SYY Q3 2017 Earnings Call
Operator: Good day. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter Fiscal Year 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Neil Russell, Vice President, Investor Relations and Communications, you may begin your conference.
Neil A. Russell - Sysco Corp.: Thanks, Jack, and good morning, everyone. Thank you for joining us and thank you for your interest in Sysco. With me in Houston today are Bill DeLaney, our Chief Executive Officer; Tom Bené, our President and Chief Operating Officer; and Joel Grade, our Chief Financial Officer. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in our Annual Report on Form 10-K for the year ended July 2, 2016, subsequent SEC filings, and in the news release issued earlier this morning. A copy of these materials can be found in the Investors section at sysco.com or via Sysco's IR app. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures are included at the end of the presentation slides and can also be found in the Investors section of our website. To help ensure that we have sufficient time to answer all questions, we'd like to ask each participant to limit their time today to one question and one follow-up. At this time, I'd like to turn the call over to our Chief Executive Officer, Bill DeLaney.
William J. DeLaney - Sysco Corp.: Thank you, Neil, and good morning, everyone. Earlier in this morning, Sysco reported strong financial results for our third fiscal quarter. Specifically, sales increased 13% year-over-year to $13.5 billion, driven both by a 3.5% local case growth in our U.S. Broadline business and new sales from our Brakes business which we acquired last July at the beginning of our fiscal year. Adjusted operating income grew 14% to $500 million, and adjusted earnings per share grew 11% to $0.51. Our results for the quarter reflect excellent performance across a majority of our businesses and build upon our increasingly strong and consistent performance over the past few years. These results were driven by our 65,000 dedicated associates successfully and cohesively executing Sysco's customer-centric strategy at a high level. Further, these results were achieved in markets that for the most part are experiencing modest economic growth and stable employment levels. While the energy-related downturn has resulted in regional economic headwinds in certain areas of the United States and Canada and political developments continue to contribute to economic uncertainty in some of the countries we operate in, overall consumer confidence generally remains favorable. Our business strategy is predicated on disciplined, profitable, and sustainable growth with particular emphasis on the following pillars: utilizing customer insights to enrich our customers' experience with Sysco; continuously improving productivity in all areas of our business; enhancing our product, service, and business solution offerings; and leveraging our talented associates while further developing our rich culture. In recent years, we have made tremendous strides in more effectively and consistently executing the specific initiatives developed pursuant to this strategy. By putting our customers first and embracing the right kind of properly-paced impactful change, we've built a foundation that has both supported our improved business performance and positions us well for continuous improvement as we move forward. The other key pillar of our business strategy is to continually assess new market opportunities for profitable, long-term growth. To that end, we see many exciting opportunities ahead for our international business in Canada, Latin America, and Europe. In closing, I am encouraged by the strong, positive momentum we currently have in our business and am pleased to report that we remain on track to achieve our recently upwardly revised adjusted operating income growth target through fiscal 2018. In addition, we are also in the process of developing Sysco's new three-year plan through fiscal 2020, and look forward to sharing that publicly later in the calendar year. Now, I'll turn the call over to Tom for additional discussion about our recent business results. Thomas L. Bené - Sysco Corp.: Thank you, Bill, and good morning, everyone. As Bill mentioned, our associates are executing at a high level as we continue to deliver on the key strategic levers of our three-year plan: delivering accelerated case growth through a focus on local customers, growing gross profit dollars, and managing overall expenses. This morning, I'd like to discuss our segment results with a focus on U.S. Foodservice Operations and International Foodservice Operations. I will also highlight some of the key strategic initiatives of our U.S. business that are helping us to differentiate Sysco in the marketplace. Starting with our quarterly results for U.S. Foodservice Operations, sales grew 2.2% and gross profit had growth of 4%, while adjusted operating expenses grew 2.3%, resulting in adjusted operating income growth of 7%. Overall, our U.S. Foodservice segment had a strong quarter. We experienced strong growth in our local business as we accelerated case growth to 3.5%, which was partially offset by declines in case volume for our multi-unit business, resulting in 1.8% total case growth. Importantly, as we strive to deliver disciplined, profitable growth as a part of our three-year plan, our continued focus on providing value to our local customers through innovative product offerings and value-added services, along with improved e-commerce capabilities, has enabled our growth with these customers for the 12th quarter in a row. Looking at gross profit growth for U.S. Foodservice Operations, we delivered growth of 4% and gross margin expansion of 35 basis points as we continue to manage the deflationary environment well. As you all know, the industry has been in a deflationary environment for an unprecedented six consecutive quarters, and that trend is finally beginning to shift toward inflation. Meat prices are abating, and dairy and produce prices have begun to rise. Based on those changes, we are anticipating overall modest inflation in the fourth quarter. Our strategy around accelerating growth with local customers is working. Over the last several quarters, we've improved the capabilities of our sales force through investments made in training, technology, and targeted resources. And as a result, our marketing associates are spending more time selling and focusing on delivering benefits to our customers versus spending time on non-value-added activities. In addition, our insights-based approach to understanding and meeting our customers' needs continues to guide our efforts. As an example, one of the insights we've received from customers was around providing healthier product options. In response, we created a good-to-grow promotion during the third quarter that highlighted the large variety of fresh and healthy produce options available to our customers. Furthermore, we brought innovative products to market through our Cutting Edge Solutions program. This program introduces new product ideas to customers, which can help them reduce labor costs and/or improve the quality of their menu offering. These are just a few of the programs that have translated into improving loyalty scores for Sysco this past year. We are committed to delivering value to our customers while also providing a more consistent experience of doing business with us. From a cost perspective within U.S. Foodservice Operations, our expense management was solid as we limited growth to 2.3% on an adjusted basis for the quarter. Looking at U.S. Broadline, cost per case improved by approximately $0.02 compared to the prior year. And on a fuel price-neutral basis, cost per case improved by $0.01, ahead of our three-year plan objective. In our supply chain area, we are seeing positive momentum from our productivity initiatives and ongoing process improvements which are driving efficiencies. One example is our slotting initiative that's helping our warehouses to build pallets faster and more accurately. In the area of delivery, we are seeing progress in improved routing and delivery metrics through the leverage of enhanced technology. While there's still a lot more work to be done, we are seeing improved operating expense trends, and we are focused on continuing this performance throughout the balance of the fiscal year. Additionally, we are continuing to thoughtfully manage our administrative expenses through a more consistent approach that is improving our overall efficiency while maintaining service level to our customers. Looking at the overall performance for U.S. Foodservice Operations, I'm very pleased with our level of execution, which enables us to deliver solid operating income growth and improved operating margins by 34 basis points. Moving to International Foodservice Operations, sales were up $1.3 billion and adjusted operating income increased $6.6 million, both driven largely by our recent acquisition of the Brakes Group. During the quarter, Brakes performed well amidst a challenging environment in the U.K. and is continuing to make progress in their supply chain transformational efforts. Growth in France remains steady, and Sweden continues to produce favorable results. Additionally, we continue to see opportunities for growth across our European business. Lastly, although we are in the early days of integrating our Ireland businesses, things are progressing well, and we expect to achieve modest benefits from that integration. Looking to Canada, we are pleased with our performance despite the continued softness in Alberta which has been driven primarily by the energy market decline. Our Canadian business overall is leveraging the many learnings and successes of our U.S.-focused initiatives and is now implementing many of them. For example, we've introduced the category management and revenue management processes, and we are offering multi-channel ordering via online and telephony, as we provide our customers the ability to choose how they order from Sysco. These initiatives are a few examples of how we are enhancing our customers' experience, as we support the growth of our local business. In addition, we are effectively managing costs by streamlining administrative expenses to improve productivity. As a result, we expect the Canadian business to continue to deliver improving positive performance. Turning to Latin America, we are excited about new facilities in both Costa Rica and Panama. Specifically in Costa Rica, we have opened 180,000-square foot, state-of-the-art facility with a test kitchen and training facilities. This new space will enable new products and full product lines to be available to our customers, and we're excited about the accelerated growth potential those offerings will deliver. In summary, our customer and operational strategies are firmly aligned around improving our customers' experience, engaging our associates at the highest level to improve execution, and delivering our financial objectives as a part of our three-year plan. Now, I'd like to turn the call over to Joel Grade for further details.
