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Financial Services Innovation Lab, Georgia Tech 19

WBA

Q4

A.J. Rice

Alex Gourlay

Okay. And then maybe just follow-up -- or second one. On the pilots, I know it's a little unclear when they're going to swing positive, but I just want to make sure I understand. Is the main concept of the contribution from those the LabCorp, the VillageMD, the stuff with Optum and Humana, is that foot traffic? Is it your percentage of the earnings of those entities themselves? How's the company going to benefit from those ventures?

A.J. I think just one additional thing. The here was quite important particularly in pharmacy. So, we are really looking to see -- convinced that having a general practitioner in a pharmacy alongside a pharmacist working together not only drives additional prescriptions and a wee which is completely legal, but also provides better patient care. And that combination will lead to new platforms in the future we've spoken about as we look to not just provide a digital care, but also digital care in the community.So, again, its early days, but we are very excited about this idea of doctor-led and pharmacist-enabled including that partnership going forward in that model, yes.

DIOD

Q1

Tristan Gerra

Keh-Shew Lu

Hi, Dr. Lu. During the earnings call, I think it was in October of last year, Rick was highlighting the potential for Diodes to reach 38% gross margin by the second half of this year. And then it sounded like your outlook for gross margin early this year was more muted to about 36%. Today, your Q2 gross margin guidance is 38%. That's even ahead of last year expectation. And at the time one could contend that the end demand environment was stronger than what you're seeing today. So I know you mentioned Europe and automotive but could you go more into details about the catalyst for gross margin? What makes it better than you saw it earlier this year? Maybe quantify how big Pericom is as a percent of revenue and how sustainable you think this gross margin outlook is into the second half?

Okay. Tristan, you know I've been emphasizing if we grew the automotive and industrial revenue, automatically the gross margin will be improving better than our expectations. And so you can see the result, automotive, while the market went down, our sequential still go up 7% and year-over-year is at 20s high, 28%. So you can see the effort due to the past design win plus the company increase as I have been mentioning to you several times. This strong growth has enabled us to reach 10% - now 10% of our revenue and we continue to improve the automotive performance. And that is the one key thing to improve the gross margin better than expected. Another one is the industrial. Now this quarter, industrial is 29% of our total revenue. It is an indication of a significant growth in the industrial area for Diodes. While the market kind of slowed down and that's you're seeing through other people's earnings conference calls, industrial is actually slowed down a little bit, but for Diodes, we continue gaining the market share. So if you look at my long-term strategy, I've been talking about I want to improve the industrial and automotive to 40% of our revenue. We already reached to 39% and we'll continue our long-term goal of getting higher and higher automotive, industrial - industrial applications. And this will enable us to continue improve our gross margin. One more thing, due to our Pericom acquisition, our Pericom products result in the frequency control or those kind of the IC products contribute a significant growth, contribute to our margin. If you remember, our Pericom products typically have a 50% GP or higher. And so, if that sector grows very faster, then it again enables us to exceed our gross margin guidance. And if you look at the Pericom product concentrate on the data center, cloud computing and servers and automotive applications, all those is good and big growth effort for us and contribute better than average growth in Diodes' business. So, I'm still very confident we will continue effort to benefit from these three key areas, reaching high GP and change our product mix towards the high GP products. Even if we get some pressure from the low-end commodity type of product and the price pressure is there but due to our effort on the other market segments I mentioned, then our GP still able to continue improving.

ABC

Q4

Charles Rhyee

Steven H. Collis

Yeah, thanks for the question. Steve, at the beginning, I apologize – I kind of missed a little bit – my phone was cutting in and out. But you were talking about these buying groups, and then – is it that you were saying that you were – you anniversaried sort of the new pricing that you're seeing in some of these long-term contracts, or was there still some more as you work with the actual members that that still has to filter through? Just to clarify. And then in terms of what you were just talking about in terms of your wallet share as a prime vendor, can you talk about how much that's changed over the last year or so, like kind of what kind of share of the wallet are you getting currently? And how much more room do you think there is for improvement? Thanks.

Well, I go back to our fiscal year 2016 planning process, and we looked at a small erosion that we'd experienced in the last few years in our GNP share of wallet. And we just – we said, okay – I mean, Tim and I sort of challenged Bob Mausch and our team. We said, listen, we're investing in Elevate, we're investing in business coaching, we're investing in First to Shelf. We've got our highest full (1

RHT

Q3

Jason Maynard

Charles E. Peters

I just wanted to follow up on the question around, basically, the invoicing trends. And just to get a little bit more granular in terms of how you're seeing customer relationships mature, is this a function in your eyes of bigger transaction sizes? Do you see this because the product line's broadening? What are some of the puts and takes and -- as you negotiate with the customer in terms of, do you not want a discount for getting the cash upfront? How does that negotiation play out and how does it ultimately impact that calculated billings proxy that we all, without really maybe using a better word, obsess on every quarter?

Just -- I don't know that I have anything to add, I agree with Jim's comment. It has nothing to do with the smaller deals. It was more a function that we had really strong big deal metrics here.

TER

Q2

Timothy M. Arcuri

Gregory R. Beecher

Greg, can you help us with what the mix is going to look like for September from a revenue perspective? And the reason why I ask that is because it's pretty hard to fit the guidance, given where the bookings were. So I'm wondering maybe if you can help us with what the revenue mix is going to look like. And then I had a follow-up.

Okay. We don't typically do that, Tim. But I'll say the SemiTest, we expect to -- obviously, we have a larger segment. And basically, Semi and LitePoint are going to be down a bit from the prior quarter, but they'll both be down about the same amount [indiscernible] percent.

NWSA

Q2

David Bank:

Chase Carey:

Thanks, very much. Two questions, first could you talk a little bit about how the local stations grew revenue in December post political and how they’re pacing in the first quarter versus the impact of political? And second, could you talk a little about that you are now half way though the year that Myspace restructuring is in process. What do you think is embedded in your guidance kind of a base case expectation for Myspace losses for the year or earnings? Thanks.

I think in terms of the TV stations, there are some ups and down, you look at this quarter on pages, we didn’t have the BCFs, we do have the Super Ball in the third quarter, I think third quarter, we’re looking at pacings that are probably low-double digits as pacing what was on Myspace. Again, I think like our focus is going to be really said on the strategic options, I think if you look at it financially.

PM

Q3

Bonnie Herzog:

Hermann G. Waldemer:

I just actually wanted to touch on Japan. You mentioned you feel comfortable that you're going to be able to retain around a 30% retail share in the market. So I was hoping you could give us a few more details on what you're seeing in this market in terms of the consumer purchase patterns and then maybe also relative to what JT has been doing to take back some of their share.

Okay. The published shares that you see there are also -- I mean on JT's side, the shipment shares, these now in the quarter or year-to-date, are not really representative yet. I mean, it's simply the fact that, of course, the pipeline on JT's product had been empty and has been reloaded now to whatever JT considers to be a necessary level of their volumes. So in terms, really, of what sticks with the consumer, we simply have to wait a little bit until those shipment shares will equal really consumer offtake shares again, which -- as has been the case in the past. For now, I really think that the consumer offtake shares which we measure in the C-stores give you the best indication. This is, of course, not a national average. This is a snapshot. And also, in those stores, our shares before has been slightly higher than the national average. But we continue to see, even now in the beginning also of October, the very latest numbers, and we, of course, look at them every week, that our shares continue to be slightly above 30% with Marlboro shares in there being stable. So therefore, I mean, that, of course, makes us feel good about the retention shares that we will be able to keep and which will form a much better basis from which to grow going into next year.

ENTR

Q4

Aalok Shah

Dave Lyle

Hey, guys. Couple of quick questions. Dave, on the gross margin, the guidance range 52.5% to 53.5%, the mix there I am sure is somewhat dependent on that, if you get to the higher end of the range, can you give us a sense of what you are thinking about that at this point? Is it definitively favoring more CSS or is MoCA now also kind of up to where the gross margins are for where CSS is at this point?

Sure. First of all, our long-term gross margin range is 50% to 52%. And we have been on the top end of that and are now exceeding it for several quarters now. So clearly the DBS ODU business which has higher margins in the RF product is contributing in a little bigger way than the other product lines. Going forward, I think it's really going to depend on how fast the ramp on the MoCA side actually happens. We thing we're going to continue to get growth out of DIRECTV as we penetrate further with CSS. But I think the MoCA market in general has a larger stamp, so there is potential there for that part to increase. I think at the end of the day, we're going to be able to hit somewhere in the 50% to 52% range quarter-to-quarter for at the foreseeable future.

RAIL

Q4

Sal Vitale:

Charles F. Avery:

Right. And then – so that remaining $1.7 million what was that again?

So, that’s the one Joe had discussed in terms of the lead-times on the material. So the $1.7 was fundamentally, it’s 2014 production. But in terms of the lead-time requirements we have to go – we had to buy materials at prices that were substantially higher than sort of a normal lead-times. And so fundamentally we booked the charge in 2013 for that difference.

GME

Q3

David G. Magee

J. Paul Raines

The interest in the new consoles is very encouraging and the -- I guess, the discounts that we also have attached to it versus the last cycle launch may not have been warranted. I'm curious, as you look out 6 to 9 months from now, when you get through this initial gamer-centric demand, how do you feel about the visibility of the console demand at that point in time past the initial rush? Are you feeling better about that at this point? Or it's just hard to say?

Mike is going to give you some modeling sort of stuff. I would just tell you plain, the PS4, you can't help but think about the innovation level in that device as being around for a long time. Just all the social features, you stream PlayStation live, all that stuff is really compelling. Mike -- that's just an anecdotal qualitative kind of thing. But Mike, what do you want to share with about that?

CMN

Q1

Mitra Ramgopal

Seth Yellin

And again you're seeing, you have a pretty good pipeline both in the U.S. and outside?

Yes, we do. We feel pretty good about where our pipeline is today.

NMRX

Q3

Richard Valera

Stratton J. Nicolaides

Okay. That's where I was at. Yes, I was getting a different number there, so maybe we're just -- I'm on a different base or something.

No. But our -- we are expecting clearly an increase in recurring service revenue and support Q4 over Q3.

IM

Q2

Matthew Sheerin

William D. Hume

Thomas Weisel Partners. Thanks. Just a follow-up on the question regarding your revenue guidance. Could you remind us the revenue run rate for DBL. I think it's around $300 million and will you see a full quarter's worth of that in the September quarter?

