we expect to achieve from new products being introduced in all of our product families. Fourth, streamline operations. We have reduced our SKUs to less than 1,200, and we expect to be less than 1,000 before the end of our fiscal year. We announced the transition of our manufacturing operations in Minnesota to our contract manufacturing partners, which we expect to take place over the next 2 quarters. We continue to advance the implementation of one common CRM and ERP solution, while improving our processes along the way. Our model for IoT Products & Services is to grow 5% to 10% annually, while achieving double-digit EBITDA margins. Accelerated was acquired in January and has contributed materially to both our financial results and our cultural evolution. The Digi and Accelerated teams have integrated and worked well together. We've conducted joint training, and we'll begin rolling out Accelerated products to Digi's channel partners. In addition, strong teamwork between the product management and R&D teams has created a joint product road map with plans to leverage our collective best practices and best technologies. There are significant synergies to grow our business with common technology and joint go-to-market. The IoT Solutions business is focused on subscriber and recurring revenue growth. We believe we have a strong leadership position and a $3.5 billion addressable market that has fragmented competition and low penetration. Our talented team and technology added approximately 4,000 subscribers and facilitated the signing of some significant enterprise customers that ensures our growth will continue throughout the year. First, we launched the SmartSense brand, which better describes our core mission and realities of the business behind one flag. SmartSense embodies our industry leadership role in automating, alerting and analyzing the conditions and tasks surrounding the safe and cost-effective handling, storage and distribution of conditioned sensitive goods. Second, we exited our second fiscal quarter with a subscriber base of almost 42,000 sites. Our subscriber base will further expand as we implement new and existing customers marked by 2 large wins in both health and transportation. Our annualized recurring revenue now exceeds $14 million, which is calculated by annualizing the recurring revenue in the last month of the quarter, representing a 25% increase from last quarter's figure. We've defined the path to optimize the technology stacks starting with the consolidated set of on-site product that is best in breed amongst the 4 acquisitions, our next challenge is to consolidate the host and mobile applications, unlocking significant productivity and clear go-to-market strategies. We expect IoT Solutions to experience sequential growth throughout the fiscal year. We reiterate our confidence that we can grow the business to $50 million to $100 million in revenue over the next 3 to 5 years fueled by strong double-digit growth. As you may have seen with our announcement earlier today, our CFO, Mike <UNK> is transitioning to a new opportunity outside of Digi after our current fiscal quarter. We will miss Mike's talent and leadership, and we congratulate him and wish him success in his new role. I want to personally thank Mike for the 3-plus years we worked together, transforming Digi into the exciting company it is today. We've already started the process to secure our next Chief Financial Officer. Now I will turn it over to Mike for more detail on our performance in the second fiscal quarter of 2018 and our expectations for the third fiscal quarter and full year fiscal 2018 periods. Mike. Thanks, Ron. First, I appreciate the comments. It's, obviously, a tough decision to leave Digi and the team. I've been here for 3 years and by Ron side for over 20. A great local opportunity presented itself that allows me to return to a private company environment. We've executed on many of the initiatives we set out to do and the company is in a great position to capitalize. Our results and guidance supports the product businesses again on firm ground with scale, leverage and attractive profitability. Solutions is poised to fuel our growth with a business model predicated on delivering ROI with recurring revenue. We've built a strong team, and I leave Digi in great hands. I expect to be here for the balance of the quarter and be a 100% focused on an early transition. I'd like to thank Ron and everyone else for allowing me to be a part of Digi. So turning to more exciting news. We are happy with