Advanced Drainage Systems (WMS) Q4 2018 Earnings Conference Call Transcript

Advanced Drainage Systems (WMS 0.03%)
Q4 2018 Earnings Conference Call
May. 29, 2018 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' fourth-quarter and fiscal 2018 results conference call. My name is Jack, and I'm your operator for today's call. [Operator instructions] I would now like to turn the presentation over your host for today's call, Mr. Mike Higgins, director of investor relations and business strategy.

Sir, you may begin.

Michael Higgins -- Director of Investor Relations and Business Strategy

Thank you, and good morning. With me today, I have Scott Barbour, our president and CEO, and Scott Cottrill, our CFO. I would also like to remind you that we will discuss forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements because of various factors including those discussed in our press release and the risk factors identified our Form 10-K filed with the SEC.

While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8-K submitted to the SEC.

We will make a replay of this conference call available via webcast on the company website. With that, I'll turn the call over to Scott Barbour.

Scott Barbour -- President and Chief Executive Officer

Thanks, Mike, and good morning, everyone. We finished the year with a strong fourth quarter. Revenue grew 2% driven by growth in both the domestic and international markets. Our core domestic construction market sales increased 4% with favorable pricing in the quarter and international sales were up to 15% driven by sales in the Canadian construction market.

We also deliver significant improvement in profitability with adjusted EBITDA increasing to $27 million and adjusted EBITDA margin increasing 570 basis points to 10.8%. On Slide 5, we present our full-year results as compared to our guidance. We have a strong finish to the year achieving our financial goals through disciplined execution of our fundamentals. Fiscal 2018 was another successful year of converting traditional materials to our plastic pipe products, and the 8% increase of Allied product sales gives us confidence in our complete water management solutions strategy.

From a top-line perspective, we once again achieved above market growth with sales in our core domestic construction markets growing point 500 basis points faster than the market. We focused on improving profitability through sharper operating execution and achieving better returns on our capital through critical areas of focus since I came on board last September. I am pleased to say that our focus and efforts on our second-half results paid off, which enabled us to compensate for our slower start to the year. Recall, through the first six months of the year, our sales were up 6% but adjusted EBITDA was down 7%.

Our results improved significantly in the second half of the year as we executed on the profitability road map laid out on our second-quarter earnings call, including the following actions. First, our sales team aggressively pursued favorable pricing in the marketplace to catch up on resin cost inflation for the full year. Next, we delivered 8% sales growth at our core domestic construction markets for the year, which grows coming from both Pipe and Allied products. Third, we achieve favorable performance from our international businesses in the second half of the year, with net sales growth of 11% and $10 billion of adjusted EBITDA, as compared to $2 million in the prior period.

Lastly, we realized savings from restructuring actions to realign our cost structure and contain expenses. We also approved the execution in our sales and operations planning, which resulted in better loading at our factories and delivery to our customers. We expect the transportation and logistics improvements we drove in the second half of the year to continue into fiscal 2019. Disciplined execution on these key priorities resulted in a 40% -- 40% increase in our second-half adjusted EBITDA to $83 million, which was key to achieving our financial goals this year.

I'm very proud of our team for working hard to get us back on track. On Slide 6, we compared our domestic and market sales with the overall market, which measure -- which measures our market conversion for fiscal 2018. In the non-residential market, we generated 8% sales growth outpacing the market by 500 basis points. This growth was driven by our full set of water management solutions, including high single-digit growth in both PIpe and Allied products.

In the residential market, sales grew 11%, as compared to market growth of 4%. And within residential sales, new residential construction sales increased 18% and retail increased 5%. The infrastructure market faced headwinds with this year, resulting in a flat market overall. We were able to increase infrastructure sales by 4% due to the strong growth of our HP product line, which continues to drive market conversion.

Finally, the agriculture Pipe market declined 7% after another challenging year. We saw the return of a more normal winter this year as compared to the last two, which impacted both the fall and early spring selling seasons. In addition, estimated cash receipts for crop -- crops were down over 2% at 2017, and over capacity in the pipe market kept prices low. Despite of these headwinds, ADS maintained its market share in fiscal 2018.