Yeah, Matt this is Bill. Last year in 2006 DBL had about $300 million in revenue. It's growing in the mid teens essentially, I would expect on a year-over-year basis. So you can do the math on the individual quarterly, we won't disclose separately but it's roughly... it's pretty estimatable. And we acquired that right at the end of June, so what we ended up getting is all the balance sheet but really no P&L in the June quarter. And then so it will be basically a substantial... sequential increase.

HSY

Q3

Michael Lavery

Michele Buck

You've talked about the increase in e-commerce sales, even if it might have decelerated a little bit, but it's up very strongly. You've said in the past that baskets and dollar ring are higher online, is that still holding true with the growth that you're seeing now. And on the margin side, you've mentioned that there is a small gap, but that is that you were narrowing it and the scale would help that -- is that coming along the way that you would have expected. How does that look now?

Yeah. I mean we've generally seen larger basket sizes in general across most channels of this year, as people are doing fewer trips and more quantity per trip. So I think that's been somewhat of just an underlying dynamic given the pandemic impact in the marketplace. For us, on our e-commerce business, we've seen very significant growth across the board, but particularly in click-and-collect, where people actually go and pick up their groceries. And also in the local delivery models as well as versus kind of national delivery. The margins that we have are similar to what we see in bricks-and-mortar.

BGFV

Q2

William J. Dezellem

Steven G. Miller

And then, it would be our sense that you felt as though you were playing catch-up, maybe, but certainly, that there was an accelerated effort, and I guess, specific to that accelerated effort or catching up process, how far along would you say you are in that?

Well, I'm having a hard time. Again, as I said, there's no end date. We remain -- we believe very much in the middle of the game. Bottom of the fourth to top of the fifth. That's how I'd call it. I mean, it's really ongoing.

VSH

Q3

Jim Suva

Gerald Paul

And then my follow-up is, as we look at tantalum pricing typically if my memory is correct, it’s this time of year when the tantalum powder company start looking at contracting pricing for the future year out, is that the case now? And what type of pricing are we looking at for 2012 versus 2011? Because I believe 2011 was up pretty sharp versus 2010. What type of price of tantalum should we be considering for your cost of good sold increase and are you back in the market or you have to have quite a bit of inventory you’re still having – that you can go through?

We did not believe in the shortages since a long time. We never believe the story with the shortage and therefore we don’t have so much inventory as well and this is not the environment for substantial price increases in tantalum powder, I would say.

TGX

Q4

Joseph Munda - Sidoti & Company

Yes, Christine and also, and what I got out of the article is, it seems like these guys really put all their cash together and are going after and logging the Congressmen, how do you compete when these guys are doing that.

Well, first of all, they have been doing it for quite a while and the Office of Inspector General and I cannot give you with certainty when that date was maybe 09, around 09 in the Office of Inspector General and there is an article by Yale University from last year about over-utilization of IMRT because of this, I will tell you I don't know that if Theragenics has the horsepower to fight this battle, what I can say is that it is not lost on CMS, what these charges have - what they have done for the Medicare and the treatment schemes for early stage prostate cancer. Theragenics is not big enough to fight this war on its own, we just cannot. What I am doing is making sure that everybody is aware of it. I'm hoping that the government takes control over their missed steps.

NTCT

Q4

Alex Kurtz

Anil K. Singhal

Yes. Good morning. So, the high-single-digit declines in service provider, Anil, if I heard that right, what percentage of that is being driven by just overall spending in that vertical versus transitioning some of your customers to software-only? I think you said 8% to 10% of the business this year will be software-only, but I guess what's that percentage – as a follow-up, what's that percentage in the service provider segment?

I'll let Jean add maybe a specific percentage, but overall software strategy is that we need to mitigate part of the OpEx and CapEx challenges. So, everything is related to dealing with OpEx and CapEx. We just decided that instead of market forces disrupting us, we rather do it ourselves proactively. And so that's what is resulting in 10%, we are – that number we are forecasting for this year, it was low single digits this year. And next year, we hope that we'll accelerate that beyond 10% and that will result in even better gross margins. But overall, dynamic playing in the sector is that customer has X amount of budget. And unless they can buy sufficient capacity for an X amount, they rather not do anything or do go to cheaper solutions, less attractive, but cheaper solutions. And by we coming up with a software solution and it's evidenced by the couple of (37

ODP

Q3

Stephen Chick:

Steven Schmidt:

For Steve Schmidt, just on the Direct segment, the BSD, obviously, flat, it's been an improvement from where it had been. It was kind of the same as last quarter. And I was thinking that Direct would've gotten sequentially a little better. I don't know if you're kind of looking that way as well. But just given the investments that you've been making there, can you talk about what's happening competitively within Direct? And just remind me is that about a third of the BSD business?

Steve, yes, about a third would be a good estimate. When we look at the Direct business, the combination of, obviously, our activity on the web, catalog, direct mail, e-mail, and when I look at that space, it is a highly competitive space. When you look at page search, you look at what's happening, who the different search engines. We see competition increasing significantly, the number of companies who are actually competing with us from a page-search standpoint to acquire keywords has increased significantly. We see increased activity around catalog and obviously our focus around the web. I would say generally, we're pleased with the overall performance of our Direct business. Obviously, we're involved in the whole back-to-school process, also, highly competitive. So just to see that business kind of trending flat, it is our intention to obviously return to positive growth hopefully in the near future. So no, I was not displeased in any way with our performance. And I think we're doing a good job overall, managing the mix, both products and promotion, relative to our Direct business.

ENTR

Q4

Tim Luke

Patrick Henry

Just remind us where you are with your 65 nanometer migration and the new product delivery in the MoCA arena?

Yes. So we, on the 65 nanometer MoCA 1.1 product, we have been in production since September of last year. We have won some new designs based on that. We are starting to ship production volumes. But we have pretty decent volume this quarter on that product. In terms of the crossover point between that and the existing (inaudible) product, it's really kind of late this year where maybe it gets into kind of the 50/50 state and then kind of migrates into the 65 nanometer completely sometime in 2011, is kind of what we are thinking about right now.

OCX

Q1

Steven Mah

Ronald Andrews:

Okay, great. Yes, that’s great color. And maybe just one more question. On your pharma services business, again kind of the same line of questioning, how COVID-19 shutdowns affected your pharma customers? And again, do you expect a gradual recovery or short ramp back up as research and academic labs begin to open up?

Yes, this is one where I’ll recruit Dr. Ross or Dr. Hesterberg as well, but it’s interesting because right out of the gate the first couple of weeks, a lot of the engagement we had with the pharma companies themselves went down significantly in the quiet. And obviously after a few weeks, things began to open back up and we began to reengage. What we do know is just from that feedback from the industry and my role at ASCO, we are hearing that there has been a reluctance of patients to go to the hospital to be treated and thus the number of patients that would normally get diagnosed and potentially put on a trial has slowed. But what we do know is the engagement with pharma and the interest in what we’re doing is starting to pick back up. When those patients will actually show up and start begin enrolling in various trials is really still up for grabs I think, but we don’t have really direct insight to that expect through our pharma partners. But Dr. Ross, any color commentary you want to add on that?

BJRI

Q2

Christopher O'Cull

Gregory Levin

Yes, that's helpful. And then just the restaurant margin was down, obviously, a couple hundred points this quarter with the two comps. So -- and it looks like it's going to be down, based on your guidance, another 150 on a -- on a softer comp. So, how do you keep margin flat with a 3% comp?

Well, we think with the 3% comp and you start to come back and take out some of the initiatives that we rolled through, it's probably going to be a little bit of a challenge from that standpoint, I think, as you look at it. But I think there's some efficiencies that we can go after. I also believe, as we look at this, some of it is transitory, you know, avocados are starting to come back in line from that standpoint. So, we would probably pick up the basis points there. We've got the basis points in some of the investments that we're rolling out in labor that's started to help us.And then, as always, we're going to go after that operating occupancy line and make sure there's areas that we can get more efficient at in our business. I think there's a challenge -- we think -- Chris, real quick, the challenge we face, frankly, and I try to make this clear short-term, is Q3 is just our lowest weekly sales average quarter and that with, you pay some utility rates, we start to pay for the NFL package in our restaurants. There's just little things that kind of hit us in Q3 but I think when we look at our business longer-term, we like where we are, we like the menu, variety that we have, the fact that we can have value on one side and we can have higher priced items or center plate entrees on other, but that will allow us to drive sales, drive check average and provide a great guest experience that frankly will allow us to drive margins.

EXPE

Q3

Scott Kessler

Michael Adler

Two questions if I may. The first is, obviously, it's a small part of the overall revenue mix, let me say. But Egencia with essentially flat compares on a sequential basis, could you just provide an update on what's going on there? And my second question relates to the M&A that's been occurring in Europe on the OTA front, and obviously, there's been considerable speculations. Can you talk about whether or not you think you would potentially have an interest in participating? And do what you think of the path [ph] you'll make in that regard?

Yes. So on Egencia, we continue to be pretty pleased with its growth, and it really is kind of across-the-board, different segments in the market, geographically dispersed as well. We are seeing much faster growth rates than we think the industry is experiencing. We grew 40-plus percent gross bookings, and AMEX, I believe, grew about 20%. And so we feel like we are taking share. The comp does start to get a little bit more difficult based upon when corporate travel started to return a bit. For us though, I think what's most positive is that we're seeing the increase in same client spending as well as a lot of the new business that we signed during the recession and then continuing on with new business today. So I think our value proposition continues to resonate very well.

KONA

Q1

Mark Smith - Feltl & Company

Berke Bakay

Okay. And then last question, can you just comment anything else that you can give us on kind of comp trends during the quarter and kind of what you have seen as weather has improved recently?

And we are expecting snow in Denver in two days, so the day that we hate to use weather as an excuse, but the day that kind of stay clear and nice days we see significant improvements year-over-year, so…

TWI

Q4

Justine Ho

Paul G. Reitz

Okay. I guess I must have misheard you. I thought you were not able to pass the rubber cost increases through without price increases.