Joel T. Grade - Sysco Corp.: Thank you, Tom. Good morning, everyone. As Bill and Tom mentioned earlier, we are pleased with the results for the third quarter. Our ongoing quality of earnings growth reflects continued momentum from our business, including strong local case growth, solid gross profit dollar growth, and good cost management. This morning, I like to cover our third quarter results for the company both excluding and including Brakes. For the purpose of comparing to our three-year plan, I'll start with our quarterly results excluding Brakes where we delivered sales growth of 2.3%, gross profit growth of 4.3%, which included margin expansion of 34 basis points, and adjusted operating expense growth of 1.9%, resulting in adjusted operating income growth of 13.6%. We continued to maintain the gap between gross profit dollar growth and adjusted operating expense growth above 2%, which translated into strong adjusted operating income leverage and continued progress toward achieving our three-year plan objectives. As Tom mentioned earlier, we now expect modest inflation for our fourth quarter of fiscal 2017 in our U.S. Broadline business. While it is important to note that this change from deflation to inflation can pressure gross margin as a percentage of sales, we do not anticipate inflation to negatively impact our ability to grow gross profit dollars. Shifting gears, I like to transition to our results for the quarter including Brakes. Sales grew 12.7%, and gross profit dollars grew 18.3%, while adjusted operating expenses grew 19.3%, which resulted in adjusted operating income growth of 14.3%, and adjusted earnings per share growth of 10.9%. On an adjusted basis, our Brakes Group operations contributed approximately $0.01 per share to our consolidated earnings per share this quarter. As Tom noted earlier, Brakes performed well during the quarter and continues to make progress in their transformational efforts. The reason the performance was accretive rather than dilutive, which was our original expectation for the third quarter, was largely related to changes in deferred taxes for our European business. Additionally, there are negative tax impacts to our domestic business, also driven by changes in deferred taxes. As a result, our adjusted effective tax rate in the third quarter was 35%, compared to 34.3% in the prior-year period. These changes, along with increased interest expense, ultimately impacted our adjusted earnings per share growth of 10.9%. Cash flow from operations was $1 billion for the first 39 weeks of fiscal 2017, which was $36 million higher compared to the same period last year. Free cash flow for the first 39 weeks of fiscal 2017 was $630 million which was $11 million lower compared to the same period last year. These changes are largely due to improved business performance, improved working capital, and favorable year-over-year comparisons due to the US Foods termination payment last year, offset by higher cash taxes from deductions related to the US Foods settlement and a deferral from flood relief. Net CapEx for the first 39 weeks was $395 million. We now expect the total CapEx for FY 2017 to be in the range of approximately 1% to 1.1% of total sales, slightly above our previous guidance. Investments have been related to capital improvements in the business, including supply chain opportunities at Brakes. Net working capital performance has continued to improve. We have improved net DSO by 2.7 days compared to fiscal year 2015, driven by improvements in all three areas: payables, receivables and inventory. As a reminder, we are measuring these results ex-Brakes, consistent with our three-year planned targets. Our third quarter results include certain items that were related to the Brakes acquisition, including amortization associated with the transaction and accelerated depreciation related to our revised business technology strategy. As a reminder, the accelerated depreciation will continue through the end of fiscal 2017. One last item before closing. This month, Sysco voluntarily withdrew from a multi-employer pension plan previously disclosed in our 10-K, and has recorded a $35.6 million withdrawal liability subsequent to the third quarter of fiscal 2017. We consider this fourth quarter charge to operating expense as a certain item. In summary, we had another high-quality quarter reflecting continued momentum from our business, including strong local case growth, solid gross profit dollar growth and good cost management. We are committed to serving our customers and delivering a high level of execution in all areas of our business, which will improve our financial performance in both the near and long term. Operator, we are now ready for Q&A.