Overall, we are pleased to deliver another successful year of material conversion at ADS, which gives us confidence in our ability to drive above-average market growth going forward. We will continue to enhance profitability and improve operating performance by executing other fundamentals, which is already favorably impacted our results. Longer term, the measures we already have in place coupled with our superior performance plan initiatives are expected to drive margin improvement and offset inflationary headwinds that we see in transportation and labor. Additionally in fiscal 2019, we will continue to emphasize our working capital program improvements to drive down inventory by increasing our terms and improving inventory quality, while we will also work to make improvements in our receivables and payables. And with that, I'll turn it over to Scott Cottrill.

Scott Cottrill -- Chief Financial Officer

Thanks, Scott. Moving to Slide 7. I'll keep my comments here brief, as Scott already discussed our domestic performance plan market. Our full-year revenue increased 6% to $1.33 billion, coming in slightly above the top end of our guidance.

On domestic net sales growth of 7% was driven by growth in both Pipe and Allied products. Our HP products posted double-digit growth, again, this year and we saw strong growth from our key allied products, including our Storm Tech retention and detention systems and our Nyloplast catch basins. International net sales ended the year slightly up with 1% growth driven by solid performance in the Canadian construction market, which helped drive 11% growth in the back half of the year. Adjusted EBITDA increased 9% to $210 million and our adjusted EBITDA margin improved 40 basis points to 15.8%.

The full-year increase in adjusted EBITDA was primarily driven by volume growth in both Pipe and Allied products. Additionally, in the second half of the year, we successfully managed favorable pricing in the market while controlling our costs. We realized approximately $7 million from the restructuring actions we previously announced, which helped offset the inflationary headwinds Scott mentioned in transportation and labor. As we move into fiscal 2019, we expect the inflationary pressures to remain, but we are confident we will continue to expand our margins through pricing, our SPP program and incremental benefits from our ops excellence initiatives and plant closures in 2018.

I will provide additional color on the latter two in a moment, but with respect to pricing, we will continue to offset resin cost increases with favorable pricing. Going forward, we will also ensure our pricing reflect -- reflects the valuable service we provide our customers in terms of transportation and distribution. Moving to Slide 8. In fiscal 2018, we generated $137 million of cash flow from operations and spent $42 million on capital expenditures, resulting in $95 million of free cash flow.

This $38 million increase compared to fiscal 2017 was primarily due to stronger sales and earnings as well as working capital improvements. In fiscal 2019, we have initiatives in place to reduce our cash conversion cycle. As Scott mentioned, we will increase inventory turns as well as work to better align our customer and supplier terms. We also expect to accelerate -- accelerate our capital expenditures in fiscal 2019 to between $60 and $70 million.

This investments will be focused primarily on growth and productivity initiatives to support our SPP efforts. For example, we're investing in cost-improvement projects to reduce our conversion costs and increase our capacity. Additionally, we are investing our network capacity including plant improvements, new lines and tooling to support high-growth products in high-demand regions. This will reduce our manufacturing conversion, freight and material costs, and allow us to service our customers more efficiently.

We're also investing in our Green Line Polymers facilities, where we sell processed recycled plastics. In a given year, we recycle over 400 million pounds of plastic. We are going to increase that capacity to capture additional cost benefits from using recycled material. These improvements will also reduce the cost of converting the recycled plastic into usable material and improve our production efficiency.

And finally, we're investing in IT systems and infrastructure to better support our growing business. Our SPP initiatives, in combination with prior-year plant closures will result in cost out of $10 million to $15 million in fiscal 2019. As we've discussed in the past, our SPP and organic investments remain our top priority for capital deployment, followed by bolt-on M&A. We will continue to look for M&A opportunities that fit our strategic, qualitative and financial lens.

After M&A, we will look to dividends and share repurchases to effectively return cash to shareholders. We believe these capital deployment priorities will drive profitable growth, margin expansion, free cash flow generation and shareholder value over the long term. On Slide 9, we provide our financial targets for fiscal 2019. Based on our order backlog and current market trends, we expect net sales to be in the range of $1,375,000,000 to $1,425,000,000, representing year-over-year growth of 3% to 7%.