Just the first half of the year. If you look at the chart for natural rubber going back to the tail end of '16 into early '17, it spiked rapidly. So if it had done a gradual increase, it would have been less of an issue, but it didn’t. It did one of those runs up the mountain that’s scary to look at. And it was just driven by primarily speculation going on in some Asian markets. So that’s why it wasn’t a supply-demand imbalance, so that’s why it was able to correct itself in the back half of the year. But again, if you just pull up our natural rubber chart, it does the hockey stick and it’s ugly to look at. And the way our business model is and the way tire manufacturers is they’ve also expressed since that moment – we just don’t have the ability to absorb those – well, we have to absorb the cost but we don’t have the ability to pass them on that quickly. And so basically everybody had to face absorbing those costs more so than what we could pass on. But it hasn’t happened that – that hasn’t happened that often out of blue. It’s happened before in commodity cycles where rubber cost increased that quickly, but this one came out of the blue with natural rubber and again it wasn’t driven by supply-demand and the world went back to normal fairly quickly.

AMD

Q4

Matt Ramsay

Devinder Kumar 

No, thanks for that. As a follow-up, I guess, for both of you, but maybe for Devinder, just a couple of little pieces. For me, it looks like, on the operating expense side, you're going to be up in the neighborhood of mid-20s for the full year in the annual guidance that you outlined. Maybe you could talk a little bit about the focus of that? Is it branding and marketing in the PC and server spaces as you grow, or is it in other areas in R&D? And then, secondly, I think you guys had disclosed the data center revenue mix. So, GPU plus server in prior quarters? And if you have that number handy, that would be really helpful. Thank you.

Yeah, let me take the second one first. You know, data center, it's as, you know, we said in the past, mid-teens of revenue. And this quarter, it is around the same, mid-teens of the total revenue. And I'll point out that it is record revenue in the quarter, so that's pretty good. And we feel pretty good about that, having mid-teens revenue in the data center, combined server, and data center GPU on revenue of $2.1 billion. As far as opex is concerned, you know, our guide for the year is about 28% of the revenue guide that we provided. And you are right, fundamentally, the investments are, you know, R&D and go to market, and obviously, the business is growing. So obviously, there's investments needed to go ahead and grow the business from an absolute standpoint, but we feel we can manage it to about 28% of our revenue overall for the year.

RDUS

Q4

Kevin Patel

Gary Hattersley

This is Kevin Patel on for Salveen. First question is for the elacestrant compare and controlled study. How long will it take to data?

So, at this point, we're actually not guiding in terms of how long it will take us to enroll the elacestrant study. We’re guiding to when the study would be initiated, which is the first half of -- I'm sorry, second half of 2018. Obviously, it's a high priority for us, we're looking to execute this study as quickly as possible and to enroll as quickly as reasonably possible.

TAP

Q3

Mark Swartzberg

Stewart Lindening

Okay, There is obviously an issue with the way the Canadian dollar has performed over the last month or so. I have two questions in that regard. If we assume, for illustration purposes, that your currency neutral profits are flat next year, operating income flat, what is structurally there? Let’s say for illustration the Canadian dollar is down 15% year-on-year versus the US dollar next year on average, what is structurally in place to cause that scenario to not produce a 15% US dollar profit decline? Have you done anything hedgewise that might add to any structural protections you have? That’s a translation to US dollar profit question. I’m going to turn that over to Stewart, if that’s okay with you.

Yeah, let me address this. As we’ve covered in previous quarters, we really don’t get into the details or the specifics of our hedging. I can point, however, to the fact that there is an important moderating factor which is the fact that we have a substantial amount of our long-term debt denominated in Canadian dollars. That presents a natural hedge for us.

IM

Q2

Brian Alexander

Kevin M. Murai

And I guess, the first question I have relates to European profitability just to better understand. So the warehouse issue which sounds like it's kind of fully resolved, and you are starting to get efficiencies out of the German warehouse system, what was the impact if there is anyway to quantify the margins in the quarter, and could you help us think about whether that was more of a gross margin impact as you had to price more aggressively to regain market share, or is it more of an OpEx issue because you still had some extra cost that you had to incur?

Yeah, I mean it was really both. There are investments that we had to make to recapture share of both that gross margin but again investing in some marketing programs to drive incremental growth in our business as well. So, it's hard to actual quantify and break out exactly what that impact was to overall European results except, I do want just reiterate again though that I mean overall our business in Europe in many countries was very, very good, and in addition to the strong growth that we had in certain countries and some of the uptake that we saw through the quarter in Germany, we will also continue to have opportunities though as we take a look at our Italy and Hungary businesses. And that's really been the story on the margin in Europe is starting of with the improvements that we been making slowly in Germany but also a little bit dampened by Italy and Hungary.

FOSL

Q1

Edward J. Yruma

Kosta N. Kartsotis

Hey, guys. Thanks so much. Just a follow-up on Omar's question. I know that you guys have dramatically changed the launch cadence this year. I guess when will we expect to see products that will ship for the third and fourth quarter? And in terms of thinking about your factory capacity and your ability to meet some of those demands, I guess relative to last year, how would you score kind of your factory availability or your ability to flex kind of close-in demand? Thanks.

Yeah, so timing, it will be about a month earlier than last year so think – see it in broad scale across our formats and channels in August with some early limited-edition launches a couple weeks earlier than that. Same sort of annual significant technology upgrade around that fall timeline is the key there. That should be on an ongoing basis be the cadence that you see. And then we'll be adding brands this year as well. So, you'll see more breadth of our offering to go along with that launch timing. In terms of capacity, we are, I think, going to be in a much better position this year even and better managing supply and demand and then at launch and then also have plenty of capacity to flex up and respond to demand in the back half of the year if we see an even better-than-expected result. So now that we're two to three years in on the supply-chain side, I think we'll just continue to do better.

TWI

Q4

Justine Ho

Paul G. Reitz

Okay. And I guess as a last follow up with that one. If you – when it spikes that quickly in the first half and you’re able to then increase prices in the second half, do you have to give that back when rubber cost go down and then you end up having a permanent loss of that 19 million, or do you kind of --?

The way we look at it and the way – I think Jim’s talked about it in prior calls is we do end up with the permanent loss. Generally speaking you end up – the commodity prices and really the components that go into our products are known by our customers. So generally speaking you end up pricing in an equilibrium manner between your price and your cost. And it’s just when you get those rapid changes that you get some things to get out of whack. But I would say generally speaking you end up having permanent losses and then you get back to a rational price cost point which is where we’ve been since the back half of the year. Would you agree with that, Jim?

ROST

Q3

Brian Tunick

Michael O'Sullivan

Thanks. Good afternoon. Curious, I guess, for Barbara, may be, can you talk about what categories might be the biggest opportunity you see for next year or may be where some of your buying team is spending their time? And then, I guess, also curious on the real estate pipeline, any initial thoughts from a planning perspective, why either the store growth rate or mix could look different than what we saw this year? Thanks very much.

And Brian, on your question about real estate and number of stores, obviously, we will be more specific when we talk about 2017 guidance in February. But, I think, it’s a fair bet, if you look at our store openings over the past several years, we run at typically 80 to 90 net new stores a year. I wouldn’t expect a dramatic deviation from that going forward.

ODP

Q3

Daniel Binder:

Steven Schmidt:

In the most recent quarter, did your account wins offset your account losses? Was it a net positive or negative number?

As we stated, particularly in our medium to large public sector private and public sector business, we are having very good success from the standpoint of acquiring new customers, and we're actually running at the highest retention rate that we have since I've been here. And so clearly, in our large segment, we are growing share.

HAE

Q4

Lawrence Solow

Chris Lindop

Just switching gears real quick, just your outlook on the hospital outlook for next year, if I'm doing my math correctly it looks like surgical, OrthoPAT, that mixture is about, set to be about flat, is that correct?

Yes.

DELL

Q3

Benjamin A. Reitzes

Joseph M. Tucci

Can you just talk a little bit about the geographies? Joe, what did you see in Europe? It looks like pre-currency growth was probably like up around 10%. That's still actually pretty good for that environment. And APJ, why was it so good?

No, APJ is just really hot for us, as our other parts of the world. If we broken out our business in the Middle East and other parts of the world, countries in the world where we're quite robust, and it's the big investment we've been doing in these rapidly growing economies and new developing economies, which is paying off. And of course the way those economies are just natively growing. If you look at EMC as a lot -- a younger, much younger company, despite being formed in 1979, we really didn't get up on storage until 1991-ish. So our revenues are still -- and, of course, Q3 is probably more U.S. skewed which is 54% of revenues, but kind of in a -- most of the other quarters you'll see our -- we still have 52-ish percent of our revenues in the U.S. So obviously, we have a lot more potential outside the U.S. for our products and services, and we've been focusing on that percentage -- on that potential while still growing the U.S. at very good percentages. So we're very -- so part of it is focused, part of it is the, I think, just the attractiveness of our product line. Part of it is the fact that we have younger and have a lot more growth opportunity relative to our potential outside the U.S., and I think that's why Asia. In Europe, as you said, as David said, in constant currency, we grew 12% which we think is pretty good. Clearly, taking share in Europe. And I think in the U.S., without a doubt, we took share. So we had some pretty good balance and good products, good strategy, good go-to-market and a lot of good people on them, very fortunate.

ANET

Q1

John Marchetti

Jayshree Ullal

Thanks very much. Jayshree, I'm curious with the supply constraints that are going on right now, if it impacts any one of the verticals a little bit more than any of the others, or it's broad enough that it's kind of having an even impact across the group.And then Ita, just sort of as a follow-up to that, you sold a bit out of inventory, I'm guessing because you bit out of inventory I'm guessing because you couldn't bring some other stuff in. Is that something that likely occurs again here quarter?

Yes. Maybe let me take that first. I mean that's kind of -- that's a onetime thing where -- when things are constrained, it's a good opportunity to go look at what you an inventory and sale some stuff that maybe we haven't thought we would. But I think we're through most of that now.So that's why I think the guide for gross margin comes back to the typical a 63% to 65%, and then it will just be driven more by customer mix than anything else, right.

B

Q4

R. Scott Graham

Christopher J. Stephens

Okay, so that's year-over-year?

Year-over-year, yes.

GLW

Q2

Mark Sue

James Flaws

Now that we’re almost anniversarying your price change to Corning’s price and the market price, the thought is that the moderate price declines will prevail. How does that occur when you have a competitor that’s still adding capacity? Or is that just very localized, do you feel? And at the same time, as we move towards the back half of the year, are there annual price negotiations that are still variable, or are we at a point where the pricing change that you’ve made is going to be beneficial for the industry going forward?