Operator: Your first question comes from the line of Kelly Bania with BMO capital. Your line is open. Kelly Ann Bania - BMO Capital Markets (United States): Hi, good morning. Thanks for taking my question. Just wanted to ask about the independence, I guess, a little bit. Always hard to gauge, but with 3.5% growth there, very strong. I was just curious if you feel like you gained some share there with that customer this quarter, and anything to call out that you think is driving that that you're doing or regional trends or types of restaurants that are really kind of outperforming among that group. Thomas L. Bené - Sysco Corp.: Hey, good morning, Kelly. It's Tom. Thanks for the question. So, let's start with – I think we feel really good about the work we've continued to do in this segment. And if you think about where we said we'd be on our three-year plan, we're right where we've said we would be, which is around 2.5% local case growth. So, obviously, good quarter this quarter. And what I would say is I think over the three-year time, our goal was to continue to gain share in this space, and I feel like we continue to make progress there. But I think what I'd attribute it to is continued just execution of our strategy. If you think about these customers, we've been very focused on them. I think our value proposition is resonating with them. And I think based on that, we're seeing more and more customers support Sysco and partner with us. If you think about new business growth, we're also seeing some new business growth in this space. But overall, I would say it's really just more consistent continuation of the work we've been doing, and I think we're seeing the recognition of that effort with these customers. Kelly Ann Bania - BMO Capital Markets (United States): Great. And then, I guess just to follow up on that with the core gross margin expansion of 34 basis points, I guess a little bit slower than the past couple quarters. So, can you comment a little bit more on the drivers there and also elaborate on that comment about potentially the return of inflation maybe weighing on gross profit margin percentage but not impacting gross dollar profit growth? I think there's still a lot of confusion on that front, if you could talk about that a little bit. Thomas L. Bené - Sysco Corp.: Okay, I'll start and then I'll toss it to Joel for some of the further discussion around the deflation and inflation. So, I think gross margin percentage, yes, it probably slowed a little bit versus where we've been, but I think still very strong. And I think you are starting to see a little bit of impact of that starting to move from deflation to inflation that could be impacting that. But just as a reminder, the areas we continue to talk about regarding gross margin improvement are the category management effort we've had for a few years now, continued improvement in Sysco Brands. So, you saw again additional growth in Sysco Brand with our local customers. Obviously, that shift of mix to higher local case growth versus corporate multi-unit is going to impact that as well. And then, obviously, now revenue management is kind of part of the way we operate day in and day out. So, I think those are all key drivers, what continues even as we start to see a little bit of slowing of the deflationary environment start to happen. Why don't I toss it to Joel? He can talk a little bit about some of the categories that are starting to shift a bit. You heard me talk a little bit about it and then maybe just idea of gross margin dollars versus just gross margin percent.
Joel T. Grade - Sysco Corp.: Yeah, so, Kelly, the question you asked in terms of the impacts, yeah, just as a reminder, the deflation tends to impact the margin percentage, and so we've seen some benefits over the last few quarters that we've called out the impact of deflation on our margin percentage. But we typically would see that as a headwind in terms of the gross profit dollars. As we shift to more modestly inflationary environment, one of the things I think you – again, and certainly I called this out in my script as well, we do anticipate some impact on the margin percentage, which we began to see in this quarter, but we certainly also do not consider that an impediment to growth in our gross profit dollars. And so, again, we've talked oftentimes in this industry that a couple percent of inflation is what we would view as the – some of the optimal state. In other words, so an opportunity where costs that come through to us, we can pass to our customers, our customers can pass to theirs. And so, I wouldn't look at this more the return of inflation in a negative way. Again, gross profit dollars, we certainly feel good about our ability to generate. Again, we may see erosion in our margins. To Tom's point, in terms of product categories, just remember again, we talk about one number, but it's certainly made up of a lot of different product categories. And some of the things that you're seeing here is some lesser level of deflation in our meat area, though that area still is deflating. But other areas such as produce, and we've seen some in bacon and other product categories that are continuing to actually accelerate in their inflationary characteristics. And so, all told, again, looking at some more modest levels of inflation as we head into the fourth quarter.
William J. DeLaney - Sysco Corp.: Kelly, this is Bill. I just would add that in addition to everything these guys just took you through, we're now talking about gross margin improvement over gross margin improvement. So, there's a little bit of math in this thing right now in terms of year-over-year comparisons. So, we're actually quite pleased with the performance. And to Joel's point, I think the 4% gross profit dollar growth we feel very good about, and that's been a target of ours. And so, I think whether it's modest deflation or modest inflation, we certainly want to stay locked in on growing the gross profit dollars. So, I would just say that as we get back into some modest inflation, if we can hold the margins flat, little up, little down, that type of thing, I think we'll be pleased with that. And you should see a very good gross profit dollar growth. Kelly Ann Bania - BMO Capital Markets (United States): Thank you.
Operator: Your next question comes from the line of Karen Short with Barclays. Your line is open. Karen Short - Barclays Capital, Inc.: Hi, thanks. Just wondering, given the growth that you're seeing, and I mean it looks like the momentum is here to stay for a little bit. Can you just give us an update on where you're at from a capacity perspective? How much more whittling down, I guess, you have to do with some of your less profitable customers? And then, I had a follow-up. Thomas L. Bené - Sysco Corp.: Good morning, Karen. This is Tom. So, I assume when you say capacity, you're just talking about overall warehouse capacity? Karen Short - Barclays Capital, Inc.: Yes. Thomas L. Bené - Sysco Corp.: And so, I would say we are fine in that regard. You heard me talk kind of over the quarters about different efforts we're talking where we may have some capacity constraints to get more capacity out of our facilities and more throughput, and a lot of those initiatives in our supply chain area have been working very well. So, we're going to continue to focus on those where we have challenges. But we think we feel very comfortable at this point about our ability to not only handle our existing customers but continue to grow this business within our current footprint.
Joel T. Grade - Sysco Corp.: I think one of the things you did hear – Karen, it's Joel – from us also is this approach to a disciplined approach to growth. And certainly, part of that is around the idea of a very thoughtful and carefully thinking about opportunities where they may exist to either add or retain, and how that fits in with the overall network of facilities that we have. So, again, certainly, something we do consider. But again, as Tom said, I think we're in a decent place there. Karen Short - Barclays Capital, Inc.: Okay. And then, I just wanted to switch gears to SYGMA for a second. Because SYGMA was up, I mean, decently on tougher comparisons. So, wondering what kind of drove that shift suddenly in the quarter. Thomas L. Bené - Sysco Corp.: Well, you heard me talk over the first couple quarters about some of the challenges we've had in the SYGMA business. And some of that had to do with some of the operational aspects of the business specific to certain customers, and also the deflationary environment we've seen. So, I think as you start to see some of that deflation slowing as we talk, there's some benefit we're seeing there. And we continue to focus on improving our operational effectiveness. I'd say that those are probably the two biggest drivers of the kind of shift in our performance, although I would say while we feel better about the quarter, we still feel like we have a lot of opportunity in the SYGMA side of the business. Karen Short - Barclays Capital, Inc.: All right. Great. Thanks.
Operator: Your next question comes from the line of Marisa Sullivan with Bank of America Merrill Lynch. Your line is open.
Marisa C. Sullivan - Bank of America Merrill Lynch: Good morning. Thanks for taking my question. I just wanted to start with some operational expenses, including Brakes. They came in a little bit higher than expected. How much of that was Brakes, and is there anything else to note during the quarter that might have drove higher OpEx?