our fiscal Q2 financial performance as well as how the balances of fiscal year is progressing. We're on track for continued momentum in both our operating segments. I'm going to touch on a few highlights for the quarter before talking about each segment and our guidance. Our consolidated top line revenue and adjusted EBITDA both exceeded the upper range of our guidance for the quarter. Along with both the organic business and acquisitions, we grew more than 20% year-over-year. Subsequent to the end of the fiscal quarter, we announced a manufacturing transition plant that will transfer the majority of manufacturing from Eden Prairie, Minnesota facility to existing manufacturing partners. The transition is a result of a year-long initiative on SKU rationalization, improved business efficiency and a focus to do fewer things better. Unfortunately, as a result, many of our employees in Eden Prairie will be negatively impacted. Up to 61 positions will be eliminated in a 2-quarter phased approach. We will incur total restructuring charges of approximately $600,000 that will be recorded during the third and fourth fiscal quarters of fiscal 2018. The new outsourced manufacturing model is expected to result in total annualized savings of between $3 million to $5 million. On January 22, 2018, we purchased all of the outstanding stock of Accelerated Concepts, a Tampa-based provider of secured enterprise-grade cellular LTE networking equipment for primary and backup connectivity applications. This acquisition is reported within our IoT Products & Services segment. The initial purchase accounting resulted in approximately $13 million of intangible assets that will be amortized over 5 to 7 years, adding approximately $900,000 of additional quarterly amortization expense, or $0.10 per diluted share, for fiscal 2018. And finally, you'll notice in our earnings release, we started to craft our discussion to provide more insights into our 2 segments: IoT Products & Services and IoT Solutions. We will post historical information for comparison purposes to our IR section on our website. Now I'll speak to our results. We generated $54.8 million of total consolidated revenue compared to $45.6 million in our second fiscal quarter revenue a year ago. Fiscal Q2 revenue exceeded our guidance range of $50 million to $54 million. We enjoyed year-over-year growth in Products, Services and Solutions. In addition, our channel showed POS momentum with inventory dropping from $20 million in fiscal Q1 to $16 million in fiscal Q2. Geographically, North America revenue increased by 32.7% in fiscal Q2 2018, largely resulting from incremental revenues from our Accelerated, TempAlert and SMART Temps acquisitions. EMEA revenue remained relatively flat with a decrease of 0.4% versus the prior year comparable quarter. Combined revenue in Asia and Latin America decreased by 7.6% year-over-year. Our overall gross margin increased to 48.6% compared to 48% in fiscal Q2 2017. Gross margin increased in the quarter versus the year ago quarter, primarily due to an increase in hardware product gross profit and strong performance from Accelerated, which has higher gross margins, partially offset by IoT Solutions and increased amortization expense related to our acquisitions. Operating expenses in fiscal Q2 2018 increased by 28.3% compared to the year ago quarter. However, excluding the incremental expenses of $5.4 million related to the Accelerated, TempAlert and SMART Temps acquisitions, operating expenses were comparable year-over-year. We recorded an income tax provision of $400,000 for the quarter compared to $100,000 in the first quarter a year ago. As we mentioned on our last call, our year-to-date provision was impacted by the recently enacted Tax Cuts and Jobs Act, adoption of ASU 2016.09 (sic) [ASU 2016-09] in fiscal Q1 2018. The first one is a onetime adjustment of $2.5 million related to the remeasurement of our net deferred tax assets as a result of the Tax Cuts and Jobs Act, which lowered the U.S. corporate tax rate from 35% to 21%. The second is an adjustment of $200,000 for the adoption of FASB ASU 2016-09, which requires the expensing of the tax deficiencies related to stock awards that historically were recorded in additional paid in capital. Net loss for the quarter was $400,000, or a loss of $0.01 per diluted share, compared to net income of $1.3 million, or $0.05 per diluted share, in fiscal Q2 2017. Included in our fiscal Q2 2018 loss is $1.9 million, or $0.07 per diluted share, of incremental amortization expense