Obviously I can’t speak for our competition, but we believe that price declines have moderated for the entire glass industry. And particularly with a benefit to our panel customers from the yen, we believe there’s potential for that to continue. In terms of the capacity additions by our competition, we believe only one of our competitors is adding capacity in Korea, and we believe even that is at a very moderate pace. We’ve learned that the capacity there is smaller tanks, so we’re hopeful that we’ll be able to have an industry environment where price declines continue to be at a moderate level. It’s premature for me to comment on price negotiations and contracts. We’ll give you an update on that in October.

DGII

Q3

David Gearhart

Ronald Konezny

And just because it’s a large pharmacy chain I’m assuming drugs, medication, temperature monitoring which also could do front of the stores with some of the food cases and whatnot, so are there expansion opportunities within these accounts or is this pretty much one is done, once it’s deployed that’s going to be the recurring you get and you want to revisit RPM another sites of the shop later?

David that’s a very keen question, you know we think there is great opportunity actually both within the pharmacy as well as in the front of the store. In a pharmacy it’s mainly a temperature application, but as some pharmacies do compounding, differential pressure is a key attribute as well as humidity sensors so there is additional sensor opportunities. And of course front of the store, they have got a gateway installed, they can leverage that gateway and have more incremental expense associated with covering their store rather than an entirely new implementation. And of course you're confident in the implementation, you're confident in the training that the user's acceptance of the system. So we feel like we are well positioned while we are certainly not taking anything for granted.

GCI

Q3

Kannan Venkateshwar

Gracia C. Martore

Okay. So one last question is on classified ventures. I mean, there's been a news flow more recently on Apartments.com and so on. What's your thought on that asset? I mean, is there a point at which you basically sell that asset and monetize it?

I think we're just going to have to see. Right now, as you said, we are looking at -- all of the partners are looking at the strategic alternatives around apartments.com. We'll just see -- have to see how that unfolds. The other thing I would say is that when you look at the cars.com business, it's a terrific business. When you think about where auto sales and new car sales are going to be this year and the fact that prognostications are that next year is going to be another potentially a $16 million plus new car sales unit year, that's a very, very good business. And we'll just see how it continues to grow in the best way to maximize value there down the road.

GME

Q3

Arvind Bhatia

Robert A. Lloyd

Just a couple of questions here, guys. One, I wanted to see if you could give us a sense of what you're seeing in tie ratios for the PlayStation 4 so far and maybe compare that to what you saw early on either for the 360 or the PlayStation 3. And then also, the 20% to 30% industry growth guidance you guys -- or not guidance but how you guys think about the industry for next year, is there any change in your thought process? Are you guys more comfortable with that kind of number as you now have more visibility? And then I have a follow-up.

Yes, I think it's a little bit early for us to talk about tie ratios. I think we're pleased with what we see so far. It's just been a week on the Sony side and of course, Xbox tonight. So I think we'll have more color around that when we talk about our -- or when we release our holiday results I think.

GGG

Q1

Kevin Mackza

Pat McHale

Okay. And then finally from me, the translation effect here is a bit worse, as you called out. When I look at the organic growth in industrial and process, it doesn't look obvious that there's been any transactional effect, like losing out on sales versus just translating those sales back into fewer dollars. Are you expecting that? Is that something that we ought to be watching out for? Or is that a smaller issue here?

Yes, I view that as a smaller issue. Generally in the past, we haven't seen that be a dynamic in the marketplace when currency shifts. It can shift to maybe on a project-by-project basis, but I think generally from the larger view of things, the end market pricing will remain stable.

TECD

Q4

Brian Alexander - Raymond James

Jeff Howells

Thanks and good morning. On the gross margin, I know it’s difficult, but can you ballpark what gross margin would have been excluding the currency benefits you got in the quarter. It would seem like they were squarely above 5% even excluding the currency benefit, and if that’s true, it would be the first time I think since 2005 where that’s the case. So can you confirm that and more importantly rank the key factors that helped gross margin performance. You threw a lot of variables out there but how much of it or I guess, in the order of priority it was customer mix, pricing, freight, vendor incentives and any other variable, you think were important?

Brian, this is Jeff. We really can't tell you precisely what that gross margin would have been without, because we have to estimate it all, because, of course, we don't know where the market is. I think if you took the far extreme, you could take the two quarters, combine it Q3 and Q4, and net out the FX loss for the six months and if you see that you will see that the net gross margin would have been just under 5% for the second half of the year, and that would have been a slight improvement 8, 9, 10 basis points above the prior year calculation. So, clearly we didn’t recover our 100% of the FX loss because some of its cost and the expenses, because the cost differential in the forward points, and putting the contracts in place for the pieces of the inventory and the payrolls that aren’t naturally hedged. So, the only thing you can do is estimate it internally, estimate it with some facts and taking into the worst case if you will. As far as the components maybe, Bob would want to add to it. I think around the world our freight management and our pricing was very strong in many countries and many regions, we still weren’t were able to realize what we believe would be the maximum or the appropriate level of back-in dollars, because goals set by certain manufacturers were still higher than market reality. And different countries, different regions had different success in negotiating reasonable goals and that continues into beginning of the new fiscal year. So, the most challenging for the backend achievement and then I think the next challenging as we mentioned in our scripts, the competitive nature of the Americas environment particularly in the US where pricing has remained very competitive on a day in and day out basis.

POWL

Q4

John Franzreb Sidoti and Company:

Don Madison:

I might have missed this, apologize. Based on what you characterized as the lumpiness in the Power/Vac business, how long until you think it achieves company like margin contribution?

The only thing I will add to that is basically is that when we look at that business, we look at comparable margins for comparable products in comparable markets. Not all markets, not all projects, all products, have the exact same margin. We are approaching that comparability, as Pat was saying, we're weeks away from it, not quarters away from it.

AXAS

Q4

Welles W. Fitzpatrick

Robert L. G. Watson

Okay, perfect. And then, am I eyeballing the type curve right to say that the Raven 2H is going to be about 500 over its first month and then the 3H will be north of that when you say that it's meeting or exceeding?

I don't have that right in front of me. I would say that the Raven 2H is -- do you remember? Right on the curve or…

IM

Q2

Unidentified Analyst

William D. Humes

Thanks, couple of things first on more the financial side and the housekeeping side of the equation. If I take a look at the slide 6, I see the add back on the $15 million charge but if I also want to really make it comparable year-over-year and adjust for the warranty change in accounting as well, would I be correct in commenting about $1.74 margin on that by adding about $6 million back on the opline for the $165 million on the top line?

This is Bill. Parry, the SEC charge was basically 18 basis points overall. I think you are referring to North America operating margin.

BLDR

Q3

Allen Baugh

Chad Crow

I had a little higher-level question and it relates to the shift of value-adds in manufactured and certainly commodities moved all over the place and they impact margins when they do. But when you think, Chad or Peter, about what – the pace you're on of shifting your mix, what overall impact that's having to either gross margin or EBITDA? Any sense of how you're moving the needle through time? I'd love to just get a sense of that.

That's a good question when you try to drown out all the other noise that's going on. I think if we execute on our strategic plan over the next few years of expanding value-add on the company as a whole, gosh, I could see by the end of say 2021 or so kind of a permanent improvement of 40 basis points or so in our gross margin would be, I guess, a best guess off the top of my head. John

RHT

Q3

Keith Weiss

Charles E. Peters

Got it, got it. And then just one question on RHEV. How is RHEV doing -- now that you have version 3.0 out there for a while, how has RHEV been tracking versus your expectations since the most recent release?

I think one of the important points on RHEL is that 5 of the top 30 deals had included a RHEV component. And it gets back to this land-and-expand strategy, it's get into these accounts and then grow from there. So 5 out of the top 30 is a good metric for us.

NWSA

Q2

Michael Nathanson:

Chase Carey:

And what type of follow-up in there, what type of ad growth is assumed to get to a billion OI and when you said modest ad growth, is it between low-single digit growth element?

Yes, we’re assuming a pretty mean growth. I think our view of the economy right now would probably be, you’ve got sort of a pretty low growth economy and obviously look at the short-term the ad market, right. We’re sitting here with scatter pricing that is more than a third of the up front and we’re not assuming that we’re assuming, you’re going to have an ad market that is pretty modest growth that sort of reflects an economy that I think we do assume right now is pretty modest growth.

CTAS

Q1

Brandt Sakakeeny:

William C. Gale:

Okay, great. Finally, I guess any potential impact or color on the GM strike. I mean, I know obviously, autos are a big percentage, although, it’s not necessarily the OEMs. Do you expect anything favorable to come out of that or potentially unfavorable?

We had very little business with General Motors. I am sure we had some business with some of their suppliers but the impact is negligible to Cintas. Going forward, I guess the health of the auto industry if it’s improved as a result of this settlement will certainly help our business here in the U.S. and Canada.

AVNR

Q4

Ritu Baral

Dr. Joao Siffert

Thanks for taking the question guys. Looking back, have you seen any sort of historical difference and placebo response rates in MS pain studies versus diabetic peripheral neuropathy studies?

I’ll take the question, Ritu, Joao here. There aren’t a lot of MS pain studies, at least not lot of well-controlled trials in MS pain. There is a lot more in DPN pain studies. So -- and placebo is a factor in all pain studies affecting all of CMS therapeutic areas pretty much including epilepsy more recently. So I can’t make a sort of statement one way or another, what’s known is in MS pain is it seems to be a harder hurdle. There is no approved drugs for that in the U.S. There is some -- other than OPS perhaps that have a broad pain indication. And if you look at the history of these clinical trials a lot of good drugs have failed in MS pain. So it’s a tough field to crack. And so we again need to put this in context with the overall neuropathic pain program and the indications that ultimately we would like to pursue in a regulatory path.

RAIL

Q4

Matt Brooklier:

Joseph E. McNeely:

Okay, and with two lines going and being fully staffed up, where you guys are kind of add max capacity at Shoals?

Well, we’ll be at max capacity for the staffing levels again we’ve taken a pretty cautious view on production to make sure that we don’t overstretch ourselves and we produce good quality products for these new car types.