Joel T. Grade - Sysco Corp.: No. I mean, I think part of what you may be seeing in the Brakes, again, if you remember there is some seasonality in that business. And so, some of the things you see there is just on a smaller base of business as a higher relative expense. But I – I would not say there's anything of any significance there at all in terms of that comparison. It's really more related to what I talked about there in the smaller business. I think we're very pleased overall with our expense performance. Again, we maintained a gap in our overall business in the nearly 2.5% to 2.5 points between our gross profit dollar growth or operating expense growth. Again, as Tom pointed out, on a cost per case basis with our U.S. Broadline, we came in actually, on a fuel adjusted basis, $0.01 better, which is actually a little better than the goal we talked about of a flat cost per case. So, in general, I would just tell you what you're seeing there again is a little bit more reflective of the smaller businesses seasonality as it is anything else. But overall, we're very pleased with the expense results.
Marisa C. Sullivan - Bank of America Merrill Lynch: Got it. And if I could just follow up on the topic of deflation. As you've started to see it come back in some categories like dairy or produce, have you been able to pass along the higher product cost to your customers? And are you generally seeing rationality in the – amongst your competition when it comes to passing through the return of inflation? Thomas L. Bené - Sysco Corp.: This is Tom. Yeah, I'd say, Marisa, that we're – again, we're talking about mild numbers at this point, and as Joel said earlier, this industry historically, I think, operates pretty well at these kind of lower inflation levels. So, we're not seeing anything that would concern us right now about our ability to pass along those prices. I mean, in the category like produce, when you get some of the weather issues they had in California earlier this year, you'll get some spikes in certain areas that have to be kind of managed closely. But generally speaking, we feel fine about how it's affecting the business right now.
William J. DeLaney - Sysco Corp.: Yeah, I would actually distinguish dairy and produce from other items in our mix. Those are very volatile items, dairy maybe even more than produce at times. So, I think in the course of 12 months, Marisa, you could see those go up and down within that period. As I think we alluded to, the meat, center-of-plate items, obviously, high dollar boxes there. They drive a lot of this thing over the medium to long term. Still some modest deflation going on in the meat side, but we would expect that to continue to turn in that direction as well. So, I would look more in terms of long-term thoughts on deflation more in terms of wait and see on the center-of-plate items. And I think dairy and produce will, for other reasons, be up and down from time to time.
Marisa C. Sullivan - Bank of America Merrill Lynch: Got it. Thank you so much.
Operator: Your next question from the line of Chris Mandeville with Jefferies. Your line is open.
Christopher Mandeville - Jefferies LLC: Hey, good morning. So, I guess, I'm just looking to tackle capital allocation here. I think you've essentially exhausted your $3 billion ASR at this point. Can you just remind us of what you have remaining for just general buyback programs and then potentially update us on your order of importance when it comes to capital allocation?
Joel T. Grade - Sysco Corp.: Sure, be happy to. So, we think about capital allocation really in number of few key priorities, starting with investing in our business. And so, certainly technologies, facilities, fleets, et cetera, those are the kinds of things that, as we talked about today, actually are getting our CapEx numbers even up slightly, and that certainly reflects our continued emphasis on reinvesting in our business as a key priority. Certainly, dividend was a key part of our strategy that obviously is very important to a large part of our investor base, and remain committed to growth in our dividend as we have over a long time in this company. Pursuing strategic M&A, and both in our core space and adjacencies and additional geographies certainly remains a key focus of this company. And then, to the points you're bringing up, again what I call a balanced view between paying down debt and buying back shares is really the other key component of our capital allocation. I think the question specifically you asked, so just as a key point, we're a good majority of the way through the two-year $3 billion ASR that we announced a couple years ago, following the termination of the US Foods merger. I would call our share repurchase strategy opportunistic. That would certainly fall into that category. And in addition to that type of repurchase, we also, as a reminder, do continually repurchase shares to offset option dilution. So, hopefully, that...
Christopher Mandeville - Jefferies LLC: Okay. Yeah. And then, I guess, just my second question as it relates to case growth itself. If I recall in the last earnings call, you guys were actually sounding a bit cautious heading into this quarter itself. But obviously with the results, they were really quite impressive and must have seen some nice acceleration in the month of March. I'm just curious if you can provide any real color on the case growth cadence and if you've seen some continued trends quarter-to-date.
William J. DeLaney - Sysco Corp.: Yeah, I'll start here, Chris. And kick it to Tom, since I'm usually the one who's most cautious. So, part of the reason for the caution, we had had a couple quarters where we were between 1.5% to 2% case growth. And we were heading into a quarter, being the March quarter, that's a hard quarter to predict early in the quarter, March, because of the seasonality within the quarter, March is a big, big percentage of the overall sales and earnings. And we'd had a pretty mild winter the year before. So, we were a little bit cautious. At the same time, the point I made and I will continue to make, Tom mentioned it as well in his prepared comments, is we feel very good where we are in the three-year plan, and frankly, where we are in our plan for this year. We're running about 2.5% local case growth over the seven quarters now and over the three quarters for this year. And we would love for people to kind of look at us the way we look at the business, which is we've got a three-year plan and it'll be a rolling three-year plan over time. And there's going to be some ebbs and flows in any individual quarter or even couple quarters in a row. But overall, we're running this business certainly for the long term, but also understanding that we've got some three-year financial objectives out there. So, we're very pleased with what we're seeing here. We've got some good momentum, as we said in our earlier comments. And I'll let Tom give you a little more color on that. Thomas L. Bené - Sysco Corp.: Chris, I think the only thing I'd really add was more – and some of that caution might have also been around the corporate multi-unit because at the time, we had been slowing in that area. We obviously rely heavily on how each of those concepts themselves perform. And so, I think that's always something that we are thoughtful about as we go into any quarter. So, I don't think there's much else to add to what Bill said. I think we feel really good about where we're at, and I feel like we've got good momentum which is important going forward.
Christopher Mandeville - Jefferies LLC: All right. Best of luck, guys.
Operator: Your next question comes from the line of John Heinbockel with Guggenheim. Your line is open.
John Heinbockel - Guggenheim Securities LLC: So, maybe for Tom. When you look at the local case growth, roughly how much of that is coming from existing customers? Could it be two-thirds or 70% or something in that ballpark? And then, maybe talk a little bit about growing share with those existing customers going forward, both from other broadliners and then specialty distributors. Does one have more potential than the other? Thomas L. Bené - Sysco Corp.: Hey, John, good morning. So, look, I think – let me say a couple things. One, I'd say, we definitely feel like we are improving our level of penetration with our customers, which is selling more to our existing customers. To give you a number on what percentage, I think that's probably a bit of a stretch and...
John Heinbockel - Guggenheim Securities LLC: Okay. Thomas L. Bené - Sysco Corp.: But I think we feel like we are continuing to further penetrate and gain our share of wallet with those customers. And we obviously are growing new customers and adding customers to the portfolio as well. So, I think we have a good balance of both of those working, and I think we feel really comfortable with where that's at. As far as where that's coming from, it comes from a lot of different places. It's hard to, again, peg, is it just in the specialty area? I think we continue to perform well in the specialty areas. But I also would say that the broadline business is really doing very well. And a lot of what you see is the sheer size of our broadline business especially in the U.S. That's where a lot of the growth is going to come from, is from more within our existing customers and certainly picking up some new business from other broadline competitors.