associated with our acquisitions. Adjusted EBITDA in the second fiscal quarter of 2018 was $4.8 million, or $0.18 per diluted share, and 8.8% of total revenue, compared to our guidance range of $3 million to $4 million. In the second fiscal quarter of 2017, our adjusted EBITDA was $4.7 million, or $0.17 per diluted share, and 10.2% of total revenue. Reconciliations of GAAP and non-GAAP financial measures, including adjusted EBITDA, appear at the end of this release. Moving to the consolidated balance sheet, cash and investments, including long-term investments, totaled $59.6 million, a decrease of $55.4 million over the comparable balance at September 30, 2017. The decrease in cash was directly related to the Accelerated and TempAlert acquisitions in fiscal 2018. We expect to return to cash positive in fiscal Q3. As mentioned in our earnings release on April 24, 2018, our Board of Directors authorized a new program to repurchase up to $20 million of our common stock, primarily to return capital to shareholders. This repurchase authorization expires on May 1, 2019, and replaces the program set to expire this May 1, 2018. Now I'd like to discuss the results of our IoT Products & Services segment. IoT Products & Services revenue in the second fiscal quarter 2018 was $49.8 million compared to $43.9 million in the same period a year ago, an increase of 13.6%. This was primarily the result of $6.2 million of incremental revenue related to Accelerated. Product revenue was $47.6 million in fiscal Q2 2018 versus $41.8 million in fiscal Q2 '17, a 13.9% increase. We experienced stronger sales of terminal servers in North America and larger sales of embedded modules in EMEA. Services increased to $2.2 million versus $2.1 million, or 6.2%, year-over-year. Our IoT Products & Services gross margin was 50.4% compared to 48% in fiscal Q2 2017. This increase was primarily a result of incremental gross profit of $3.6 million related to Accelerated as well as the stronger performance internal servers. IoT Products & Services operating expenses increased by 11.2% compared to the year ago quarter. The increase was primarily due to incremental Accelerated operating expenses of $2.2 million in the current fiscal quarter. Excluding these incremental costs, operating expenses were down year-over-year. IoT Products & Services operating income was $4.7 million compared to $2.7 million in the prior year quarter. IoT Products & Services adjusted EBITDA was $7.2 million, or 14.7%, compared to $5.3 million, or 12%, in the same period last year. The improvement to adjusted EBITDA reflects the strong leverage in this segment. Moving to our IoT Solutions segment. IoT Solutions revenue in the second fiscal quarter 2018 was $5 million compared to $1.7 million in the same period a year ago. This was primarily driven by incremental revenues of $3.5 million related to the acquisition of TempAlert. Our growth subscriber additions in the quarter were nearly 4,000, and we are now servicing approximately 42,000 individual sites. Our IoT Solutions gross margin was 31.5% compared to 48.2% in fiscal Q2 2017. This decrease was primarily driven by TempAlert and a onetime increase to product cost of goods sold. We expect balance of year margins to settle back into the high 40s. Amortization expense of $500,000 and $200,000 is included in gross margin, respectively. Excluding amortization, gross margin was 42.1% compared to 60.8% in the prior fiscal period. IoT Solutions operating expenses increased to $5.8 million compared to $2 million in the year ago quarter. The increase was primarily due to incremental expenses of $3.3 million associated with SMART Temps and TempAlert. IoT Solutions operating loss was $4.2 million compared to $1.2 million in the prior year quarter. And IoT Solutions adjusted EBITDA was a loss of $2.4 million compared to a loss of $700,000 in the same period last year. Now I'd like to provide our updated guidance, which includes the third quarter and the full year of fiscal 2018. For the third fiscal quarter of 2018, we expect total company revenue in the range of $56 million to $60 million, and net income per diluted share to be in the range of $0.02 to $0.06. Adjusted EBITDA is projected to be between $6 million and $7 million, and adjusted earnings per share in the range of $0.21 to $0.26. For the full fiscal year, we're projecting revenue to be in the range of $215 million to $223 million, and net income per diluted share to be in the range of a $0.07 loss to a $0.03 net income. Adjusted EBITDA is projected to be