HY

Q4

Joe Mondillo

Al Rankin

Okay. But in addition to that, you have been talking about sort of the challenges with the supply chain. Since the sort of integration of the product, which was in mid-2018, so we have seen about -- spent about 20 months since then, and from our vantage point, it doesn't seem like anything is really happening or progressing with that. Of course, we are not inside the business. So could you provide some color on, at least, why you feel like things are actually progressing?

That could be a pretty big deal. We don't really want to comment too much on it at this point. But Ken may give you some more lever on that in another quarter or so, when we have a better fix on exactly how that's going to work in the situation for us. But that is a large number. We think that much of the current pricing in the marketplace has been predicated on the existence of that, and we haven't enjoyed it in the past, and so as we moved towards the producing units, it could help us get over the bridge, with some of the cost issues, until the development programs mature and the individual battery box by battery box cost reduction and engineering improvement programs take hold.

TGX

Q4

Frank Tarallo

Also, you guys had mentioned possible additional charges in the first quarter of 2011, can you give us some idea of what those, I mean are we expecting a similar charge that we saw this fourth-quarter.

Joseph Munda - Sidoti & Company

No, that is what I was just referring to is our run rate last - is, our sales to Core last year were about $3.2 million but that was for the entire year, We terminated - we did notice a termination on February 1, so that might give you little idea of what it might have been in a one -month timeframe. So to give you a little may be idea of what kind of charges it might be if we have to go that route.

BMY

Q1

Terence Flynn

Chris Boerner

Great. Thanks for taking the questions. Maybe this is for Chris, you obviously have a number of upcoming launches and just wondering how you're adapting the commercial strategy here with the possibility of the current environment persists longer than maybe we'd expect. And are you confident that you can achieve your target sales goals for a lot of these new product launches? And then follow up questions just on liso-cel BLA submission. I was wondering if you can give any more specifics about the FDA request. Thank you.

Yes, so maybe I’ll start. Terence, thanks for the question. So as Giovanni mentioned, we made the decision a number of weeks ago to pull in-person engagement with customers. That said, we have continued both on the medical and commercial side to engage with customers remotely. The good news is that BMS has made significant investments in remote engagement capabilities over the last few years. So the teams have a lot of experience, not just for the last couple of months, but for many years in leveraging this technology to engage with customers. And as Giovanni mentioned, we've very much taken the point of view that every launch is going to be viewed as independently. And we'll look at how we're going to engage with customers and how we're going to think about those launches, given the specifics. So for example, you'll recall that when Zeposia was approved in late March, we decided to postpone that launch. We did so because at the time the healthcare system was really just bracing for the impact of COVID. And within the MS community specifically, we were starting to see a pretty big impact on their ability to operate through March. For example, we saw about a 25% decrease in new to brand scripts in MS. And we frankly didn't feel that the conditions were appropriate to introduce a new medicine, without having our commercial and medical teams be able to effectively engage with customers. That said, in recent weeks we've begun to see the MS market begin to adapt to the current environment. Importantly, physicians are beginning to actively initiate new therapies. They began switching patients on therapy and as a result we plan to launch Zeposia, on June 1st. In terms of preparations, the teams are very well prepared. We've hired a very experienced medical and commercial team that's been fully in place frankly before launch. And we've gotten very good feedback on the Zeposia profile. So we're very excited about making that opportunity available. Obviously initially that launch will heavily index and this will be true for first line lung cancer as well it will heavily index on remote engagements. Again, we have a lot of experience in leveraging that technology. And then as conditions warrant, we'll be able to dial-up in personal promotion. And ultimately as we always do, we'll use a mix of both in-person and remote engagement to support those launches. And we have a lot of confidence in the teams across the commercial organization in our ability to execute these launches. Nadim, anything to add.

CTIC

Q4

Okay, great. And then just switching gears to -- you mentioned in several scientific meetings where data will be presented. Can you potentially spell out? Would it be at ACR, ASCO, ASH? Do you know -- have these abstracts been submitted already? And will we see any follow-up studies or follow-up data or long-term data from the Phase II trials of pacritinib?

Information abstracts have been submitted to a variety of meetings throughout the year. Certainly, the biggest ones, both in the hem space and in the solid tumors space for both pacritinib and Pixuvri, so -- and tosedostat and OPAXIO. So I think you'll see some visibility on that in the future as those meetings come together.

SYK

Q2

Vijay Kumar

Kevin Lobo

Thanks for taking my question. From my side Kevin, maybe on Mako, is there pieces to be made around utilization on robotic systems is having changed, has the environment ground utilization and how these systems are being used post pandemic hasn't changed at all and have you seen an increase in utilization?

Thanks Vijay. No we have not seen really any change in utilization post pandemic. The gating factor really is being able to do the procedures and having the flow of the patients related to overall hospital operations, but so far we haven't seen any change. We are seeing a lot more demand for Mako in the ambulatory surgery centers. As you know, a lot of volume is starting to shift towards surgery centers and for us it's been a real tailwind. Our ASC offense is performing extremely well. And so there are a larger percentage of our Makos that are going into surgery centers, but that's been the only dynamic we've seen change. No real change in their procedure utilization.

VCEL

Q3

Kevin DeGeeter

Dominick Colangelo

Okay. And then lastly for me and then I'll get back in the queue. With regard to sales force expansion is 40 sort of the right number now that you have essentially full access in payor coverage and how should we think about the trend in potential sales force growth going forward to the extent the demand continues to pull through?

Yes. Thanks Kevin, it's Nick. For the time being, we do think it's the right number. As Dan mentioned, there were a couple drivers, one is that with increased expanded medical policies, it opened up some geographies where we didn't have good Carticel coverage in the past, so that was sort of an easy one. And then as you think about a sales force expansion, obviously there's a larger universe of orthopedic surgeons that we would like to reach with the appropriate frequency and making sure we can do that in light of increasing workloads being driven by increased by biopsies implants et cetera. So it's a combination of all of those factors, increased medical policy better region frequency on our target universe, and making sure that we can do count the work activity for our sales reps.

PLNR

Q2

Jeff Martin

Scott Hildebrandt

Okay, and then what are your expectations for gross margin percentage in the back half of the year?

We talked about the EPS in the third quarter and then profitability in Q4. So, obviously the gross margin percentage is going up a bit. I think for your models we were looking at like between 23, 24% somewhere in that neighborhood.

HY

Q4

Mircea Dobre

Al Rankin

So can you help us understand what raw materials are as a percentage of your cost of goods sold?

More than 50% of the cost of a forklift truck is steel. Whether it's steel we buy, or steel one of our suppliers has to buy. And depending upon the timeline of the supply chain, those increased steel costs ultimately pass-through to us. We can pull back the buyer --

AXGN

Q2

Dave Turkaly

Karen Zaderej

Got you. And then sorry, I didn’t get the technical here, but just over 40% of the direct salesforce leaves a lot of room for what the actual number was. I was wondering if you might want to -- if you could kind of quantify we're talking 45, 50. Any color around how well the direct channel grew to give people comfort that 40% is the right number for the year.

The greater than 40%, by that we mean that that's their organic growth because it also -- it's bigger number than that if you do the math it's because we're adding in some of the distributor territories that we traded over. But their organic growth even with the newer associates is greater than 40%.

TAP

Q3

Christine Farkas

Kevin Boyce

Did you give us an indication of how much currency impacted the Canadian results this quarter?

No, we didn’t, but it was virtually negligible.

RHT

Q3

Ross MacMillan

Charles E. Peters

Okay, that's helpful. And then just on invoicing duration more generally, is this a trend? So I guess, as we think about that billings proxy and we think about your disclosure around total backlog and current backlog, it feels to me like the -- that backlog disclosure will become incrementally more important. And if that's right, are you going to just continue to give us that just once a year or are you going to potentially give us any more color around that as we go through quarters?

I guess, my comment on the growth of the backlog, I really do believe it's connected with the large deals. So the way to make some -- I suppose, some determination on it is, if we have this -- the large deal metric, I think, is what's important. And we talk about that every quarter, and you can basically add up the large deals for the year. The backlog metric is one that we disclose annually in the 10-K and we'll talk about it on the year end call.

DOV

Q2

Scott Davis

Robert G. Kuhbach

Maybe tough question to answer, but given that you are 95% FIFO accounting, Rob, do you have a feel for either, A, how much that kind of helped you on a price cost basis this quarter or B, maybe how far behind the price cost curve... I mean I know that buys you a little bit of time to raise prices from an accounting perspective. But how much pressure does that put on you for 3Q to really get prices in?

I would say the impact on Dover... first of all, not a lot of our companies are actually on FIFO or a little more on [ph] LIFO. So we don't have the same... the other way around... I am sorry. So we don't have as much of an impact as companies that are entirely on that system. But I would say that our ability to manage through exercise is very high. We don't expect that to have much of an impact for the quarter or the rest of the year.

TGX

Q4

Joseph Munda - Sidoti & Company

Also, you guys had mentioned possible additional charges in the first quarter of 2011, can you give us some idea of what those, I mean are we expecting a similar charge that we saw this fourth-quarter.

No, that is what I was just referring to is our run rate last - is, our sales to Core last year were about $3.2 million but that was for the entire year, We terminated - we did notice a termination on February 1, so that might give you little idea of what it might have been in a one -month timeframe. So to give you a little may be idea of what kind of charges it might be if we have to go that route.

AAPL

Q2

Chris Whitmore

Peter Oppenheimer

What impact is like software to have on mix in the June quarter?

We don’t give specific product guidance. But in the March quarter, iLife and iWork sales exceeded our expectations and we’re one of the reasons why both revenue and gross margin was higher than we expected.

BJRI

Q2

Nicole Miller

Gregory Trojan

Okay, thank you, very fair. And then just a second and last question, you also talked about setting aside some additional marketing this quarter to talk about large party ordering. And I want to understand, you know, how will that -- where will you do that marketing and then what can you share in terms of large party ordering? How far will you go in terms of delivering time, what's the price hurdle, what's the margin profile, etc.?

Well, let me do the last part and then I'll ask -- I'll ask Kevin to fill in some of the -- a little bit more of the specifics. We're not going to get too far into those specifics for competitive reasons, obviously, but -- but our -- most importantly is the product lineup that has been, you know, we really have constructed these both a la carte items and these combinations with value in mind. So, you know, at the starting price points you can see large parties at -- at and around $10.00 per person which we think is quite compelling. But there's, I think, if you scroll through these varieties and do a relative, you know, value check, you'll see that we compare, I think, more than very competitively.So, that's been -- since this, again, is, we think, very incremental to our business, we wanted to, you know, frankly be pretty aggressive from a value and pricing perspective. Our delivery radiuses, you know, don't, are not -- don't vary from our normal radiuses which range, you know, based upon drive times, so they -- mileage isn't the best way to think about it but we're usually within 20 minutes of drive time is on the outside of our delivery ranges in terms of those logistics.