William J. DeLaney - Sysco Corp.: John, the other thing I would add there, which kind of gets buried in these numbers as well is we're having the best year we've ever had on retention of local customers, off of a very good year last year. So, it's all of the above. You certainly always want to have new business coming in. But in addition to penetration, we're managing the current portfolio very well.
John Heinbockel - Guggenheim Securities LLC: And then, maybe just shifting gears a little bit. On to Brakes, I guess we knew it was seasonal, maybe we didn't appreciate how seasonal. But you think about the amount of deleverage there, is it solely that deleverage or is there a mix issue as well? And does it have to be that seasonal? You sort of wonder, is there an opportunity for you to do things somewhat differently, and so it's not so skewed, 3Q versus the first half?
Joel T. Grade - Sysco Corp.: Yeah, I mean, John, I think – I mean, first of all, this is Joel. I mean, this – as you know, it's our first full year of this acquisition.
John Heinbockel - Guggenheim Securities LLC: Yeah.
Joel T. Grade - Sysco Corp.: So, we're certainly seeing some of those things for ourselves for the first time as well. But I would just say, again, if – keep in mind, just in terms of the order of magnitude of the size of their business, there's certain fixed costs that size leverages in different ways. And so, I think there's always going to be an element of some of that. And I think that's – but certainly to your point, I mean, there are things that as we go along, we'll continue to find ways to try to take a little of that seasonality out. Now, we did anticipate it. Again, last quarter, we called it out that certainly the second half of what is our fiscal year is a weaker time for them, particularly in our third quarter. So, again, we certainly anticipated some of that. But again, over time we'll certainly get smarter there, and look to find ways to continue to drive a little less seasonality in the business. But it certainly is inherently there.
William J. DeLaney - Sysco Corp.: Yeah, John, I think on that one, to Joel's point, we need to get through 12 months with this business and kind of really understand their cycles. I think the top line probably will remain pretty seasonal. There's some CapEx we need to invest in over there. We need to better understand how they work with their big customers and their suppliers. So, I think over time there may be an opportunity for us to better understand, not just the seasonality, but the efficiency of some of these things and – so hopefully, as we get into the fourth quarter and we talk to you in August, we'll have a better handle on that. But I think, over the next year or so, it will still take some time to work through some of that, and we'll give you the best guidance that we can.
John Heinbockel - Guggenheim Securities LLC: Okay. Thank you.
William J. DeLaney - Sysco Corp.: Yes.
Operator: Your next question comes from the line of Vincent Sinisi with Morgan Stanley. Your line is open. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Hey, good morning, guys. Thanks very much for taking my question. Just wanted to ask on the international front. Quite a bit of commentary upfront just around kind of the opportunities and the different geographies. Any further color you could provide at this point in terms of kind of either timing effort or capital that may be allocated to those, that would be great.
William J. DeLaney - Sysco Corp.: I think I was the one who was so effusive upfront there, Vinny. So, I'll start. I think Tom hit on up some of it. I mean, we certainly feel good with some of the earnings momentum that we have up in Canada right now. We've had to go in there and obviously look at our cost structure pretty aggressively, and we continue to do that. As Tom also mentioned, some of the initiatives that we've rolled out now for a couple, three years, and four years really in cat man's case, we're looking at how to deploy those in Canada in a way that makes sense for that country and that market. And there's some things that we're already doing up there with the telephone sales and that type of thing. So, we're learning from Canada and vice versa. And so we feel good about that. The Latin American business, a couple joint ventures, Bahamas, smaller in scale but exciting in terms of what we see over the medium to long term down there in terms of growth potential, new facilities in Costa Rica and Panama, that kind of thing coming up. So, that's really what I was talking about. And then, we just talked about Brakes, and lot of opportunity in Brakes. There's going to be opportunities to certainly improve how we execute over there. I think there's going to be some investment opportunities. And at the same time, we still think from an acquisition platform standpoint, it's just a tremendous vehicle for us to do more in Europe over time. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Okay. And then, maybe just following up on that, Bill, and thank you for the commentary. Just on kind of on the international margin, I know you said, obviously seasonality, still early, still learning, Brakes specifically. But that it was a bit lower, of course, in 3Q. Anything else to call out outside of just kind of continuing to work through Brakes, and how we should just kind of generally think about that profitability in that line of business kind of on a go-forward basis?
William J. DeLaney - Sysco Corp.: I don't think so right now. I'll let Joel weigh in. We're just now beginning our planning process for next year with them. So, I think as we finish up this year, like I said a minute ago and as we get into their planning process, to the extent that there're some nuances here or some things that we think we can maybe work with them to do better or differently, we'll certainly give you some guidance there. Joel?
Joel T. Grade - Sysco Corp.: Yeah, Bill, I actually don't really have anything else to add to that. I just think it's, in general, again – just always remember, again, order of magnitude, a little bit smaller businesses, so more impacted by some of the cost structure and smaller volume quarters. But other than that, there's – again, we'll keep getting smarter about this, as Bill said, and I talked about earlier. At least, again, we've had these people as part of our company now for not even a year yet, and so we'll continue to be able to refine our talking points around that and hopefully give you guys continued clarity as we go forward. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Great. Thanks, fellas.
Operator: Your next question comes from the line of Edward Kelly with Credit Suisse. Your line is open. Edward J. Kelly - Credit Suisse Securities (USA) LLC: Yeah, hi, guys, good morning.
William J. DeLaney - Sysco Corp.: Hi, Ed. Edward J. Kelly - Credit Suisse Securities (USA) LLC: Bill, last quarter, obviously, the market hated the fact that your total case growth was roughly flat. And then, this quarter, it really kind of came back pretty good. You had talked about, post Q2, about the multi-unit side. And I think if I remember correctly, some business that didn't renew because you didn't like the pricing. Did something else happen this quarter? Was there a new business here to fill the void? Just thoughts around that. And then, as we think about total case growth going forward, I think what a lot of us were doing we're kind of assuming that you'd be flattish to up modestly for three quarters now. And it doesn't seem like that's going to be the case. So, I guess, how should we be thinking about this going forward? Was Q2 just an anomaly?