between $21 million and $24 million, and adjusted earnings per share in the range of $0.76 to $0.88. Included in this full year guidance is our recent Accelerated acquisition. That completes our prepared remarks. At this time, Ron and I will be pleased to open the call for your questions. Sonia. So let me take the first part of that question, which is the phase end of the $3 million to $5 million. I think you will see some marginal improvements as we go into fiscal Q4. And then we really would expect to get that full benefit, really kind of pro rata over the course of FY 2019. So I think you can kind of spread that range really kind of evenly throughout next year. But we really look to that first quarter of 2019. And this is Ron. On the second question, we're really pivoting towards more of a focus on growth and getting higher productivity out of resources. We're ---+ we've done a lot of work, as you know, getting the company more athletic and getting us focused on doing fewer things in the value chain better. So after this initiative, we're really, really focused more so on growth. We're always looking for opportunities to become more efficient. So we'll never stop that relentless focus, but much more clearly focused on growth. Yes, this is Ron. It's really fair and good question. We would like having the buyback in place should there be a good opportunity. We are at a moment right now where we are ---+ we've got a lot of work to do to integrate the acquisitions we've done, which is 5 acquisitions in the last 2.5 years. So we are more focused on integrating the acquisitions, but we're absolutely not ruling out acquisitions in the future, both on the Products & Services side as well as SmartSense. Those are really good questions. We're not quite yet at the maturity level that we could give you that information with confidence. It is something we're spending a lot of time on to make sure we're getting the productivity out of our go-to-market. But we do expect over time as we integrate these companies and get better at our craft that we'll have more insightful commentary around that. That's correct. Yes. Yes. Thanks, <UNK>. I appreciate the well wishes. This is Mike. So the $3 million to $5 million is all in cost of goods sold. It's directly related to the operation center here at Eden Prairie and moving to the outsourced manufacturing model. So $3 million to $5 million it's all in cost of goods sold. And what I had mentioned previously is we'll see some modest improvements in margins, I think, in fiscal Q4. And you can really expect to see a lot of that improvement just sequentially throughout the year. Because it's really, now it's related to outsourced manufacturing, it will be somewhat predicated on volume as well as mix. But the way we view it is really ---+ you can kind of pro rata spread it throughout the year, starting in fiscal Q1 2019. Yes, sorry, <UNK>. So I'll take the tax rate one. The actual tax rate for fiscal 2018 is going to be hard to get your head wrapped around, because we had a large charge in fiscal Q1 even though it was a net operating loss. So what we've kind of built into the model is the 21%. We should be able to take advantage of some R&D credit, so you might see some discretes kind of pop in there. But what we've done in both the guidance as well as our model is used the new rate of 21%. And <UNK>, we're able to add approximately 4,000 subscribers from the previous quarter. We also announced in our press release that we've signed a couple of larger contracts, both from the health and transportation verticals that we'll roll out over these next 2 quarters. So we didn't provide specific metrics on backlog and pipeline. But we are encouraged, in particular, by the progress we're making in health and in transportation. Food is not contributed as greatly as we expected, but we do have a lot of strong prospects in that segment as well. It's taking a little bit longer to convert them from small implementation or a pilot into a rollout. Thank you, Sonia. On behalf of the entire Digi team, we thank you for your continued support and interest in our company. In summary, we are energized by our second fiscal quarter's results, and we are pleased with our expectations for the third fiscal quarter. Digi is a well-positioned company within a large IoT market. Digi has the potential to create transformative value through the growth of both our business segments and increasing the percentage of Digi's revenue that is recurring. We look forward to updating our story next quarter.