MPAA

Q2

Jacob Muller

Selwyn H. Joffe

The second half, you mentioned, you're seeing strength here in October, November. Is it your view that second half results or the EBIT line will be at least similar to what we experienced in the first half, with the wheel hubs going up a bit from where they are right now?

That's a tough one to answer. I mean, I think, yes, the answer is yes. We do see some -- we do see good demand for the next 6 months. I think we need to be cautious. I don't want to get ahead of myself. I think, in particular, when I look at -- look out and we have tremendous amount of visibility on orders in the base businesses that the fourth quarter in particular looks very strong at this point. We are working anxiously and aggressively and diligently on trying to grow the hub business. And you never know what -- what new customer expenses may come with that. But overall, I want to be cautious and I want to be -- I don't want to come across as being overly excited, but we do feel strong about our business. We do have some margin pressure, and we need to take some cost out of the system to compensate for that, which we're comfortable addressing. But I would say, the outlook looks good. Not to be evasive, but I think it looks good, but cautiously optimistic.

SANM

Q4

Bob Eulau

Great. And then a quick question – follow-up, probably for Bob. On the other income expense line, I believe you guided that could be approximately $13 million to $15 million. Is that kind of a good run rate or is there some timing to where that’s going to keep going down lower in the future? Thank you, gentlemen.

Yeah, so at this point, I think that’s a reasonable run rate to assume. As you know, that particular line item just inherently has volatility because we have miscellaneous things that show up there. But I think the $13 million to $15 million range is a good way to think about it throughout FY 2013.

BMY

Q1

Geoff Meacham

Giovanni Caforio

Thanks for the question. I just had a couple, as a follow up for David if the environment normalizes this year, maybe still be a lower run rate for some of your new launches. Since if this affects how you think about 2021 in terms of revenue or cash flow, and other opportunities for synergies to be realized on an accelerated basis. And then Giovanni, big picture on the BD front. You talked about deals still being focused on as well integrate cells. And so just curious whether the COVID-19 environment offers this view either their priorities or perhaps the size and scope? Thank you.

Thank you, David. So just going back to your question, Geoff. So let me just say first of all, we are very, very happy with the progress we've made with the integration of the company, and at the same time, the strength of execution in the company. So on one side, our business continues to perform really well. As you've seen, we've made great progress with the pipeline against all key value drivers. We're executing well. We've made progress. I would say we are progressing really well with synergies as well. And we have tremendous flexibility from a P&L perspective and from a financial perspective. So going forward, we will continue to be very disciplined in terms of how we think about resource allocation and expenses given evolutions related to the COVID pandemic. Now, given our strong position, as David mentioned earlier, we've not really changed our capital allocation strategy. Business development remains the central pillar of our strategy. We are very focused on continuing to bring the new assets and innovation into the company. I expect that to continue to be the case and it's very possible in fact that there are more opportunities available to us going forward. And going to we are definitely focused on business development as we've always been. So, thank you.

FISV

Q4

Tien-Tsin Huang

Jeffery Yabuki

I just have a couple of quick ones so you guys can go. Just the capital question I wanted to ask, I think 2.5 turns of leverage, is that still the leverage target you guys expect just to stay true to you through this year or do we see that change? I asked because it could imply heavy repurchase activity again this year absent any deals.

Really, nothing has changed from what we've talked about for the last couple of years.

EXPE

Q2

Mario Lu

Eric Hart

Great. Thanks for taking the questions. I have 2 on ADRs. They're up 21% This quarter year-on-year, I believe 22 versus 2019 levels. So, any further breakdown you can provide in terms of this growth, whether it's a deal mix, organic rate increases, or shifts Vrbo? And how sustainable do you think this is part of the back half of the year?

Peter, I'll take that one. Thanks for the question. And I think the 3 categories that you've laid out, the answer is yes, yes, and yes. So, it is a geo mix and into the -- into the U.S., it's a mix into Vrbo, which typically has higher ADR s as well. And then we're seeing for core ADR s increased in some products more than others. So, it gets more color there. On the Vrbo and car side, I would say in particular, have seen meaningful increases in their ADRs, whereas Air has started to recover, but clearly not to the extent of those other 2 and would say the same for conventional lodging, it's sort of somewhere in between that's a higher than Air, but not to the . Projecting forward, we are, as I mentioned earlier on the Vrbo side, for instance, continued to see bookings with those long booking windows. And if you end up with any kind of supply compression and the word that that's what customers are comfortable traveling with and again, as I mentioned earlier, I think people have really enjoyed that product experience. You can continue to expect a -- very possible to expect that you would see that in Vrbo going forward. On the car side, which may get a supply issue. I think that's been discussed in various forms before, and that's going to take some time to work through. But how much demand remains for far as we get out of the summer season is a bit TBD. And as generally presuming that July is a bit of an anomaly if things start to recover again, I think you'll continue to see our ADR increases or are in healthy levels, if you will, going forward. So again, not going to get into specifics of trying to predict where exactly those are going to land. But it gives you a sense of the trends that we're seeing across the different products.

MPAA

Q2

Jacob Muller

David Lee

I guess one final item. What's the normal interest going forward for the company?

Yes. So I'll break it down between bank debt interest and other interest. So, as explained, the term loan is $95 million and the revolver is $10 million borrowed. So the blended interest rate is approximately 6.4%, it's about $6.7 million annually. Now the other interest, the largest component is factoring interest, along with amortization of loan fees, there's a little bit of cap lease interest and other interest. That all adds up to a little over $7 million, so you're looking at about $14 million annually, about which on average about $3.5 million per quarter. At the current debt level.

LBRANDS

Q2

Susan K. Anderson

Sharen Jester Turney

I was wondering if maybe you can give us an update on the swim business and how that performed this summer, and then also if you can provide some color on the sports business and trends you're seeing there.

Sure, Susan. This is Sharen. We were very pleased with our swim business. So we will have about a $450 million swim business this year. We still see growth opportunity. We're still not in 1,000 stores. It is still a big category for direct and has much more opportunity, and it's a natural adjacency to our apparel business. The sport category still has a lot of upside potential. I think the one thing there in the sport category is just making sure that we can get the real estate in the right -- in the right real estate as we go forward, and that is something that we're working through year after year because the first priority is to make sure we have the right space for the Victoria's Secret lingerie and PINK and then sports.

GCI

Q3

Alexia Quadrani

Gracia C. Martore

Just a follow-up question on USA Today -- I may have missed it but what was the circulation revenue in the quarter and are any other ad categories outside from the core travel, are you seeing weakness there as well?

Alexia, with regard to USA Today circulation revenue, I think that Dave Hunkey has indicated that for the full year, circulation revenue is about flat. As you’ll recall, we had a price increase in the fourth quarter of last year so now we are going to be cycling that price increase in the fourth quarter and as well as you know, USA Today circulation has been impacted by the tremendous downturn in travel related and lodging related vacancy levels and just simple lack of traveling and that’s obviously an important component for USA Today but I would add that USA Today continues to be the number one newspaper in print circulation in the country. Our subscription levels were virtually flat in the quarter, despite obviously the impact on single copy and newsstand sales and hotel delivery as a result of the travel impact. And the good news is that we have maintained every single one of our hotel contracts throughout this recession and feel very good about how we are positioned. I will remind you that back after 9/11, our hotel distribution I think back then was off about 30%. And then from September of ’02 to September of ’08, I think our hotel distribution was up about -- a little more than 50%. So we anticipate that as the economy improves and as hotel and airline traffic comes back, that we will see the typical bounce that USA Today has always see in that aftermath of those kinds of events.

ROLL

Q4

Walter S. Liptak

Dr. Michael J. Hartnett

Hi. Let me ask first about the aerospace business and your comments about better to look at the annual rate. I wonder as you look out over – if you grew a couple of percent this year, if you look at over the next 12 months, is that sort of the growth rate that you're expecting excluding the Sargent deal?

Good question. Let's see the – looking out over the next 12 months, we don't expect the currency shift to hit us again, so that ought to be good news. And I think last year, we had a sort of a weak demand from the aerospace distributors in the aftermarket and that seems to be normalized and strong now. So, I think the defense programs are sort of tepid. So, I would expect that the overall, we are going to be in the high single digits in terms of expansion rate driven principally by the major OEMs for airframe and engine and sort of offsetting some of the defense weakness and no more currency impact.

RRD

Q4

Edward Atorino

Thomas J Quinlan

Do you see any new competitive pressures anywhere, from Quad, for example, which is much bigger than it used to be, in some of your businesses?

As you know, we don't talk about competitors here. But what I would tell you is, without talking about anybody, there's no one that has the capabilities that we talked about today. There's no one that can go ahead and serve people along the communication supply chain like we can. We've got the integrated communication products and services that's going to make our customers more efficient, more powerful and enable them to target their customers more. There's nobody else out there that can do that. It's not about ink on paper like it was a number of years ago. It's about how are you going to allow me to reach my customer on a daily basis at the right time with the right information in the right medium. It could be physical. It could be electronic. That's what we're excited about, what we've built, which we -- as I sit here today, again, I don't believe anybody else has that capability to close the circle to say how do you want to go ahead and reach out to your customer. If you want to reach out physical, you go to one person. You want to reach out electronic, you go to another person. If you want to do it underneath one roof, you come to RR Donnelley.

IM

Q2

Min Park

Gregory M. Spierkel

And following, you mentioned that you are seeing improvement in the month of June, as seeing a good tail wind in July. Can you tell us how North America exited the quarter and what you are seeing for that first month in the quarter?

Actually our comment on relative strength in June and the first part of July was related to Europe... our European business and in particular what we have been seeing in Germany. I think overall in North America... as the quarter progressed kind of as expected, we did see a bit more strength later on in the quarter but overall I would tell you it wasn't much different that what we would have expected to see.

