UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2019
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) | 001-14989 (Commission File Number) | 25-1723342 (IRS Employer Identification No.) | ||
225 West Station Square Drive Suite 700 Pittsburgh, Pennsylvania (Address of principal executive offices) | 15219 (Zip Code) | |||
(412) 454-2200
(Registrant's telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||
Emerging growth company o | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o | ||||
Item 2.02 | Results of Operations and Financial Condition. |
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
On January 31, 2019, WESCO International, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year 2018. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01 | Regulation FD Disclosure. |
The information in this Item 7.01 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
A slide presentation to be used by senior management of the Company in connection with its discussions with investors regarding the Company's financial results for the fourth quarter and full year 2018 is included in Exhibit 99.2 to this report and is being furnished in accordance with Regulation FD of the Securities and Exchange Commission.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
The following are furnished as exhibits to this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WESCO International, Inc. | ||
(Registrant) | ||
January 31, 2019 | By: | /s/ David S. Schulz |
(Date) | David S. Schulz | |
Senior Vice President and Chief Financial Officer | ||
 | NEWS RELEASE |
WESCO International, Inc. / Suite 700, 225 West Station Square Drive / Pittsburgh, PA 15219 | |
WESCO International, Inc. Reports Fourth Quarter and Full Year 2018 Results
Fourth quarter highlights:
• | Consolidated net sales of $2.0 billion, up 0.7% |
– | Organic sales growth of 2% |
• | Cost of goods sold as a percentage of net sales of 80.6% |
– | Gross margin of 19.4%, up 20 basis points sequentially and versus prior year |
• | Operating profit of $90.5 million, up 12% versus prior year |
– | Operating margin of 4.5%, up 40 basis points versus prior year |
• | Earnings per diluted share of $1.26 |
• | Operating cash flow of $122.2 million; free cash flow of $109.7 million, or 189% of net income |
• | Repurchased $100 million of shares |
Full year results:
• | Record consolidated net sales of $8.2 billion, up 6.5% versus prior year |
• | Operating profit of $352.5 million, up 10% versus prior year |
– | Operating margin of 4.3%, up 10 basis points versus prior year |
• | Earnings per diluted share of $4.82 |
• | Operating cash flow of $296.7 million; free cash flow of $260.5 million, or 116% of net income |
• | Repurchased $125 million of shares |
PITTSBURGH, January 31, 2019 /PRNewswire/ -- WESCO International, Inc. (NYSE: WCC), a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistics services, announces its results for the fourth quarter and full year 2018.
Mr. John J. Engel, WESCO's Chairman, President and CEO, commented, “After returning to sales growth in 2017, I’m pleased to report that we executed our top priorities of delivering margin expansion, strong profitable growth and increased cash generation in 2018. We strengthened our business, growing in all end markets and geographies, while operating against an economic backdrop that was more challenging than expected. We improved gross margin as we moved through the year and delivered double digit growth in operating profit and EPS in all four quarters. Free cash flow generation was also very strong at over 115% of net income and remains a hallmark of WESCO across the economic cycle. After paying down debt and accelerating the pace of our share repurchases, we exited last year with financial leverage at the lowest level since early 2015.”
The following are results for the three months ended December 31, 2018 compared to the three months ended December 31, 2017:
• | Net sales were $2.0 billion for the fourth quarter of 2018 and 2017. Organic sales for the fourth quarter of 2018 grew by 1.5% as foreign exchange rates negatively impacted net sales by 0.8%. |
• | Cost of goods sold for the fourth quarter of 2018 and 2017 was $1.6 billion, and gross profit was $390.3 million and $383.1 million, respectively. As a percentage of net sales, gross profit was 19.4% and 19.2% for the fourth quarter of 2018 and 2017, respectively. Gross margin for the fourth quarter of 2018 was 40 basis points higher than the fourth quarter of 2017 excluding the reclassification of certain labor costs from selling, general and administrative expenses to cost of goods sold. This reclassification was previously noted in the first three quarters of 2018. |
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• | Selling, general and administrative ("SG&A") expenses were $284.2 million, or 14.1% of net sales, for the fourth quarter of 2018 compared to $285.9 million, or 14.3% of net sales, for the fourth quarter of 2017. |
• | Operating profit was $90.5 million for the fourth quarter of 2018, compared to $80.9 million for the fourth quarter of 2017, an increase of 11.9%. Operating profit as a percentage of net sales was 4.5% for the fourth quarter of 2018, compared to 4.1% for the fourth quarter of 2017. |
• | Net interest and other for the fourth quarter of 2018 was $16.8 million, compared to $17.1 million for the fourth quarter of 2017. |
• | The effective tax rate for the fourth quarter of 2018 was 21.2%, compared to 65.2% for the fourth quarter of 2017. As adjusted for the application of the Tax Cuts and Jobs Act of 2017 (the "TCJA"), the effective tax rate in the prior year's fourth quarter was 23.9%. The lower effective tax rate in the current quarter as compared to the adjusted effective tax rate for the prior year's comparable quarter is primarily due to the permanent reduction of the U.S. federal statutory income tax rate from 35% to 21%, effective January 1, 2018, and the completion of the accounting for the income tax effects of the TCJA. |
• | Net income attributable to WESCO International, Inc. was $58.2 million and $22.5 million for the fourth quarter of 2018 and 2017, respectively. Net income attributable to WESCO International, Inc. for the current quarter increased 19.0% as compared to adjusted net income attributable to WESCO International, Inc. of $48.9 million for the prior year's fourth quarter. |