2018_DGII

2016

TFX

TFX #Good morning, <UNK>. Thank you very much. <UNK>, this happens occasionally. So about 50% of our business goes through these large distributors, the [cardiac care] and the Minors, so those people you should be familiar with. And occasionally we see that they will ---+ we get trade from some of the shows, the in-hospital sales, and occasionally, we will see a trend where they destock their own inventory levels. It normally normalized within a quarter, and if it just normalizes in a quarter, then it comes back during the year. It's not going to have any impact in the year. We just happened to see it in this current quarter that we're in. I think it's too early in the year for us to talk about an upside at this point in time. I would say everything is on track as we initially planned for 2016. We expect to see some benefit from this towards the end of the year and more benefit as we move into 2017, but both of phase one into phase two, essentially are tracking to plan. That's still a consistent thought in terms of how we are going to get there in the full year. I'd say that in the first quarter, we had a little stronger benefit coming out of mix, but we continue to expect the operational efficiency gains to build as the year processes. So still thinking along those same lines for the full year. <UNK>, I think our long-term view remains similar, that the general marketplace is less favorable to smaller companies than it is to the larger companies through a certain scale extent. Those companies that are $50 million to $100 million in revenue have a tough time with IDNs and GPOs. They have a tough time globalizing. That's becoming a much more important part of a growth strategy. So we think there's availability of product lines that we are interested in. We have said no to a couple of things that we liked over the past several months because we thought the valuations were out of line, so I would echo the point that we continue to be quite disciplined. But also, as last year, we continue to be very, very active in many, many more smaller acquisitions that I think are more than gap fillers but good strategic additions for the product line. I think you can expect that to continue with or without a larger acquisition. Well, the $300 million, $400 million was a subsegment of the overall laparoscopic market. It wasn't defined on a procedural basis. When we launched the product first, we thought we would be doing a considerable number of Lap/Choles. We are doing some of those, but we've found a broader application for the product in more complex procedures ---+ complex, tiny procedures. But the position of the patient limits the ability of the surgeon to place trocars where they would once placing trocars, and obviously, with our device, they don't need to place trocars. Some bariatric procedures that the surgeons are doing and have used the product for in the limited-market release. So the market size is not limited by the procedures per se, but it's the [step] taking a proportion of the laparoscopic overall market. Well, for us, it has to be the way to go for the most part since we're ---+ our size is what it is. But I would point to the continued success we have with both IDNs and GPOs in this country in terms of winning awards, and for new products as well. So that notion that GPOs or hospitals want to deal with a limited number of suppliers has some partial truth to it, but there's still a robust place for product differentiation and for better clinical outcomes. I do think, and I've said this many times, I think we are big enough to get in front of GPOs and in front of IDNs. We're big enough be able to sell our products globally. So I don't see a disadvantage in our size. I see more of an advantage in our nimbleness. Sure, well, just a little bit of background on the transaction would perhaps give you some insight. As a reminder, the notes come due on August, 2017. We wanted to take steps to redeem some of those notes in advance of maturity. Given where the notes currently trading in the marketplace, we saw the opportunity now to take those notes out at a pretty attractive price for us. We determined that the best approach was a privately negotiated transaction versus going out with a full tender offer, just given the difference in the premium that would be required between the two. And because we approached this in that manner, there's a limitation of the amount of notes that could be redeemed at this time. Now, we're always evaluating the highest and best use of the capital, and so we'll continue to monitor the terms, the maturities, and the rates, and as I mentioned earlier, you shouldn't assume that we are finished with what's been done in the first and early part of the second quarter. We are continuing to look to see if it makes sense when we can go back in the marketplace to look at the remaining notes. Thanks, operator, and thanks to everyone that joined us on the call today. This concludes the Teleflex Incorporated first-quarter 2016 earnings conference call.

2016_TFX

2017

LOW