EXPE

Q2

Stephen Ju

Peter Kern

Thank you so much. So, Peter, I think you wanted to kind of talk about potential permanent changes to consumer behavior. I think vacation rentals versus a hotel are fairly well understood. but are you noticing any change in terms of folks favoring agency versus merchant because I'm sure they probably learned last year they're paying ahead of time and trying to get refunds later on? It's probably something that they probably don't want to do again. So, are there kind of sort of meaningful differences in the conversion rate between the 2 types of transactions you can call out? And does that positively or negatively influence your customer acquisition strategies going forward? Thanks.

Yeah. And I will just add, Stephen, that we're not trying to drive, as Eric said, we're not trying to drive the customer to any particular outcome. We provide choices by and large. And what the customers do, what they want. There has been a relative bias during COVID for pay later. As you say perhaps, I could later do something security around the idea. But there's nothing that I think suggests that that's necessarily a permanent thing. I don't think we know enough yet and we'll see as we come out of COVID, but certainly, we've seen merchant rebound considerably and that may well persist.

GCI

Q3

John Corright

Gracia C. Martore

Gracia, also while I have you, I know it’s early but if necessary, can you hold CapEx next year to the $80 million type range? I mean, are there any projects that just have to get done next year?

Well, we are just actually finalizing our capital budge and it looks like it will come in in that range and we’ve taken a look at sort of a five-year horizon and we are pretty comfortable that for pure maintenance CapEx plus doing every project that provides a strong ROI, that the $85 million or so, including CareerBuilder, will be a sufficient number for us to continue to grow the strategic part of our business as well as to maintain our existing traditional businesses. We have no big new press projects or any other -- you know, like a DTV conversion, that are on the horizon. Obviously if something like that came up, then that would mean a shift in our thinking but no regulatory issues that we are aware of that would cause us to spend outside of that $85 million range.

PLXS

Q1

Matt Sheerin:

Steve Frisch:

Yes, thanks. Good morning, everyone. Just a question regarding the product or the component on the supply chain environment right now, I mean, you talked about inventory days up, Pat. We’re hearing across the board of supply constraints in certain semiconductors, in some passive components. Are you seeing that yet? And are your customers asking you to build inventory?

Yes. So Matt, this is Steve. I’ll take that one. First of all, there’s a lot of news out there about the automotive market, having shuts down – shutdowns due to semiconductor shortages, and just want to remind everybody we don’t do automotive. So in terms of our end market impact, there’s nothing there. Now specifically, what’s causing those challenges in automotive is a tightening in semiconductor components. And we are seeing some of that. We don’t foresee any issues here in the fiscal second quarter. We’re from an inventory standpoint and that we feel pretty comfortable where we’re at. We do start to see lead times start to extend a little pricing pressure here and there. So it’s definitely real from our perspective. I feel like you’re pretty comfortable where we’re at. Our teams definitely have to work harder through these periods, but at these times is when our teams have outperformed. And so I’m pretty optimistic in terms of what our teams will be able to do. The one part that I get a little nervous on is, looking at those forecasts as we go into the back half of the year. If our customers start dropping in big demand our ability to react and bring things in is really kind of the bigger challenge. And so we have been talking to our customers about inventory levels in what we’re comfortable storing. Now keep in mind, our customers are responsible for the inventory levels. Plexus doesn’t speculate. So from our standpoint, it’s really just working through with our customers where they need to be. And we do have some – we do have some customers that have increased raw component inventories to be able to respond to upside demand in the back half of the year. And so again, it’s a mix with each customer, but it is a – we do see it coming a bit more, but I think we’re responding appropriately. And at this point, the teams are handling it really well.

EXPE

Q2

Justin Post

Peter Kern

Great. Thank you. I think we're all trying to figure out what your earnings can look like on the other side of this, and so the market share is important. People are going to compare you're down 26% bookings versus to booking, which is in the low double-digits. So just wondering if you can help us understand how you think about market share in your core U.S. and Europe markets right now. And second, maybe you can explain some of the differences, maybe your percent of air bookings or how much of your bookings are international versus domestic. Thank you.

Yeah. Thanks for the question, Justin and I will just say so a couple of things to think about there. First of all, as I mentioned, broadly, when you look at conventional lodging plus press we believe our position is stronger in the U.S. than pre - COVID. But, again, that's not the same for all markets. And if you look at a market like EMEA, which came back strong over the summer and came back principally in domestic, that obviously favors some of the other players. And our business in places like EMEA and APAC, as I mentioned, is more international focused. Now that goes to airlift as well because we're very good at delivering long-haul air, which has been virtually non-existent during the COVID period. So, you've seen again, a bunch of these principles at play where we've benefited from some. Others had benefited from others. And we generally believe that international will be the next major thing to open up and that favors our position in many of those markets, and we and we will see that rebound through that side of our business and through the air and all the pieces that are attached to that. But that's really what's going on in market share more than anything, is this a domestic versus international extra start. There are also more bookings into small markets as people have stayed domestic and gone to the equivalent in the U.S. is a small motel near national park etc., that has not been a traditional strength of ours. We have been better in big cities. Big cities have lagged somewhat

WBA

Q4

Ricky Goldwasser

James Kehoe

Yeah. Hi. Good morning. I'd start it with the direct savings. I think in the past you said that the long-term plan is to save 50% to 60% of reimbursement pressure or to be offset by generic savings. So when you think about that long-term goal where are you at now into 2020?

We're probably in the range of 40% to 50%. As I said, we change the planning assumptions quite frequently based on the latest visibility. We saw generic deflation in 2019 of around 8%. That's mix-constant. So it would actually be lower than that if you include all the changes and new molecules that comes in.And we've planned relatively consistent with that, but I think realistically I think generic deflation over the next three years is probably a single digit kind of number with some years going up a high single digit. I don't think we'll turn back to double-digit kind of numbers.So we've adjusted. We're probably in the range of 40% to 50%, as we look forward in terms of how much of the reimbursement we expect to offset through procurement initiatives.

VNRX

Q1

Kyle Mikson

Cameron Reynolds

That makes sense. It doesn’t have to be an approved assay. And then just thinking about the body’s natural studies looks like the collections have been played a bit, which makes sense due to COVID. And I know there is going to be an updated timeline provided when it is ready. But is there any detail that you could share to help us understand why the studies were delayed? And I’m sure you know, mostly it was due to COVID? How significantly could that delay the first 510(k) submission for DLBC, because we talked about the timelines in the past and just wondering how far was there now pushed out to 10-Q?

Yes, that is a very good question. And I don’t have the firm timelines, and I don’t know, updates and have to re update, but it is tough updating in the moment with COVID going. That is the primary reason was what you said. And as I’m sure you were, it is been a tough 15-months to be collecting trials in the U.S. for cancer. So an EDRN study is still paused. I don’t want to half answer that question. Because we are not I don’t think anyone really knows exactly what is happening at the moment with collections. And so we are doing as much as we can to really work out the new timescale and how much it is delayed. But I would strongly expect it is going to be at least a quarter or two, given everything. So that is just speculative at the moment, and we are looking at ways perhaps we can get things back on track time wise. But as I said, yes, it is just been a really tough time. The last 15-months with the pandemic to keep collections on track in the U.S., but we will have a full update as soon as we know and I strongly expect that is going to be before at the next cue.

NMBL

Q3

Alex Kurtz

Suresh Vasudevan

It sounds like the October guidance from an enterprise perspective you guys assumed some large deals in the enterprise side we're going to close, right?

That is exactly right.

POWL

Q4

George Gaspar Robert W. Baird:

Don Madison:

If I can just followup on a backlog question. Can you break out domestic versus international in your backlog, and can you highlight anything in particular about your U.K. business progress?

I do not have the breakout in front of me. Basically, the international participation relative to last year is probably, my understanding, about flat. Most of the backlog improvement we have seen in fiscal 2008 was due to strong domestic spending predominantly in domestic refining. When you are looking at, we don't break out individual businesses, but I can report that our acquisition in the U.K. continues to perform very well. We are very pleased with that acquisition.

SYKE

Q1

Frank Atkins

Chuck Sykes

Okay. Great. And can you talk a little bit investments that Sykes has made in security or privacy of client information? And what are you hearing from clients in regards to that?

Yes. Security is something that is top of mind for everyone. I don't think it's just even our industry. I mean it's the world and it's kind of sad state of affairs when you comment on it. I can tell you personally when I look at the amount of money that we spend and the amount of money that we continue to spend, it is definitely a new item on our P&L that has emerged over the last five years. I don't know if I see it at this point in time dramatically increasing. The thing that is changing for us as a company is the level of sophistication that our team has built internally. But security is one of those things that I don't think you ever really want to tout how good you are, because I think we are learning in the market, the synergy to figure out once they, you know somebody figures out something else. So it's going to be a challenging area. But we think, as a company right now for us, the security is everything from your protocol that you put in your hiring processes to your facility, physical security to your network security. Even as simple as clean desk policies. There are certain human capital strategies that we are deploying and the way that you interact with your people. We are serving predictive technologies now that we are starting to deploy. There is a lot of masking technology, I call it masking where you can protect the customer service professional and the customer from exchanging credit card information, social security numbers, whatever those things maybe. So from a technology standpoint, I think the world will keep up with it. Typically the security issues boil down to people and I think that's going to probably always continue to be one of the bigger challenges. But for us right now, it's something that is both -- it's a concern. I think about it a lot. But at the same time I think we have some pretty good discipline in our presentations. I think it can be, for us, it's a little more of a differentiation. But it's something we are going to have to watch, Frank, for a long time.

ODP

Q3

Bradley Thomas:

Neil Austrian:

KeyBanc. Just one last follow-up on the CEO search. Will you be considering internal candidates, or is this external only?

We're considering everybody. And obviously, internal candidates will always be included.

CTXS

Q3

Jason Ader

Arlen Shenkman

Yeah, thank you. I have two quick ones. First, for fiscal 2021, the 4% growth. Can you quantify the headwind from the shift to subscription for us? And then secondly, just on the networking side, David, can you talk about some of the demand in that space? I know you have the shift to subscription that's also creating some headwinds to top line to revenue from networking, but what's the demand in that space? And how do you see that evolving from here?

And to build off of David's comments there, I think what's important to think about in terms of that transition is not only do we have the transition that's continuing from SaaS – from perpetual to turn to SaaS on the Workspace business. But as you think about that networking business, you also have not on the significant uptick we saw this quarter from 29% mix to 66%, but you also have, as David articulated, software and hardware. So now we're at 48% of software. So you have these transitions happening simultaneously, which obviously is embedded in our guidance and our thoughts around how we'll get through that transition and continue to grow through 2021.