• | Earnings per diluted share for the fourth quarter of 2018 was $1.26, based on 46.2 million diluted shares, compared to $0.47 for the fourth quarter of 2017, based on 47.5 million diluted shares. Earnings per diluted share for the current quarter increased 22.3% as compared to adjusted earnings per diluted share of $1.03 for the fourth quarter of 2017. |
• | Operating cash flow for the fourth quarter of 2018 was $122.2 million, compared to $68.0 million for the fourth quarter of 2017. Free cash flow for the fourth quarter of 2018 was $109.7 million, or 189% of net income. Additionally, the Company repurchased $100 million of shares in the fourth quarter of 2018. |
The following are results for the year ended December 31, 2018 compared to the year ended December 31, 2017:
• | Net sales were $8.2 billion for 2018, compared to $7.7 billion for 2017, an increase of 6.5%. Organic sales for 2018 grew by 6.2% as foreign exchange rates positively impacted net sales by 0.3%. |
• | Cost of goods sold for 2018 was $6.6 billion and gross profit was $1.6 billion, compared to cost of goods sold and gross profit of $6.2 billion and $1.5 billion, respectively, for 2017. As a percentage of net sales, gross profit was 19.2% and 19.3% for 2018 and 2017, respectively. Gross margin for 2018 was flat compared to 2017 excluding the reclassification of certain labor costs from selling, general and administrative expenses to cost of goods sold. This reclassification was previously noted in the first three quarters of 2018. |
• | Selling, general and administrative expenses were $1.2 billion, or 14.1% of net sales, for 2018 compared to $1.1 billion, or 14.3% of net sales, for 2017. |
• | Operating profit was $352.5 million for 2018, compared to $319.1 million for 2017, an increase of 10.5%. Operating profit as a percentage of net sales was 4.3% for 2018, compared to 4.2% for 2017. |
• | Net interest and other for 2018 was $71.4 million, compared to $66.6 million for 2017. For the year ended December 31, 2018, net interest and other includes a foreign exchange loss of $3.0 million from the remeasurement of a financial instrument, as well as accelerated amortization of debt discount and debt issuance costs totaling $0.8 million due to early repayments on our term loan facility. |
• | The effective tax rate for 2018 was 19.8%, compared to 35.4% for 2017. As adjusted for the application of the TCJA in the fourth quarter of 2017, the effective tax rate for the prior year was 24.9%. The lower effective tax rate in the current year as compared to the adjusted effective tax rate for the prior year is primarily due to the permanent reduction of the U.S. federal statutory income tax rate from 35% to 21%, effective January 1, 2018, and the completion of the accounting for the income tax effects of the TCJA. |
• | Net income attributable to WESCO International, Inc. was $227.4 million and $163.5 million for 2018 and 2017, respectively. Net income attributable to WESCO International, Inc. for the current year increased 19.7% as compared to adjusted net income attributable to WESCO International, Inc. of $189.9 million for the prior year. |
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• | Earnings per diluted share for 2018 was $4.82, based on 47.2 million diluted shares, compared to $3.38 for 2017, based on 48.4 million diluted shares. Earnings per diluted share for the current year increased 22.6% as compared to adjusted earnings per diluted share of $3.93 for 2017. |
• | Operating cash flow for 2018 was $296.7 million, compared to $149.1 million for 2017. Free cash flow for 2018 was $260.5 million, or 116% of net income. Additionally, the Company repurchased $125 million of shares in 2018. |
Mr. Engel continued, “As mentioned last quarter, we provided our initial end market sales outlook and expect all of our end markets to remain healthy and to continue to provide profitable growth opportunities for WESCO. Our 2019 plan builds on the positive momentum generated in our business last year and includes continued execution of our growth initiatives, investments in our people and processes, and maintaining our cost and cash management discipline. As a result, we reaffirm our 2019 full year outlook for sales growth in the range of 3% to 6%, and provide our full year outlook for operating margin of 4.3% to 4.7%, EPS of $5.10 to $5.70 per diluted share, and free cash flow generation of at least 90% of net income.”
Mr. Engel added, “Customers are seeking continuous improvement in their operations and supply chains in an increasingly complex and rapidly changing world. Our talented team of associates and our robust portfolio of products and value-added services continue to differentiate WESCO by providing our customers with complete solutions for their MRO, OEM and capital project needs. We are very well positioned and remain steadfast in our commitment to deliver increased value for our customers, suppliers, associates and shareholders in 2019 and beyond.”
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the fourth quarter and full year 2018 earnings as described in this News Release on Thursday, January 31, 2019, at 10:00 a.m. E.T. The call will be broadcast live over the internet and can be accessed from the Investor Relations page of the Company's website at www.wesco.investorroom.com. The call will be archived on this internet site for seven days.
WESCO International, Inc. (NYSE: WCC), a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistic services. 2018 annual sales were approximately $8.2 billion. The company employs approximately 9,100 people, maintains relationships with approximately 30,000 suppliers, and serves approximately 70,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. WESCO operates 10 fully automated distribution centers and approximately 500 branches in North America and international markets, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.
The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as well as the Company's other reports filed with the Securities and Exchange Commission.