William J. DeLaney - Sysco Corp.: I don't believe in anomalies. So, I won't say that. I can't say that with all of our people listening right now, Ed. But now, look, let me start, and I'll have Tom give you a little more color on the large account, what we call the CMU part of the math here in a little bit. But I think the way we should be thinking about it is the way we're trying to run it here, which is we've got these three-year targets, and we have an annual plan. And we bifurcate it today, because when we talk about disciplined, profitable, sustainable growth, we really run this thing, even though we run them out of our operating companies, we run them differently. And a lot of the large accounts, they're much more complex relationships and they're longer term generally. And there's going to be normal ebbs and flows in those negotiations as well. And while we've done a great job over the years growing that business, and frankly, retaining the business, when you do lose an account or two accounts, even if you are maybe the catalyst in that transition, i.e., Sysco, that's going to make an impact over, not just one quarter, but a couple quarters. And obviously, perpetually, you're always bringing on new business. Hopefully it's not four quarters, so you have a chance to mitigate it. So, I think you're seeing a little bit of that with the new business offsetting. I'll let Tom go there. I think the bigger point is more on the local side, which is we're looking to grow that, in the current three-year plan, 2.5% or more. And if you go back and look at Q1 and Q2, we were between 1.5% and 2%. So, we certainly weren't where we needed to be, and I think now you're seeing a strong quarter here in the third quarter. And so far, this quarter we're seeing similar types of results. So, when we talk about momentum, that's really what we're talking about there and our ability to leverage it. So, feel good about the local case growth, feel good about our ability to leverage it. Feel very good about where we are, relative to our three-year plan. And I just think the CMU side of it, the way I'd like you to think about it is we're managing this in a very disciplined way. We're not trying to get rid of customers. We're trying to work with customers in a way where we can grow, support their growth in a way that's profitable for both of us. But to the extent that there is turnover in that account base, it will impact the numbers a little more significantly. Thomas L. Bené - Sysco Corp.: Yeah, I don't think I have really that much to add. I think Bill answered that pretty well. The only thing I'd go back to, we've said earlier around the local, is we feel like we're very focused on improving our share wallet with our existing customers, and we're seeing good momentum there. And then, sure, we're always looking at new business opportunities in that space. But I would say it's not anything unique or different this quarter than what we've been doing. I think we just feel like we've got good momentum, and we're continuing to execute our plan accordingly. Edward J. Kelly - Credit Suisse Securities (USA) LLC: Okay. And then, just one quick follow-up. And we're kind of beating a dead horse a little bit here, but it's probably worth it. As you think about inflation and deflation and your goal to drive gross profit dollar growth, a couple hundred basis points faster than SG&A, you would rather have an inflationary backdrop than a deflationary backdrop in order to achieve that, number one. And then, number two, sounds like you'd encourage us to really think more about, as we analyze you as a company, more about how you're achieving that gap and how you're growing gross profit dollars over really what your gross margin is doing in any given quarter. Is all that fair?
William J. DeLaney - Sysco Corp.: I would say yes and yes. And on the first one, what we would prefer is modest inflation, let's call it low-single digit, Ed. Edward J. Kelly - Credit Suisse Securities (USA) LLC: Okay. Great. Thanks, guys.
William J. DeLaney - Sysco Corp.: Sure.
Operator: Your next question comes from the line of Zack Fadem with Wells Fargo. Your line is open.
Zachary Fadem - Wells Fargo Securities LLC: Hey, good morning, guys. I'm curious if you have any thoughts on the disconnect between the improving consumer confidence trends, yet underlying restaurant traffic, particularly chains, looks to be pretty choppy. I'm curious if you think there's been any change out there with regard to the reallocation of consumer wallet. And if you see this variability as more temporary or if you think restaurant spending can reaccelerate from here going forward.
William J. DeLaney - Sysco Corp.: Yeah, I'll take a stab at that, Zack. It's hard. I mean, it's hard to really get a handle on it. These trends aren't exactly new, so I think the traffic phenomenon, it's probably – it's been a few quarters now where we've seen somewhat less traffic. It's not dramatic, but a little bit less. But the nice thing is the check amount is covering that, and we're still seeing some real growth at the restaurant level. It obviously changes from subsegment to subsegment from quarter to quarter. And obviously, within the individual operators. I think the good news here is while there's consumer confidence or some of the other feedback we get from surveys we do with restaurant operators that we participate in, it is positive. So, I think you always want to be in an environment where people are looking forward or feeling better about things. And I think that's a good thing. So, if the economy can continue to at least move along even modestly and if that translates into our business, that will keep our customers positive and obviously that keeps the business in a good way. So, I think right now, we'll take it. It would be good to see a little more traffic. But the fact that people are positive is very good.
Joel T. Grade - Sysco Corp.: The only thing, Zack – this is Joel – that I could add, just to remind you and others, yeah, and we certainly talk about restaurants, as we should, frequently. But always keep in mind, about a third of the business is actually outside of the restaurant space, as well. So, things like healthcare, thing – sports stadiums, universities. Those types of government institutions. And I only just say that as a reminder that some of the opportunity we have is part of Sysco's kind of what we've begun portfolio diversification, if you want to call it that, and the ability to have some level of buffering, if you want to call it that, and some of those trends. So, just as a reminder. No other comment there.
Zachary Fadem - Wells Fargo Securities LLC: Thanks, Joel. And I had a couple housekeeping items. Sorry, if I missed this. But what was the specific impact of deflation in the U.S. this quarter? And then, also, with respect to the volume uptick, was the U.S. Broadline all organic growth for the most part, or was there any small M&A or anything like that in there as well?
Joel T. Grade - Sysco Corp.: So, I can take that. (50:16) I'll call it slightly deflationary for the quarter. And the other one I would consider – there's some M&A growth, not a large amount. So, it's considered mostly organic.
Zachary Fadem - Wells Fargo Securities LLC: Got it. Thanks, Joel. Appreciate the time, guys.
Operator: Your next question comes from the line of Shane Higgins with Deutsche Bank. Your line is open. Shane Higgins - Deutsche Bank Securities, Inc.: Hey, guys, good morning. Thanks for taking the questions. Obviously, your cost per case continues to come down. Expense management has been pretty strong. Are you guys seeing any signs of the labor cost inflation in the U.S.? Any indications that you're seeing upward pressure on wages in any of your markets?
William J. DeLaney - Sysco Corp.: Well, certainly, our customers have been experiencing that for a year or two now. So, that's been one of the benefits of the deflation, is that we've been able to work with our customers well on that while they were incurring a fair amount of labor increase. As far as our labor costs go, to your point, Shane, we're managing it very aggressively. And I would say we're doing a decent job managing both the head count as well as the costs. So, we're keeping those in line. We're a heavily incentive-based company. So, when the company performs, our people do well, our sales people are on commission. So, it's a heavily incentivized cost structure here on the payroll side. Thomas L. Bené - Sysco Corp.: I think the only thing I'd add – this is Tom – is that the minimum wage changes you might see around that Bill referenced that certainly impacted some of our customers, don't really impact us much because we're generally well above the minimum wage with all of our employees. Shane Higgins - Deutsche Bank Securities, Inc.: Okay, great. And then, just a quick follow-up on your M&A outlook. I know that's – still you mentioned it was a strategic priority. What are you guys seeing today in terms of the M&A environment? Just any color you could give. Do you guys see a lot of willing sellers out there? And do you anticipate more opportunities over the next year?