We expect adjusted EBITDA to grow between 5% and 14%, and to be in the range of $220 million to $240 million. These ranges represent an adjusted EBITDA margin of 16% to 16.8%, while margin expansion of 20 to 100 basis points. One other item of note, we expect our effective tax rate for fiscal 2019 to be in the range of 30% to 32%. Our revenue and adjusted EBITDA targets are based on the market outlook provided on Slide 10.

Overall, we anticipate continued strength in our end-markets year over year. We expect domestic construction markets to grow at low- to mid-single digits in fiscal 2019, supported by healthy demands in each of our end-markets. In international, we expect growth in the Canadian construction markets and a modest growth in Mexico. We expect the Canadian ag market to perform in line with the domestic agricultural market.

With that, we'll be happy to take questions. Operator, please open the line.

Questions and Answers:

Operator

Certainly. [Operator instructions] Your first comes from the line of Mike Halloran with Baird. Your line is open.

Mike Halloran -- Robert W. Baird & Company -- Analyst

Hey, good morning, everyone.

Scott Barbour -- President and Chief Executive Officer

Hey, Michael.

Scott Cottrill -- Chief Financial Officer

Good morning.

Mike Halloran -- Robert W. Baird & Company -- Analyst

So let's start on the top line. It feels like as you guys lay out your expectations for next year that the underlying trajectory doesn't feel all that different when you look across the end market from a market perspective. I think maybe you can just comment on the non-res market and the residential markets and what you guys are seeing from an underlying momentum there from a marketplace perspective, recognizing that your guidance assumes you're going to continue to outperform where the conversions at?

Scott Barbour -- President and Chief Executive Officer

So, Michael, this is Scott Barbour. And I would characterize those markets as better condition than a year ago, much like we had been kind of seeing late last year, in the calendar year trajectory, particularly in Florida, Texas to West, very good. And we're -- we've got a lot of focus on those regions where we think those markets have a lot of, I would call demographic and economic list, and we're seeing some of the benefits in that right now. To support that, Scott mentioned we're pushing investments and investing the high-growth areas.

That would be those kind of areas that we're talking about.

Mike Halloran -- Robert W. Baird & Company -- Analyst

On the cost side. First, maybe some commentary on price cost. Were you guys neutral to slightly positive in the quarter? And then, obviously, for next year, I think the guidance assumes that you're at a minimum price cost neutral. Is that fair?

Scott Barbour -- President and Chief Executive Officer

In the quarter, we are spread, if you will, on price on resin costs. We were very favorable when you look at the bridge. When you look at the full-year '19, again, we will expect pricing will remain up, but we expect that to offset some of that inflationary resin cost that we've seen in the first, you know, part of of this year, more so than what we expected. But we expect that to be relatively neutral in fiscal '19 to your point.

Mike Halloran -- Robert W. Baird & Company -- Analyst

That's fair. And then on the transportation cost side, it feels like the headwinds there probably haven't really changed, but your ability to mitigate that with productivity and pricing is what the difference was in the quarter?

Scott Barbour -- President and Chief Executive Officer

Correct. Correct. I mean, I think, we're -- we are seeing the same inflationary and hiring headwinds as any other company with a fairly sizable transportation activity would see, but we've developed a lot of productivity, mitigation actions, you know, kind of pricing actions to try to combat that, and we started that, you know, a couple of months ago. So we saw it coming and we were trying to get out ahead of it, and I think we're seeing some benefits of that work right now.

Mike Halloran -- Robert W. Baird & Company -- Analyst

Great. And then last one on my side, just some thoughts on the M&A environment -- what your pipeline looks like, how actionable the pipeline is. And any thoughts on pricing in the marketplace?

Scott Barbour -- President and Chief Executive Officer

So they're -- I mean the pipeline is -- got a few things in it. We kicked out sime things, we put some more things back in. I think a couple of them are pretty actionable and it'll all kind of come down to what the prices and our appetite for it. So it is, I would say, some nice decent level of activity.

Mike Halloran -- Robert W. Baird & Company -- Analyst

Great. Appreciate the time. Thank you, gentlemen.