Contact Information:
Will Ruthrauff, Director, Investor Relations
(412) 454-4220
http://www.wesco.com
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Three Months Ended | |||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||
Net sales | $ | 2,011.4 | $ | 1,996.6 | |||||||
Cost of goods sold (excluding | 1,621.1 | 80.6 | % | 1,613.5 | 80.8 | % | |||||
depreciation and amortization) | |||||||||||
Selling, general and administrative expenses (1) | 284.2 | 14.1 | % | 285.9 | 14.3 | % | |||||
Depreciation and amortization | 15.6 | 16.3 | |||||||||
Income from operations | 90.5 | 4.5 | % | 80.9 | 4.1 | % | |||||
Net interest and other (1) | 16.8 | 17.1 | |||||||||
Income before income taxes | 73.7 | 3.7 | % | 63.8 | 3.2 | % | |||||
Provision for income taxes | 15.6 | 41.6 | |||||||||
Net income | 58.1 | 2.9 | % | 22.2 | 1.1 | % | |||||
Net loss attributable to noncontrolling interests | (0.1 | ) | (0.3 | ) | |||||||
Net income attributable to WESCO International, Inc. | $ | 58.2 | 2.9 | % | $ | 22.5 | 1.1 | % | |||
Earnings per diluted common share | $ | 1.26 | $ | 0.47 | |||||||
Weighted-average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings per diluted | |||||||||||
common share (in millions) | 46.2 | 47.5 | |||||||||
(1) | The Company adopted Accounting Standards Update (ASU) 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on a retrospective basis during the first quarter of 2018. This ASU requires the disaggregation of service cost from the other components of net periodic benefit cost. For the three months ended December 31, 2018 and 2017, the non-service cost components of net periodic benefit cost aggregated to a benefit of $0.5 million and are included in net interest and other. |
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Twelve Months Ended | |||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||
Net sales | $ | 8,176.6 | $ | 7,679.0 | |||||||
Cost of goods sold (excluding | 6,609.2 | 80.8 | % | 6,194.4 | 80.7 | % | |||||
depreciation and amortization) | |||||||||||
Selling, general and administrative expenses(1) | 1,151.9 | 14.1 | % | 1,101.5 | 14.3 | % | |||||
Depreciation and amortization | 63.0 | 64.0 | |||||||||
Income from operations | 352.5 | 4.3 | % | 319.1 | 4.2 | % | |||||
Net interest and other(1) | 71.4 | 66.6 | |||||||||
Income before income taxes | 281.1 | 3.4 | % | 252.5 | 3.3 | % | |||||
Provision for income taxes | 55.7 | 89.3 | |||||||||
Net income | 225.4 | 2.8 | % | 163.2 | 2.1 | % | |||||
Net loss attributable to noncontrolling interests | (2.0 | ) | (0.3 | ) | |||||||
Net income attributable to WESCO International, Inc. | $ | 227.4 | 2.8 | % | $ | 163.5 | 2.1 | % | |||
Earnings per diluted common share | $ | 4.82 | $ | 3.38 | |||||||
Weighted-average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings per diluted | |||||||||||
common share (in millions) | 47.2 | 48.4 | |||||||||
(1) | For the years ended December 31, 2018 and 2017, the non-service cost components of net periodic benefit cost aggregated to a benefit of $1.9 million and are included in net interest and other. |
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions)
(Unaudited)
December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 96.3 | $ | 118.0 | |||
Trade accounts receivable, net | 1,166.6 | 1,170.1 | |||||
Inventories | 948.7 | 956.1 | |||||
Other current assets | 174.0 | 164.7 | |||||
Total current assets | 2,385.6 | 2,408.9 | |||||
Other assets | 2,219.4 | 2,326.6 | |||||
Total assets | $ | 4,605.0 | $ | 4,735.5 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 794.3 | $ | 799.5 | |||
Short-term borrowings and current debt | 56.2 | 35.3 | |||||
Other current liabilities | 211.4 | 206.2 | |||||
Total current liabilities | 1,061.9 | 1,041.0 | |||||
Long-term debt, net | 1,167.3 | 1,313.3 | |||||
Other noncurrent liabilities | 240.4 | 265.1 | |||||
Total liabilities | 2,469.6 | 2,619.4 | |||||
Stockholders' Equity | |||||||
Total stockholders' equity | 2,135.4 | 2,116.1 | |||||
Total liabilities and stockholders' equity | $ | 4,605.0 | $ | 4,735.5 | |||
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Operating Activities: | |||||||
Net income | $ | 225.4 | $ | 163.2 | |||
Add back (deduct): | |||||||
Depreciation and amortization | 63.0 | 64.0 | |||||
Deferred income taxes | 9.1 | (50.4 | ) | ||||
Change in trade receivables, net | (22.9 | ) | (113.0 | ) | |||
Change in inventories | (8.7 | ) | (119.0 | ) | |||
Change in accounts payable | 9.2 | 102.9 | |||||
Other(1) | 21.6 | 101.4 | |||||
Net cash provided by operating activities | 296.7 | 149.1 | |||||
Investing Activities: | |||||||
Capital expenditures | (36.2 | ) | (21.5 | ) | |||
Other | 2.1 | 16.3 | |||||
Net cash used in investing activities | (34.1 | ) | (5.2 | ) | |||
Financing Activities: | |||||||
Debt repayments, net | (128.1 | ) | (41.7 | ) | |||
Equity activity, net | (127.2 | ) | (106.8 | ) | |||
Other | (19.9 | ) | 7.3 | ||||
Net cash used in financing activities | (275.2 | ) | (141.2 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (9.1 | ) | 5.2 | ||||
Net change in cash and cash equivalents | (21.7 | ) | 7.9 | ||||
Cash and cash equivalents at the beginning of the period | 118.0 | 110.1 | |||||
Cash and cash equivalents at the end of the period | $ | 96.3 | $ | 118.0 | |||
(1) | Other operating cash flow activities for the year ended December 31, 2017 include the effect of accruing a $65.0 million tax liability related to the taxation of undistributed earnings of foreign subsidiaries under the TCJA. |
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NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), free cash flow, adjusted net income and adjusted earnings per diluted common share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of sales performance, and the use of debt and liquidity on a comparable basis. Additionally, certain of the aforementioned non-GAAP measures either focus on or exclude transactions impacting comparability of results, allowing investors to more easily compare the Company's financial performance from period to period. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions, except organic sales data)
(Unaudited)
Three Months Ended | Twelve Months Ended | ||||
Organic Sales Growth: | December 31, 2018 | December 31, 2018 | |||
Change in net sales | 0.7 | % | 6.5 | % | |
Impact from acquisitions | — | % | — | % | |
Impact from foreign exchange rates | (0.8 | )% | 0.3 | % | |
Impact from number of workdays | — | % | — | % | |
Organic sales growth | 1.5 | % | 6.2 | % | |
Note: Organic sales growth is a measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions in the first year of ownership, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.