William J. DeLaney - Sysco Corp.: I think the first thing we see is a pretty wide open space for us, both domestically and international. So, it comes down to prioritization and just the right kind of acquisitions whether they're what we call fold-ins into our broadline, additional businesses that can complement the specialty companies that we have or international. So, there's plenty of opportunity. Obviously, over the last couple of years, three years, really we've been more locked in on some larger deals. So, we're remobilizing our team here to staff up for going out and being – if not more aggressive, certainly broader in our thinking up and down the line in terms of opportunities there, as I said. So, we think there's good opportunity. How that translates into (52:59) acquisitions, that's always a little bit more difficult to predict. You need willing sellers. You need an environment where they can take their proceeds and reinvest them in a way that works for them. But we think it's actually a very good environment right now for acquisitions. Shane Higgins - Deutsche Bank Securities, Inc.: Great. Thanks. I'll get back in the queue.
William J. DeLaney - Sysco Corp.: Sure.
Operator: Your next question comes from Bill Kirk with RBC Capital Markets. Your line is open.
William Kirk - RBC Capital Markets LLC: Thank you for taking the question. It sounds like you're pretty confident in your ability to pass food inflation to your customers. But how do you feel about their ability to then pass it on to the final consumer in the face of some of their existing traffic deceleration?
William J. DeLaney - Sysco Corp.: Yeah, I think what we've seen over the years, and this really just comes from data that we see – industry data, that kind of thing, is that most restauranteurs and the restaurant industry in general, and then to Joel's point, that's only about 60% of our customer base or revenue stream. It's a very interesting phenomenon. Year in and year out, they pass on about 2%. And so, when you hear me talk about – and we've been saying this quite consistently for years. When you hear us talk about low-single digit or modest inflation being a good environment, that's good for our customers, and therefore, it's good for us. And so, I think if it stays at those levels, they should be able to pass it along reasonably well. If it were to go back up to the 4 or 5s, that becomes more difficult. And obviously, in our situation, you don't necessarily pass it all along every day. It depends on the category and that kind of thing. But within a reasonable period of time in a modest inflation environment, I would agree that we should be able to cover it. Thomas L. Bené - Sysco Corp.: I think the only thing I'd add is just keep in mind, I mean, we are still in a deflationary point with meat. And again, a couple of the other categories. Again, we talk about dairy, produce, some of those, to Joel's point earlier, tend to be more volatile in general. So, again, I still think we're certainly in a decent place there. And again, certainly a modest inflation level is something we feel good about in this industry.
William Kirk - RBC Capital Markets LLC: Okay. That's all for me. Thank you.
William J. DeLaney - Sysco Corp.: Thank you.
Operator: Your next question comes from the line of Ajay Jain with Pivotal Research Group. Your line is open.
Ajay Jain - Pivotal Research Group LLC: Yeah, hi, good morning. Obviously, with Brakes, you did better than expected in Q3. I was just wondering if you can give an update on your outlook for Brakes in the fourth quarter. To what degree you expect Brakes to be a net tailwind or a drag on earnings?
Joel T. Grade - Sysco Corp.: Yeah. So, thanks for the question. Yeah, it's – so, again, as we guided previously, we certainly anticipated that the second half of their year – again, certainly second half of our fiscal year, if you want to call it that, would be less favorable in terms of accretion than the first half, where we also – we talked about that as – in particular, the third quarter, we expected some modest dilution. And then, that in the fourth quarter, we expected some modest level of accretion. So, we certainly maintain that belief as we head into the fourth quarter.
Ajay Jain - Pivotal Research Group LLC: Okay. And as a follow-up, it looks like adjusted operating expenses outpaced gross profit dollar growth for the first time, I think, in about six quarters by about 100 basis points. And I know you've already gotten some questions about this and you called out seasonality with Brakes in response to one of the earlier questions. But the fact is, Brakes was accretive, so can you give any clarification on what's driving the higher relative expense growth to gross profit, and if this is some kind of inflection point?
Joel T. Grade - Sysco Corp.: Yeah, I'd just – again, as I mentioned earlier, there's nothing there that I would call out as something that I would consider any type of inflection point or change point there. Again, I would just tell you that, in general, in a quarter, our smallest, their smallest, it tends to be a little less leverage on cost than there are in some of the other quarters. Again, our core business actually had very strong leverage between gross profit dollar growth and expenses. I don't anticipate – again, there's really nothing to call out there, honestly, in terms of that (57:43) business outside of this. Thomas L. Bené - Sysco Corp.: Yeah, just keep in mind, I think everyone knows this because you're probably ahead of me on your modeling, but Brakes is a higher gross profit, higher expense business. So, when you get into a quarter where you have this seasonality, which is even more pronounced than our seasonality, that's going to accentuate that even more. But that's really why we break it out the way we do. We're actually quite pleased with how we manage the expenses from the core business, if you will, to Brakes to the corporate office. So, I would say right now, we're feeling good about the expenses. We need to keep growing the gross profit, keep that spread, to Joel's point. But that is totally consistent with what we talk about. We talk about discipline. We talk about that and the customer mix, and we talk about profitable. In this business, what we mean with profitable is to keep that spread there. So, overall, we feel fine on the expenses.
Ajay Jain - Pivotal Research Group LLC: Hey, if I could ask one final question. I just wanted to clarify a comment from your prepared remarks. So, correct me if I'm wrong, but I thought you mentioned that accelerated depreciation for SAP would continue through Q4. So, does that mean the add-back for depreciation ends in the fourth quarter of fiscal 2017, or do you continue to benefit from technology restructuring next year, and by that, I mean incrementally benefit next year?
Joel T. Grade - Sysco Corp.: Well, so, again, I think the comment there was around the fact that we actually have, as we talked about during the announcement of our revised technology strategy, that because of that and because we're moving away from the SAP platform, that there would be actually accelerated depreciation that we would reflect up until the end of our fiscal 2017. And then, at that point is when we are actually completed with that transition which we are certainly on track to do. And so, the accelerated depreciation that you're seeing in our numbers will end, if you will, at the end of fiscal 2017. And then, there would be some level of benefit we would see from that although, again, I think, as we've talked about that as well, there're some opportunity to reinvest in additional technologies, particularly around customer facing. But to answer your question directly, the accelerated depreciation that you're seeing ends at the end of this year, and you will not be seeing that starting fiscal 2018.