LOW #Yes, <UNK>, it's <UNK>ert <UNK>. I'll start. As you're aware, we have announced some staffing changes over the last 30 days or so, both in the store and at the corporate office here. And you know, as we see what's rapid shift that's changing in customer expectations and what they expect in retailers, our whole movement to be a customer-centric omni-channel home improvement company really dictated that we needed to allocate our resources differently so that we could better meet the needs of customers. That's something we have to continually do, obviously, to make that sure we have our resources in the right places so we can continue to meet their needs. From a store standpoint, I think our new staffing model helps insures that we're optimally prepared for the upcoming Spring selling season. The change we made in the store, we think, will really improve our leadership capabilities, with an enhanced focus on training and really empowering our associates to deliver on an improved experience for the customer. So we're really pleased with the receptivity we've seen in getting that done before ahead of the Spring selling season. Here at the corporate office, the change that we just made at the corporate headquarters, are really designed to create a more agile, efficient and customer focused operating structure. We needed, as we continue to migrate from being a single channel retailer to an omni-channel home improvement company, we really needed to step back and make sure that we had our resources aligned in the proper way so we can best take advantage of the opportunity that we see in front of us. And as we've talked for many quarters here, online, in-home, contact centers, those other things that are part of our omni-channel strategy, are where we're seeing the highest growth, and we wanted to make sure we had our resources aligned behind that. So we're excited about it. It's always tough when you make those changes impact peoples lives, but I think it's the thing that was the right thing to do to continue to move us forward and capitalize on the opportunity we see ahead of us. Related to the impact to our guidance provided at the analyst conference, they were incorporated in the outlook that we shared at that time. <UNK>, we look at a number of factors, macroeconomic factors, our ongoing performance, input from vendor partners and other sources, to try to understand what's going on with the consumer industry demand drivers, et cetera. So certainly, as we came out of the third quarter and saw trends in fourth quarter leading up to the December meeting, we're certainly aware of our performance, also mindful of actions we were taking to drive consumer demand, to drive productivity, et cetera. So what I would say is we talk about our outlook for the year, is I feel really comfortable about our opportunity to hi the 464 for the year. It's going to happen differently than we planned it, but as far as getting the EPS, I think there's confidence with the team that figure's more than achievable. No real impact, <UNK>. So our comparable sales calculation does use the comparable weeks. So week 53 of 2016 comped over week 1 of 2016, which is the comparable week for the period, which is consistent with how we've reported comps the prior three 53-week years since I've been CFO. The 14-week period was compared against the comparable 14-week period. So yes, the comps as reported are what they are. <UNK>, I don't think we really measure it that way. What I can tell you is that as we've gone through and looked at, as I said earlier, the evolution as we've gone from a single channel retailer to an omni-channel home improvement company, we certainly have made changes along the way in the way that we have reallocated the resources. But we look at the continual shift that you see taking place in the customer, in the way that they want to interact with us, you realize that we needed to continue to evolve. So if you think about it, you're sitting back with an organizational structure today that has evolved over time, not the one that we would have designed from scratch if you were starting out as an omni-channel company. So as we continue to see that evolution, we said we really needed to step back and say, okay, where do resources need to be allocated at the corporate office. We took out some spans and layers to make us a more agile, nimble organization from a corporate office standpoint so that hopefully we can better respond to opportunities, better respond to the stores and our other channels after they've taken care of the customer on a daily basis, and then also did some hard look at our management structure in the stores to say, how can we ensure that we're organized in a right way to make sure that from a leadership standpoint, we're leading people in a way that's going to provide a better experience. So it was really more driven from that standpoint. We look at productivity more as, how do we take dollars and reinvest them in the areas that are going to drive better performance. So yes, there's obviously, through that process there's a cost savings impact, as well, but it's also, if we get them aligned appropriately then we drive better performance, which leads to the productivity loop. So you're right. it was strength of our Kitchen and Appliance business in the quarter, <UNK>, that drove that. Also, the above average pro performance is a driver for growth in average ticket. Certainly, as we take a look at our own execution, we strive to be better every day, as the items that Mike described in his comments are all items of focus for the quarter to allow us to take advantage of demand and serve customers. Yes, this is <UNK>ert. We did see continued improvement in the North and our performance there. So I think certainly some of the action that the team has taken to better resonate with the customer has certainly started to take traction. So we're pleased with the improvement in performance that we saw there. As we