Three Months Ended | Twelve Months Ended | ||||||||||||||
Gross Profit: | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Net sales | $ | 2,011.4 | $ | 1,996.6 | $ | 8,176.6 | $ | 7,679.0 | |||||||
Cost of goods sold (excluding depreciation and amortization) | 1,621.1 | 1,613.5 | 6,609.2 | 6,194.4 | |||||||||||
Gross profit | $ | 390.3 | $ | 383.1 | $ | 1,567.4 | $ | 1,484.6 | |||||||
Gross margin | 19.4 | % | 19.2 | % | 19.2 | % | 19.3 | % | |||||||
Three Months Ended | |||
Gross Profit: | September 30, 2018 | ||
Net sales | $ | 2,067.2 | |
Cost of goods sold (excluding depreciation and amortization) | 1,670.0 | ||
Gross profit | $ | 397.2 | |
Gross margin | 19.2 | % | |
Note: Gross profit is a financial measure commonly used within the distribution industry. Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. Gross margin is calculated by dividing gross profit by net sales.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended | |||||||
Financial Leverage: | December 31, 2018 | December 31, 2017 | |||||
Income from operations (1) | $ | 352.5 | $ | 319.1 | |||
Depreciation and amortization | 63.0 | 64.0 | |||||
EBITDA | $ | 415.5 | $ | 383.1 | |||
December 31, 2018 | December 31, 2017 | ||||||
Short-term borrowings and current debt | $ | 56.2 | $ | 35.3 | |||
Long-term debt | 1,167.3 | 1,313.3 | |||||
Debt discount and debt issuance costs (2) | 9.7 | 14.2 | |||||
Total debt | 1,233.2 | 1,362.8 | |||||
Less: cash and cash equivalents | 96.3 | 118.0 | |||||
Total debt, net of cash | $ | 1,136.9 | $ | 1,244.8 | |||
Financial leverage ratio | 3.0 | 3.6 | |||||
Financial leverage ratio, net of cash | 2.7 | 3.2 | |||||
(1) | Due to the adoption of ASU 2017-07 on a retrospective basis in the first quarter of 2018, the Company classified the non-service cost components of net periodic benefit cost as part of net interest and other for the years ended December 31, 2018 and December 31, 2017. These components aggregated to a benefit of $1.9 million for both years. |
(2) | Long-term debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs. |
Note: Financial leverage measures the use of debt. Financial leverage ratio is calculated by dividing total debt, including debt discount and debt issuance costs, by EBITDA. Financial leverage ratio, net of cash is calculated by dividing total debt, including debt discount and debt issuance costs, net of cash, by EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.