William J. DeLaney - Sysco Corp.: And it's all embedded in the three-year plan targets.
Joel T. Grade - Sysco Corp.: Correct.
Ajay Jain - Pivotal Research Group LLC: Great. Thank you.
Operator: Your next question comes from the line of Karen Holthouse with Goldman Sachs. Your line is open. Karen Holthouse - Goldman Sachs & Co.: Just another question on gross profit per case. And looking at the gap between inflation, assuming moderate deflation by 1% or something like that, it looks like the gap between gross profit per case and the rate per case growth came in pretty sharply this quarter, still positive but smaller than it's been, which you wouldn't necessarily expect given the sort of favorable mix shifts in the business. I don't know if there is anything you can do to help us decompose how much of that would be related to just the multi-unit piece of the business, or just help us understand why that sort of trend changed. Thanks. Thomas L. Bené - Sysco Corp.: This is Tom. You might have to help a little bit with – so, you talk about gross profit per case which we don't really talk about. Are you talking about gross margin and the slowing of the gross margin percent improvement? Karen Holthouse - Goldman Sachs & Co.: Well, you can look at gross profit growth and gross profit growth versus case growth, and get an idea of what gross profit per case growth looks like. And the gap between that has been running 500 basis points or so ahead of – in the U.S. Broadline business. 500 basis points or so ahead of inflation or deflation the last couple of quarters. And then, this quarter (01:01:23) like 200 basis points. So, a pretty sharp compression. If you can help us understand what could be driving that. Thomas L. Bené - Sysco Corp.: I don't really see anything unique or different from what we've been talking about. I think it's obviously the mix of our business continues to drive some of the change. That's certainly, as we talked about, on the gross margin percentage also lapping. We're year-over-year now lapping growth rate upon growth rate from a gross margin percentage perspective. But I guess the last thing I'd say is we feel very good about our 4% gross profit growth in the U.S., and I think relative to the overall case growth that we're seeing, which was slightly below 2% for that same gross profit growth. So, I think we feel very good about where we're at. Joel, if you have anything to add (01:02:13).
Joel T. Grade - Sysco Corp.: Yeah, Karen, I think – this is Joel. I mean, the main thing I would continue to focus on here is around the – again, as we talked about, the growth in gross profit dollars and that growth relative to our operating expense dollars. And so, the reason we keep talking about that is at the end of the day, whether it's inflation, deflation, et cetera, that gap certainly drives the efficiency in operating margin. And that's certainly, again, something we're very pleased with. And so, I would just continue to remain focused on those things that really ultimately drive the operating profitability. Karen Holthouse - Goldman Sachs & Co.: All right. Thank you.
Operator: Your next question comes from the line of John Ivankoe with JPMorgan. Your line is open.
John William Ivankoe - JPMorgan Securities LLC: Thank you. The question was on the market share that you're taking relative to the broad foodservice distribution industry. Is it happening in some of the smaller independents finally where they're just having a difficult time keeping up with merchandising and technology, and maybe, for lack of a better word, poor sellers of their business to you? And then, secondly, and I think related, and about an hour ago, Tom, you talked about improved e-commerce capabilities for your independent restaurants. And just hoping to get an update on that, and whether you're seeing gradual improvement or maybe something more of step function in terms of how things are changing on that front. Thanks. Thomas L. Bené - Sysco Corp.: Sure. So, I'd say, just back on the market share. So, we obviously are very focused on continuing to grow our share across the business. I think, as you know, there are lots of competitors out there. So, to isolate in one area or another is really hard to do, given we compete with so many different types of folks, literally market by market. So, I would just say that we continue to be focused on delivering the right value proposition for those customers, which includes all the things that I've been talking about. So, I won't reiterate all of those. One, in particular, that you did ask about was where we're at on the technology rollout, and we continue to feel really positive about that. We're now seeing across our local customers around 25% of those customers ordering via our online applications. So, we feel really good about the progress we're making, and we continue to feel like that's going to be an area that we'll continue to see growth. But we also – I want to remind everyone that our approach and our strategy around this is to do this in a way that supports whatever our customers are looking for, meaning giving them choice. Whether that's through online or that's through the marketing associate or through some other way of ordering with us. But we feel great about the progress we continue to make and think it's a combination of all those things that are helping us continue to gain momentum.
John William Ivankoe - JPMorgan Securities LLC: Thank you.
Operator: Our last question comes from the line of Steve Gojak with Cleveland Research. Your line is open.
Steven Ivan Gojak - Cleveland Research Co. LLC: Great. Thank you. Just two quick questions. Just on the corporate management case growth, what was that this quarter, and any impact from customer exits or wins there versus, I believe, the minus 2% last quarter? And then, secondly, just your thoughts on the competitive environment in the third quarter versus the last several quarters. Any change there in it being more or less aggressive. And then, within that, following up to a prior question, as you move from an inflationary environment to a deflationary environment, those competitive pressures, and then the cost and demand pressures on the restaurant operators themselves impact the ability to pass through any sort of price increase or inflation, again, even though you're seeing modest inflation right now? Thank you. Thomas L. Bené - Sysco Corp.: I guess, let me start with – we don't communicate the actual numbers on our corporately managed growth. But you know roughly from our prior conversations, we're around 50/50 on our local versus CMU business. And so, we talked about our local and U.S. Broadline being up 3.5%, and our total of 1.8%. So, you can surmise from there. I missed kind of the second part of that, I think it had to do with the inflation-deflation...
William J. DeLaney - Sysco Corp.: Kind of environment, how would that be accentuated by inflation? Thomas L. Bené - Sysco Corp.: So, I don't think – I mean, we've talked about, it remains highly competitive out there. I don't think that the inflation or deflationary environment necessarily affects or changes that competitive nature and who we're competing with. We all deal with some of those impacts as an industry. And obviously, all of us have our way of dealing with those.
William J. DeLaney - Sysco Corp.: Yeah, look, Steve, I think that's probably the best answer we have here. Our focus always starts with the customer. So, as their challenges become greater, certainly they probably put more pressure on their suppliers. But we also think that's an opportunity for us to differentiate ourselves relative to many of our competitors, if not all, in terms of what our offerings are across products and services and just basic relationship management that we've done for years.
Steven Ivan Gojak - Cleveland Research Co. LLC: Great. Thank you.
William J. DeLaney - Sysco Corp.: Thank you.
Operator: This concludes the third quarter fiscal year 2017 earnings call. Thank you for your participation. You may now disconnect.