look at 2017, if you look at, whether it's the underlying macro fundamentals that are out there, still seeing a very healthy housing market, whether it's from a turnover standpoint, whether it's from an appreciation standpoint on housing, incomes continuing to rise, as we've spoken about, employment continuing to improve, all of those things, I think, set up home improvement to continue to gain shares as a percentage of share of wallet in 2017. We've seen that trend for the past few years, and I think it sets us up well for this year. And then on top of that, we've actually, behind, or post election, we've actually seen, from our consumer sentiment survey, a really strong increase in homeowners' intention to invest in their home and start a project over the next six months, as we talked about. So as we look at just the underlying factors, some of the momentum that we saw coming out of our quarterly consumer sentiment survey, it sets us up that we think that sets us up well that a 3.5% comp should be achievable as we look out to 2017. So as we talked about in addressing <UNK>'s question, the productivity savings were contemplated in the model we put together at December analyst conference and consistent as the outlook today. What I would say is if you think about prior EBIT expansion and prior flow through expectations, there was a component of gross margin in there. We've taken that out, and the entirety of the flow through and EBIT expansion is driven by expense leverage. So it's embedded in our SG&A outlook for the year going forward. Thanks, <UNK>. So in the fourth quarter, <UNK>, we actually had modest deflation. We had Building Material deflation of 25 basis points, driven by roofing insulation which offset the, call it, 15 basis points of inflation in lumber. For 2017, there's only very modest inflation contemplated for the year. Less than 20. <UNK>, really don't have a decomposition of that 9% growth in front of me. It is all of the above, right. It is the strength of the performance in those categories and the tactics we've been taking over the number of years to better serve pro customers that are driving the 9% growth. The private label card penetration was 28.7%, up about 20 basis points versus the same period last year. Thank you. I'll take the first part, let Mike address the second part. So as we think about the 35 store openings, that's roughly 9 US big box stores, 10 stores in Canada, a few in Mexico, and 14 Orchard locations. So they're varying formats and varying geographies. As we think about the spend for new stores, that is roughly $400 million in 2017. As we think about return hurdles, we've got risk adjusted return hurdles for all of our investments, including real estate. We do expect the portfolio of stores to more than exceed those hurdles going forward. So <UNK>, if you'll recall, we had fairly substantial deleverage in the fourth quarter of last year, based on the strength of performance, which really impacted our annual accruals. So we had significant deleverage Q4 last year, which, as we planned 2016, that was expected. While we had really good performance this year, it didn't compare to what we saw last year, therefore the rate of change was less, giving rise to expense leverage in the incentive comp area Q4 2016. Going forward, we've got a variety of plans that have sent the store management and store associates to serve customers every day to ensure we help meet their needs, omni needs going forward. So no real change in how we're thinking about incenting the folks that are on the front lines interfacing with our customers every day. Regina, we've got time for one more question. Thank you. Thanks, and as always, thanks for your continued interest in Lowe's. We look forward to speaking with you again when we report our first quarter 2017 results on Wednesday, May 24. Thanks, and have a great day.

2017_LOW

2017

EQT

EQT #Thanks, Pat, and good morning, everyone Before reviewing the second quarter results, I do want to briefly give you an update on the Rice <UNK>nergy acquisition As a reminder, on June 19, we announced our intent to acquire Rice for 0.37 <UNK>QT shares plus $5.30 per Rice share As Pat mentioned, the Proxy Statement will be filed later today and will be available on our website, Rice's website or the S<UNK>C website Steve is going to have further comments on the transaction in a few minutes I'll provide an overview of the second quarter results As you read in the press release this morning, <UNK>QT announced second quarter 2017 adjusted earnings per diluted share of $0.06 compared to a $0.38 loss in the second quarter of 2016. Adjusted operating cash flow attributable to <UNK>QT increased to $223 million as compared to $105 million for the second quarter of 2016, reflecting an increase of $118 million As a reminder, <UNK>QT Midstream Partners and <UNK>QT GP Holdings results are consolidated in <UNK>QT Corporation's results Moving to Production, Production sales volume of 198 Bcfe for the second quarter was 7% higher than the second quarter of 2016 and was slightly ahead of the high end of our guidance range The realized price, including cash settled derivatives, was $2.86 per Mcfe, a 36% increase compared to $2.11 per Mcfe in the second quarter of last year Operating revenue for the production company totaled $631 million for the second quarter of 2017, which was $554 million higher than the second quarter of 2016. Total operating expenses at <UNK>QT Production were $578 million or 10% higher