Three Months Ended | Twelve Months Ended | ||||||||||||||
Free Cash Flow: | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Cash flow provided by operations | $ | 122.2 | $ | 68.0 | $ | 296.7 | $ | 149.1 | |||||||
Less: Capital expenditures | (12.5 | ) | (5.5 | ) | (36.2 | ) | (21.5 | ) | |||||||
Free cash flow | $ | 109.7 | $ | 62.5 | $ | 260.5 | $ | 127.6 | |||||||
Percentage of net income | 189 | % | 281 | % | 116 | % | 78 | % | |||||||
Percentage of adjusted net income(1) | n/a | 129 | % | n/a | 67 | % | |||||||||
(1) | See the following page for a reconciliation of adjusted net income. |
Note: Free cash flow is a measure of liquidity. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
Three Months Ended | Twelve Months Ended | ||||||
Adjusted Tax Provision: | December 31, 2017 | December 31, 2017 | |||||
Provision for income taxes | $ | 41.6 | $ | 89.3 | |||
Income tax expense for TCJA | (26.4 | ) | (26.4 | ) | |||
Adjusted provision for income taxes | $ | 15.2 | $ | 62.9 | |||
Three Months Ended | Twelve Months Ended | ||||||
Adjusted Net Income Attributable to WESCO International, Inc.: | December 31, 2017 | December 31, 2017 | |||||
Income before income taxes | $ | 63.8 | $ | 252.5 | |||
Adjusted provision for income taxes | 15.2 | 62.9 | |||||
Adjusted net income | 48.6 | 189.6 | |||||
Net loss attributable to noncontrolling interests | (0.3 | ) | (0.3 | ) | |||
Adjusted net income attributable to WESCO International, Inc. | $ | 48.9 | $ | 189.9 | |||
Three Months Ended | Twelve Months Ended | ||||||
Adjusted Earnings Per Diluted Share: | December 31, 2017 | December 31, 2017 | |||||
Earnings per diluted common share | $ | 0.47 | $ | 3.38 | |||
Impact of TCJA(1) | 0.56 | 0.55 | |||||
Adjusted earnings per diluted common share | $ | 1.03 | $ | 3.93 | |||
(1) | The application of the TCJA in 2017 resulted in a provisional discrete income tax expense of $26.4 million, which was comprised of $82.8 million of expense associated with the deemed repatriation of undistributed earnings of foreign subsidiaries partially offset by a $56.4 million benefit from the remeasurement of net deferred income tax liabilities. |
Note: Adjusted net income attributable to WESCO International, Inc. for the three and twelve month periods ended December 31, 2017 does not include provisional discrete income tax expense of $26.4 million associated with the application of the TCJA.
For the three and twelve month periods ended December 31, 2017, adjusted earnings per diluted share is computed by dividing adjusted net income by the weighted-average common shares outstanding and common share equivalents.
The Company believes that these non-GAAP financial measures are useful to investors' overall understanding of the Company's current financial performance and provides a consistent measure for assessing the current and historical financial results.
11
Q4 & Full Year 2018 Earnings Webcast Presentation – January 31, 2019
Safe Harbor Statement All statements made herein that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to: adverse economic conditions; disruptions in operations or information technology systems; increase in competition; expansion of business activities; supply chain disruptions, changes in supplier strategy or loss of key suppliers; personnel turnover or labor cost increases; risks related to acquisitions, including the integration of acquired businesses; tax law changes or challenges to tax matters, including uncertainties in the interpretation and application of the Tax Cuts and Jobs Act of 2017; exchange rate fluctuations; debt levels, terms, financial market conditions or interest rate fluctuations; stock market, economic or political instability; legal or regulatory matters; litigation, disputes, contingencies or claims; and other factors described in detail in the Form 10-K for WESCO International, Inc. for the year ended December 31, 2017 and any subsequent filings with the Securities & Exchange Commission. The following presentation includes a discussion of certain non-GAAP financial measures. Information required by Regulation G with respect to such non-GAAP financial measures can be found in the appendix and obtained via WESCO’s website, www.wesco.com. 2 Q4 & FY 2018 Earnings Webcast 1/31/19
Q4 & Full Year 2018 Highlights Oct 1%) Fourth Quarter Nov (1%) • Continued strong results in the fourth quarter Organic Growth Dec 4%) ‒ Double digit EBIT (+12%) and adjusted EPS (+22%) growth vs. prior year (%) ‒ Gross margin expansion of 20 bps year-over-year and sequentially 10.9 10.1 ‒ Operating margin expansion of 40 bps year-over-year 8.6 9.0 • Reported sales were up 1%, organic sales were up 2% (flat in the U.S., up 5% in Canada, and up 11% in International) • Organic sales up 12% on a two year stack basis • Estimated pricing impact +1% 4.2 • MTD sales as of January 29th up low single digits 1.0 1.5 • Free cash flow at 189% of net income (1.7) • Repurchased $100 million of shares (3.1) (3.6) Full Year • Record sales up 6.5% versus prior year (6.7) (6.2) • Operating margin expansion of 10 bps versus prior year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Double digit EBIT (+10%) and adjusted EPS (+23%) growth vs. prior year 2016 2017 2018 • Free cash flow at 116% of net income Note: Organic growth excludes the impact of: acquisitions in the first year of • Repurchased $125 million of shares ownership, foreign exchange rates and number of workdays. See appendix for • Reduced financial leverage to lowest level since Q1 2015 non-GAAP reconciliations. …double digit operating profit, net income and EPS growth versus prior year 3 Q4 & FY 2018 Earnings Webcast 1/31/19