NVDA

Q2

Romit J. Shah

Jen-Hsun Huang

Yes, thank you. I had a question on automotive. You mentioned that DRIVE PX is now shipping to 80 car companies. Jen-Hsun, I'm kind of curious, are the wins here sort of similar in size and focused more on prototyping, or are there opportunities here that could ultimately translate into full production wins and drive the automotive business disproportionately?

Well, I appreciate the question. Yeah, we've just started this quarter shipping DRIVE PX 2. And just before I answer your question, let me tell you what DRIVE PX 2 is. DRIVE PX 2, of course, is a processor. It's the DRIVE PX 2 version with just one single processor, with just Parker, and our Tegra processor, and optionally with discrete GPUs, you could literally build – you can build a car with autopilot capability, or an AI co-pilot capability, all the way to self-driving car capability. And it is able to do sensor fusion. It's able to do SLAM, which is localization and mapping, detection using deep neural nets of the environment in a surround matter, all of the cameras around the car all feeding into the processor, and the DRIVE PX processor doing real-time inferencing of surround cameras, all the way to the actual planning and driving of the car, all done in this one car computer, this one car AI supercomputer. And so this quarter we started shipping them to all of our partners and developers so that they can start developing their software and their systems around our computer and on top of our software stack. We have the intentions of shipping in volume production many of these, and it's hard to know exactly what everybody's schedule is, but it ranges everything from very soon to the next couple of years. Developing a self-driving car is no – it's a fairly significant undertaking, and so nobody does it for fun, surely. And the question is, maybe if I could frame the question just slightly differently, do I expect people to be building OEM cars, or do we expect them to be building shuttles that are maybe geofenced, do we expect them to be building trucks, and you know how many trucks are on the road and how much of the world's economy is built around trucking products all over the world, to services of basically taxi as a service. The answer is that we're working with customers and partners across that entire range from cars that are sold to trucks, to vans, to shuttles, to services.

ROST

Q3

Marni Shapiro

Barbra Rentler

Hey, everybody. Congratulations. Fantastic quarter. So I was curious if there were any segments in the quarter that surprised you either to the upside or to the downside, be it home, personal care, juniors, other than I believe you called out footwear, any other call outs?

I wouldn’t say that that surprised us. Our home business continues to perform well. Shoes have been performing well all along and we felt good about our assortments in ladies as we were starting to move and improve the assortments. So we did -- we were happy with that performance. I guess that would be -- if anything that would be the surprise is that business has been moving from quarter-to-quarter in the right direction. But, overall, I wouldn’t say major surprises, because home and shoes have continued and have been overall good all the year.

ABC

Q4

Robert Willoughby

Tim G. Guttman

Do you anticipate any changes in the scope of the Express Scripts contract? Or will that simply be business as usual? And then, quickly, how – if the Rite Aid deal were to close today, how quickly could you layer on those revenues?

No, I would just say, I mean, I think our Drug company is excellent at execution. They're very good and onboarding customers. Certainly, that's a little premature, I mean, they – certainly, Walgreens has to get through FTC, but again, I think we would work hard and diligently to onboard as quickly as possible if they were successful.

ACAT

Q1

Mark Smith

Claude Jordan

Okay, great. And then second, just looking at ATV dealer numbers. Can you talk about any delta that we’ve seen in North America, with the addition of Wildcat?

Yeah. We don’t really break out the specific numbers. I will say that, forget about Wildcat for a second, we added a net dealers last year and by net, you’ll always lose some dealers throughout the year. And you’re always gaining. We actually added a significant number this year of dealers for both ATV and Prowler. Now some of those may have been connected, because they wanted to go ahead and carry the Wildcat line as well. The Wildcat, obviously a lot of our dealers picked up the Wildcat. I don’t believe we had any Wildcat-only type dealers. So if you had a dealer in an area that carried ATVs and Prowlers but didn’t want the Wildcat, whether somebody else has stepped up. So, for the most part, we hired a dealer development manager about a year ago. That person has been very successful in terms of working with our sales team in terms adding additional dealers throughout the year.

SYKE

Q1

Bill Warmington

Chuck Sykes

Given that lumpiness, is it just the reality of the way the business is? Are there changes you can make in terms of the vertical mix or the geographic mix? Is it a scale issue? Meaning that if you get big enough and diversify enough?

I would have to agree in that. Yes, if we can get the company over the $2 billion mark, then you get more, think of it as flying at more altitude. It does help you deal with some of the lumpiness if you were. You do get a little smoother stream of earnings. I have to admit that. But the other characteristic is that you do have to watch with the client concentration. And so we have got to get, that's why you are hearing us right now with our growth really wanting to get things happening in technology, things growing more in financial services. And we are really encouraged with the fact that Q1 we grew 29% in technology and we do believe by the second half of the year, you are going to seeing more growth in financial services. So we can get a more even distribution across the client base in the industry. That will help in minimizing your propensity to lumpiness in your business.

GCI

Q3

Michael Kupinski

Gracia C. Martore

And Gracia, in the past press releases, you indicated that those difficult markets in Florida, Nevada, California, represented a larger percentage of the decline in print, in classifieds. So were they basically in line with the company-wide performance in the quarter or were they still trending well below the company-wide performance?

They still would have trended probably 10 percentage points worse on the real estate vertical than in our other markets but the gap in the other verticals like employment and real estate are not that inconsistent.

DTLK

Q2

Clinton Morrison

Charles B. Westling

Then in general on the growth, you just put in a great quarter of growth and a great six months relative to the industry and probably even above. You’re trying to grow at twice the industry rate. How much of this outperformance is the industry has done a little bit better than you thought versus you’re outperforming more than you thought and what are we doing right that we are doing so well?

I would say Clint we still, based on what we see, look at the industry growing somewhere in that 5%, 6% range. And, I would attribute obviously some of that drives the growth but I am frankly, very pleased with the execution that we’re seeing across the business. Rob Beyer, head of our field organization and some of the changes that we’ve made in our field leadership, the continued productivity across the sales teams, the engineering teams, the collaboration and just day-to-day functioning across departments that all tie together to take care of our customers better and better. It’s nothing revolutionary it’s just pretty fundamental execution blocking and tackling. But, I think we’re doing it more consistently across the company and that’s driving a lot of our success right now.

PDLI

Q2

Phil Nadeau

John McLaughlin

Okay. And then just the last question, I'm familiar with Merus. What other assets does it have? Is this still purchased from Novartis as main asset, or are there other interesting things in this portfolio?

At this point it's main asset, Phil. These are folks -- what they're doing is they're trying to build the company, they're looking for similar size asset by big pharma spin-offs, products that are reasonable stable and revenues reasonably mature in their life upon which they can build the business and I think that's -- they've been pretty public about their aspirations.

ABC

Q4

Steven J. Valiquette

Tim G. Guttman

Thanks. Good morning, Steve and Tim. So, there has been some mixed views on how much the earning sensitivity may be for drug distributors related to brand inflation. So, I guess just with your change in your view from what was 10% to 12% previously to 7% and 9%, is there maybe just any way to give a little more color on how much of a role that plays within your shift in the EPS growth from – Looks like about 4% to 6%, to 0% to 4% for fiscal 2017? Without getting too granular, just wondering is that a big part or a small part? Just any more color would be helpful. Thanks.

Yeah, Steve. Thanks. No, I'd just add something very quickly. I would say – Steve, good morning, and I would say that most of the change in our guidance is related to that brand pricing change, but there's also a small part related to generic. The deflation rate, we guided to 7% to 9% deflation rate, we're probably on – a little bit over that 9% right now. So, as we enter fiscal year 2017, we're starting on the high side, not quite 10%. But, so that's really the two things. Primarily brand and to a lesser extent the generic side.

LBRANDS

Q2

Irwin Bernard Boruchow 

Stuart B. Burgdoerfer

I guess, Stuart, my question is on the expense line. There were several initiatives that you took during Q1 that seemed to have flowed into Q2, and expenses were managed very well. Just kind of curious how that's going to flow through the next 9 to 12 months and how we should be thinking about SG&A going forward.

Thanks, Ike, for the question. We have intensified our focus on expenses. We talked about that at the beginning of the year, saw some benefit in this quarter, as we've reported, and we're going to continue to be focused on it. And with that said, we're go to do so in a balance way. The success for Limited Brands is not to be the world's best cost-cutter. It's to have good top line growth in brands with emotional comps and great service experiences for customers in stores and online. But with that said, we are managing expenses with discipline. I would expect that we'll continue to do -- have some leverage in the back half of the year. That's what's implicit in our guidance. And we'll continue to work it. But again, we'll do so in a balanced way. And it's broad based, so we're seeing that benefit across the major parts of the business and, particularly, in the home office area. So it's an important part of what we're doing. But again, the most important thing we're doing is working hard to drive top line growth and good merchandise margin rate results.

TDC

Q1

Jesse Hulsing

Michael F. Koehler

I've been to industry conferences over the last couple of quarters and it seems like there's been some indication that customers are starting to coalesce around architectural approaches, and you guys have talked about that a little bit on this call. But your commentary also indicates that customers are still kind of feeling it out. Are you seeing signs that decision-making is still frozen because customers are still in the process of planning out their next 2 or 3 years of -- or more of data management architecture? Or does a thawing start to occur?

I think we have to segment your question a little bit. So in a subset of our 50 largest customers in the Americas, I mean, we have clear innovators that have been at this a long time, and their analytical ecosystems or their architectures are more thought out and are more in process, although I'd still say not -- it's still evolving. Then you run into another subset in the top 50. I'd characterize it more as early adopters, and they're still experimenting and they're finding out some things on their own around what some of the alternative technologies can do and what it can't do and what type of workloads, different technologies could be good for outside of the IDW. And then, as you get out into the broader market, they're still in the very early phases of looking at this. And I wouldn't say categorically everybody. You run into smaller companies that are doing things with the newer technologies. But the other point here is, in addition to devoting a lot of resources and energy out into the analytical ecosystem, we still have a lot of them in top 50 that are building out their IDWs. So that's going on in parallel while this is going on, and I'm talking about the top 50 customers. Obviously, outside the top 50 customers, our revenue growth and the performance of the business is pretty good.