quarter-over-quarter, consistent with volume growth Transmission expenses were almost $38 million higher due to volumes transported on the Rockies <UNK>xpress Pipeline and the Ohio Valley Connector As mentioned on our first quarter call, we were paying for some Rex capacity last year But since we're unable to physically move our produced gas to Rex in the second quarter of 2016, we'll use that capacity for marketing When we use pipeline capacity for marketing, we net the cost of the transportation against the recoveries realized The cost of pipeline capacity used to move our produced gas is recognized as an operating expense Processing expenses were $17.7 million higher, consistent with higher wet gas volumes, primarily related to our recent acreage acquisitions Gathering expenses and DD&A were all higher, consistent with production growth Production taxes were $1.8 million higher as a result of higher impact fees due to increased drilling activity in Pennsylvania and better pricing Lease operating expenses, excluding production taxes, were $3.3 million lower <UNK>xcluding the impact of prior year pension settlement and legal expenses, SG&A was slightly favorable for the quarter, as we reduced our Kentucky cost structure when we integrated the Kentucky gathering operations into production in 2016. During the quarter, our liquid story was strong, reflected by an increase in volumes and a higher pricing environment NGL sales volume and realized price were significantly higher Regarding pricing, the average realized price, including cash settled derivatives, was $2.86 per Mcfe, a 36% increase compared to the $2.11 per Mcfe in the second quarter of last year The average differential for the quarter, which was a negative $0.64 per Mcfe, was within the stated guidance range for the quarter This is a $0.51 decrease from the first quarter of 2017, but a $0.15 improvement from the second quarter of 2016. Approximately 80% of our local basis exposure for the balance of 2017 is locked in and is reflected in our differential guidance The minimal effects of declined local pricing highlight the value of our diversified firm capacity portfolio, which provide significant takeaway capacity to premium markets We continued to expect improvement in our realized price as incremental pipeline projects come online, including the Mountain Valley Pipeline project, which will provide access to the premium Southeast and Mid-Atlantic markets Now moving to Midstream results, <UNK>QT Gathering operating income was $83.3 million, $10.1 million higher than the second quarter of 2016. Operating revenue was $112.1 million, a $12 million increase over the second quarter of 2016, driven by production development in the Marcellus Shale This was slightly offset by increased operating expenses, which totaled $28.8 million for the quarter, a $1.9 million increase over the same period last year Looking at <UNK>QT Transmission, second quarter operating income was $57.8 million, $1.9 million higher than the second quarter of 2016. Firm reservation fee revenue was $79.5 million, $19.2 million higher than the second quarter of 2016, primarily as a result of <UNK>QT contracting for additional firm capacity on the OBC Operating revenues were $86.8 million, an $8.9 million increase over the second quarter of 2016, while operating expenses were $29 million, a $7 million increase over the second quarter of 2016, with approximately $5 million of the $7 million increase being DD&A I'll close my remarks by providing you with our liquidity update We closed the quarter in a great liquidity position with zero net short-term debt outstanding under <UNK>QT's $1.5 billion unsecured revolver and about $561 million of cash on the balance sheet, which excludes <UNK>QM We're forecasting $1.2 billion of operating cash flow for 2017 at <UNK>QT, which includes approximately $200 million of distributions to <UNK>QT from <UNK>QGP We're fully capable of funding our roughly $1.5 billion 2017 Cap<UNK>x forecast, which excludes <UNK>QM and land acquisitions, with the expected operating cash flow and the current cash that we have on hand So, with that, I'll turn the call over to <UNK> Hi, <UNK> Sorry, just one clarification on that piece That would just be for the <UNK>QT run rate There would be additional crews because of the Rice acquisition So we would be at a higher number than 7 in 2018. As Steve said, we're committed to addressing the sum-of-the-parts issues in 2018. I'm not going to comment on any particular path forward But we don't believe that taxes will be the deciding factor in whatever it is that we decide to do, or importantly, with regard to the timing of when we're able to do it Thanks, <UNK> Hi, <UNK> Hi, <UNK> It's Rob I think that when you look around at where we overlap with Rice, that we overlap both on the upstream and the midstream side And so it's going to require less capital to deploy the midstream solution for whatever drilling that we do And some of that may accrue to the midstream business and some of that may accrue to the upstream business, but there clearly will be less capital required to gather the volumes that get drilled Nothing at this point Hi, <UNK> So, just one clarification on that, <UNK>, that I don't think we've said today When we're talking about the Utica, we're only talking about the Deep Utica in Pennsylvania We're not referring to the Ohio Utica that comes with the Rice transaction <UNK>conomically that competes much better with the Marcellus

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