Industrial End Market Organic Sales Growth versus Prior Year • Q4 2018 Sales − Organic sales were up 1% versus prior year • Global Accounts 36% • Integrated Supply (flat in the U.S. and up 10% in Canada in local • OEM currency) • General Industrial Industrial − Up 4% sequentially 13.9% • Industrial market growth continues, driven by 11.2% increasing production and capacity utilization; labor 10.4% constraints support higher capital spending • Global Account and Integrated Supply opportunity 6.0% 5.8% 2018 pipeline and bidding activity levels remain strong 4.3% • Customer trends include continued high expectations 0.8% 1.2% 0.6% for supply chain process improvements, cost Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 reductions, and supplier consolidation Note: See appendix for non-GAAP reconciliations. Awarded a three-year contract valued at more than $30 million to provide an integrated supply solution for MRO materials to support multiple facilities for a metals manufacturer in the U.S. 4 Q4 & FY 2018 Earnings Webcast 1/31/19
Construction End Market Organic Sales Growth versus Prior Year • Q4 2018 Sales − Organic sales were up 1% versus prior year 33% • Non-Residential • Contractors (up 1% in the U.S. and up 3% in Canada in local Construction currency) 8.9% 9.4% 7.9% − Flat sequentially 6.0% • Strong backlog and business momentum continues 2018 with construction/contractor customers 2.8% 5.1% 1.2% • Backlog down 3% versus prior year and down 5% from Q3 (in line with normal seasonality) • Expecting moderate growth and uptrend in non- (3.6%) residential construction market to continue (4.4%) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Note: See appendix for non-GAAP reconciliations. Awarded a multi-million dollar contract to provide electrical equipment to support the construction of a new LNG facility in North America. 5 Q4 & FY 2018 Earnings Webcast 1/31/19
Utility End Market Organic Sales Growth versus Prior Year • Q4 2018 Sales − Organic sales were down 5% versus prior year (down 3% in the U.S. and down 23% in Canada in • Investor Owned 17.9% 18.8% 16% • Public Power local currency) • Utility Contractors Utility − Down 10% sequentially 11.0% • Continued scope expansion and value creation with 8.6% 9.1% 2018 10.2% investor owned utility, public power, and generation customers • Continued interest in Integrated Supply solution offerings (4.5%) (4.4%) (4.6%) • Favorable economic conditions, continued improvement in construction market, renewables growth, and Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 consolidation trend within Utility industry remain positive catalysts for future spending Note: See appendix for non-GAAP reconciliations. Awarded a five-year contract with estimated revenues of $35 million to provide electrical and MRO materials to an investor-owned utility in the U.S. 6 Q4 & FY 2018 Earnings Webcast 1/31/19
CIG End Market Organic Sales Growth versus Prior Year • Q4 2018 Sales − Organic sales were up 12% versus prior year • Commercial (up 1% in the U.S. and up 27% in Canada in local 15% • Institutional currency) • Government CIG 12.1% − Down 5% sequentially 9.0% 8.5% 9.4% 7.7% 2018 • Technical expertise and supply chain solutions 7.4% 9.4% driving positive momentum in datacenter, 4.8% broadband, and cloud technology projects • Continued positive momentum seen in LED lighting retrofits, FTTX deployments, broadband build outs, (2.0%) and cyber and physical security for critical infrastructure protection Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Note: See appendix for non-GAAP reconciliations. Awarded a multi-million dollar contract to provide data communications products for an upgrade to a U.S. federal government facility. 7 Q4 & FY 2018 Earnings Webcast 1/31/19
Q4 2018 Results Outlook Actual YOY Sales 1% to 4% $2.0B Up 0.7% Gross Margin 19.4% Up 40 bps (1) SG&A $284M, 14.1% Up 1%, improved 20 bps Operating Profit $91M Up 12% Operating Margin 4.3% to 4.6% 4.5% Up 40 bps Effective Tax Rate ~21% 21.2% Down 270 bps, as adjusted EPS $1.26 Up 22%, as adjusted 10 bps $2.00B 90 bps $2.01B 10 bps 80 bps 1.5% (0.1)% 4.6% 11.2% 0.7% Organic Growth Growth Growth Growth Growth Q4 2017 U.S. Canada International Foreign Q4 2018 Sales Exchange Sales Note: See appendix for non-GAAP reconciliations. (1) On a reported basis, gross margin was up 20 basis points. As previously noted in the prior quarters of 2018, the Company reclassified certain labor costs from selling, general and administrative expenses to cost of goods sold. Excluding this reclassification, gross margin for the fourth quarter of 2018 was 40 basis points higher than the fourth quarter of 2017. …margins expanding with strong operating profit pull through 8 Q4 & FY 2018 Earnings Webcast 1/31/19
Full Year 2018 Results Outlook Actual YOY Sales 6% to 8% $8.2B Up 6.5% Gross Margin 19.2% Flat (1) SG&A $1.15B, 14.1% Up 5%, improved 20 bps Operating Profit $353M Up 10% Operating Margin 4.2% to 4.4% 4.3% Up 10 bps Effective Tax Rate 19% to 21% 19.8% Down 510 bps, as adjusted EPS $4.70 to $4.90 $4.82 Up 23%, as adjusted 150 bps 80 bps 30 bps $8.2B 390 bps $7.7B 6.2% 5.2% 7.6% 14.4% 6.5% Organic Growth Growth Growth Growth Growth FY 2017 U.S. Canada International Foreign FY 2018 Sales Exchange Sales Note: See appendix for non-GAAP reconciliations. (1) On a reported basis, gross margin was down 10 basis points. As previously noted in the prior quarters of 2018, the Company reclassified certain labor costs from selling, general and administrative expenses to cost of goods sold. Excluding this reclassification, gross margin for 2018 was flat to 2017. …margins expanding with strong operating profit pull through 9 Q4 & FY 2018 Earnings Webcast 1/31/19
Diluted EPS Walk Q4 FY 2017 Adjusted $1.03 $3.93) Core operations 0.16) 0.49) Foreign exchange (0.01) (0.01) Tax 0.04) 0.30) Share count 0.04) 0.11) 2018 $1.26 $4.82 …23% adjusted EPS growth versus prior year 10 Q4 & FY 2018 Earnings Webcast 1/31/19
Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Total Debt to TTM EBITDA) ~ $1.2B of free 4.0x cash flow over Target last 5 years Leverage 2.0x – 3.5x $260.5 3.5x 3.0x 3.0X 2.5x $127.6 2.0x 67% 116% of adjusted of net 1.5x net income income Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 FY 2018 FY 2016 2017 2018 Note: See appendix for non-GAAP reconciliations. …strong free cash flow generation and financial leverage improvement in 2018 11 Q4 & FY 2018 Earnings Webcast 1/31/19
2019 Outlook Q1 FY Sales (2%) to 2% 3% to 6% Operating Margin 3.5% to 3.8% 4.3% to 4.7% Effective Tax Rate ~ 23% 22% to 24% Diluted EPS $5.10 to $5.70 Free Cash Flow ~ 90% of net income Notes: Excludes unannounced acquisitions and SLS. Assumes a CAD/USD exchange rate of 0.74 in Q1. Q1 and FY 2019 have one less workday than Q1 and FY 2018. See appendix for non-GAAP reconciliations. 12 Q4 & FY 2018 Earnings Webcast 1/31/19
Sylvania Lighting Solutions (SLS) Acquisition • A leading provider of LED lighting solutions and turn-key services • Founded in 1969, currently owned by Osram Sylvania • Annual revenue of ~$100 million in the U.S. and Canada with 220 employees • Will complement WESCO’s existing turn-key lighting renovation and retrofit offerings • Closing is expected to occur in March 2019 • Expect neutral impact to EPS in year one …strengthening WESCO’s lighting solutions and services 13 Q4 & FY 2018 Earnings Webcast 1/31/19
Appendix NON-GAAP FINANCIAL MEASURES This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), free cash flow, adjusted net income and adjusted earnings per diluted common share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of sales performance, and the use of debt and liquidity on a comparable basis. Additionally, certain of the aforementioned non-GAAP measures either focus on or exclude transactions impacting comparability of results, allowing investors to more easily compare the Company's financial performance from period to period. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above. 14 Q4 & FY 2018 Earnings Webcast 1/31/19
WESCO Profile 2018 Markets & Customers Products & Services 8% 15% 11% 40% 16% 36% 11% 33% 14% 16% Industrial Global Accounts | Integrated Supply General Supplies OEM | General Industrial Communications & Security Construction Wire, Cable & Conduit Non-Residential | Contractors Utility Lighting & Sustainability Investor Owned | Public Power Electrical Distribution & Controls Utility Contractors Automation, Controls & Motors CIG Commercial | Institutional | Government Note: Markets & Customers and Products & Services percentages reported on a TTM consolidated basis. 15 Q4 & FY 2018 Earnings Webcast 1/31/19
Sales Growth (%) 2016 2017 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Change in Net Sales (2.2) (0.3) (3.6) (3.7) (2.4) (0.2) (0.1) 7.8 11.3 4.7 12.5 10.2 3.4 0.7 6.5 Acquisition Impact 3.9 3.7 2.9 1.8 3.1 0.9 0.2 Core (6.1) (4.0) (6.5) (5.5) (5.5) (1.1) (0.1) 7.8 11.3 4.5 12.5 10.2 3.4 0.7 6.5 FX Impact (2.6) (0.9) (0.3) (0.3) (1.0) 0.6 (1.1) 0.8 1.2 0.4 1.6 1.2 (0.8) (0.8) 0.3 Workday Impact 3.2 (1.6) 0.4 (1.6) (0.4) Organic (6.7) (3.1) (6.2) (3.6) (4.9) (1.7) 1.0 8.6 10.1 4.5 10.9 9.0 4.2 1.5 6.2 Note: Core sales growth excludes acquisitions during the first year of ownership. 16 Q4 & FY 2018 Earnings Webcast 1/31/19
Q4 2018 Organic Sales Growth by Geography (%) U.S. Canada International WESCO Change in net sales (USD) (0.1) 1.7 7.7 0.7 Impact from acquisitions - - - - Impact from foreign exchange rates - (2.9) (3.4) (0.8) Impact from number of workdays - - - - Organic sales growth (0.1) 4.6 11.2 1.5 17 Q4 & FY 2018 Earnings Webcast 1/31/19
Sales Growth by End Market ($ Millions) Q4 2018 vs. Q4 2017 Q4 2018 vs. Q3 2018 FY 2018 vs FY 2017 Q4 2018 Q4 2017 % Growth Q4 2018 Q3 2018 % Growth FY 2018 FY 2017 % Growth Industrial Core $742 $744 (0.2%) $742 $727 2.2% $2,995 $2,865 4.5% Construction Core 680 679 0.1% 680 689 (1.3%) 2,696 2,558 5.4% Utility Core 306 322 (4.8%) 306 347 (11.7%) 1,309 1,187 10.3% CIG Core 291 261 11.4% 291 312 (7.0%) 1,210 1,104 9.6% Total Core Gross Sales $2,020 $2,006 0.7% $2,020 $2,075 (2.7%) $8,209 $7,713 6.4% Total Gross Sales from Acquisitions - - - - - - Total Gross Sales $2,020 $2,006 0.7% $2,020 $2,075 (2.7%) $8,209 $7,713 6.4% Gross Sales Reduction/Discounts (8) (9) (8) (8) (33) (34) Total Net Sales $2,011 $1,997 0.7% $2,011 $2,067 (2.7%) $8,177 $7,679 6.5% Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. 18 Q4 & FY 2018 Earnings Webcast 1/31/19
Q4 2018 Organic Sales by End Market (%) Industrial Construction Utility CIG WESCO Core Sales Growth (0.2) 0.1 (4.8) 11.4 0.7 FX Impact (0.8) (1.1) (0.2) (0.7) (0.8) Workday Impact - - - - - Organic Growth 0.6 1.2 (4.6) 12.1 1.5 19 Q4 & FY 2018 Earnings Webcast 1/31/19
Gross Margin ($ Millions) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2018 2017 2018 2017 Net sales $2,011 $1,997 $8,177 $7,679 Cost of goods sold (excluding depreciation and amortization) 1,621 1,614 6,610 6,194 Gross profit (1) $390 $383 $1,567 $1,485 Gross margin (1) 19.4% 19.2% 19.2% 19.3% (1) Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. Gross margin is calculated by dividing gross profit by net sales. Note: For gross margin in prior periods, see quarterly earnings webcasts as previously furnished to the Securities & Exchange Commission, which can be obtained from the Investor Relations page of WESCO’s website at www.wesco.com. 20 Q4 & FY 2018 Earnings Webcast 1/31/19
2017 Adjusted Diluted EPS ($ millions, except for EPS) Q4 2017 FY 2017 Reported Adjusted Reported Adjusted Results Adjustments Results Results Adjustments Results Income from operations $ 80.9 - $ 80.9 $ 319.1 - $ 319.1 Interest, net 17.1 - 17.1 66.6 - 66.6 Income before income taxes 63.8 - 63.8 252.5 - 252.5 Income taxes (1) 41.6 (26.4) 15.2 89.3 (26.4) 62.9 Effective tax rate 65.2% 23.9% 35.4% 24.9% Net income 22.2 26.4 48.6 163.2 26.4 189.6 Less: Non-controlling interests (0.3) - (0.3) (0.3) - (0.3) Net income attributable to WESCO $ 22.5 26.4 $ 48.9 $ 163.5 26.4 $ 189.9 Adjusted Earnings per Diluted Share: Earnings per diluted common share (as reported) $0.47 $3.38 Impact of Tax Cuts and Jobs Act of 2017 (TCJA) (1) 0.56 0.55 Adjusted diluted earnings per common share $1.03 $3.93 1 The application of the TCJA in 2017 resulted in a provisional discrete income tax expense of $26.4 million, which was compromised of $82.8 million of expense associated with the deemed repatriation of undistributed earnings of foreign subsidiaries partially offset by a $56.4 million benefit from the remeasurement of net deferred income tax liabilities. 21 Q4 & FY 2018 Earnings Webcast 1/31/19
Capital Structure ($ Millions) Outstanding at Outstanding at Debt December 31, 2017 December 31, 2018 Maturity Schedule AR Revolver (V) 380 275 2020 Inventory Revolver (V) 12 52 2020 2019 Term Loans (V) 85 25 2019 2021 Senior Notes (F) 500 500 2021 2024 Senior Notes (F) 350 350 2024 Other (V) 36 31 N/A Total Debt 1,363 1,233 Key Financial Metrics YE 2017 YE 2018 Cash 118 96 Capital Expenditures 22 36 Free Cash Flow (1) 128 261 Liquidity (2) 794 824 (V) Variable Rate Debt (1) Cash flow provided by operations less capital expenditures. (F) Fixed Rate Debt (2) Total availability under asset-backed credit facilities plus cash in investment accounts. 22 Q4 & FY 2018 Earnings Webcast 1/31/19
Financial Leverage ($ Millions) Twelve Months Ended December 31, 2018 Income from operations (1) $353 Depreciation and amortization 63 EBITDA $416 December 31, 2018 Short-term borrowings and current debt $56 Long-term debt 1,167 Debt discount and debt issuance costs (2) 10 Total debt $1,233 Less: cash and cash equivalents 96 Total debt, net of cash $1,137 Financial leverage ratio 3.0X Financial leverage ratio, net of cash 2.7X (1) Due to the adoption of ASU 2017-07 on a retrospective basis in the first quarter of 2018, the Company classified the non-service cost components of net periodic benefit cost as part of net interest and other for the twelve months ended December 31, 2018. These components aggregate to a benefit of $1.9 million. (2) Long-term debt is presented in the consolidated balance sheet as of December 31, 2018 net of debt discount and debt issuance costs. Note: For financial leverage ratio in prior periods, see quarterly earnings webcasts as previously furnished to the Securities & Exchange Commission, which can be obtained from the Investor Relations page of WESCO’s website at www.wesco.com. 23 Q4 & FY 2018 Earnings Webcast 1/31/19
Free Cash Flow Reconciliation ($ Millions) FY FY 2017 2018 Cash flow provided by operations $149.1 $296.7 Less: Capital expenditures (21.5) (36.2) Free cash flow 127.6 260.5 Adjusted net income $189.6 $225.4 Percentage of adjusted net income 67% 116% Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities. 24 Q4 & FY 2018 Earnings Webcast 1/31/19
Work Days Q1 Q2 Q3 Q4 FY 2016 64 64 64 62 254 2017 64 64 63 62 253 2018 64 64 63 62 253 2019 63 64 63 62 252 25 Q4 & FY 2018 Earnings Webcast 1/31/19