Scott Barbour -- President and Chief Executive Officer

Thank you.

Scott Cotrill -- Chief Financial Officer

Thanks.

Operator

Your next comes from the line of Scott Schrier with Citi. Your line is open.

Scott Schrier -- Citi -- Analyst

Hi, good morning.

Scott Barbour -- President and Chief Executive Officer

Good morning.

Scott Cotrill -- Chief Financial Officer

Good morning.

Scott Schrier -- Citi -- Analyst

I am wondering if you could talk a little bit about the progression of the quarter. Obviously, earlier in the year, we had a lot of weather. It seems like from other companies, what they've been saying is things improved in March and then, accelerated even further in April. So, I am curious if you could talk a little bit about the quarter? And anything you're seeing on the ground in April and even May in terms of demand cadence?

Scott Cottrill -- Chief Financial Officer

So, Scott, Scott Cottrill here. So you are talking more about kind of that April, what we're seeing here in --

Scott Barbour -- President and Chief Executive Officer

March, April, and May.

Scott Schrier -- Citi -- Analyst

Yes. Yes. Just understanding, I think, January and February and early March had a lot of weather headwinds for a lot of the markets, so just want to see the progression late in the quarter in March and then in April and May. Just any color you can give there?

Scott Cottrill -- Chief Financial Officer

So we certainly saw in January, February, March quarter, an extreme regionality of our business, where Midwest and Northeast, poor weather, not a lot going on. But we had really focused on Florida, Texas, the West and -- and that, I think we benefited from that as we -- weather in the January, February, March kind of quarter. And historically, we've been a little over-weighted to the Midwest and the Northeast, but a lot of great activity in those Sun Belt states in the Southeast and the far West. As we kind of move into April, May, June, we can't talk about a lot of stuff, but it's very much in line kind of, lets call it, quarter to date with the guidance that we're giving you today and you know the seasonality that we have, so it's very in line with that.

It was a little slow kind of up in the Northern regions and pretty good down in the Southeast, in particular. But I would say, in the last four weeks, the Northeast has really turned up for us quite quickly. Better than the weather would have suggested, as a matter of fact. And now we're working hard to keep our delivery schedules up and have tried to add some production in that area.

Scott Schrier -- Citi -- Analyst

Got it. And then can you talk a little bit about how your conversations are going with customers -- or actually, the potential customers, that have been using more traditional materials. As more traditional materials that they're having more cost inflation and obviously, the labor and the benefits of your products. So are you seeing some customers or potential customers -- is it resonating a little better on becoming more receptive to substitution, just if you could talk a little bit about the trajectory of that material substitution theme that you have?

Scott Barbour -- President and Chief Executive Officer

So yes, yes and yes. In a lot of the work that we do on that conversation around the material substitution, occurs with getting the approval done by the regulatory body and then it becomes an acceptance discussion with contractors. And we're in a lot of those type of discussions today there -- where we're getting, I would say, more of a year today than maybe in the past, largely because of the productivity on the installation of our product versus traditional materials. I think that's a big winner for us because of the labor shortages in the construction and the ability to get more jobs done with the same crew when you use our materials versus traditional materials.

That said, you got to have that technical work done upfront. But once contractors begin to use our material, they develop a high preference for it. And I mentioned places like Florida, where we work several years on getting the approvals in there. And then several -- last couple of years on the acceptance by the contracting base there, we've seen -- we've accelerated into a very sweet spot of that type of activity where the preference for our product is driving conversions faster than prior years in that state.

Scott Schrier -- Citi -- Analyst

Got it. And then one last one, just on the capex, and I appreciate you going through all the new initiatives you have where you're accelerating some of the spend. For the quarter, and I guess for the year, for '18, it came in a little light. Was there anything that caused that? Was it just the weather and you slowed down the capex in some of your plants?

Scott Cottrill -- Chief Financial Officer

No. Nothing unusual there that we can point to, just more of the timing.

Scott Barbour -- President and Chief Executive Officer

Yes. I think it's a timing thing, and we're obviously looking at a lot -- the placement of a lot of these investments, geographically, to support growth. And we've also invested in new tool sets, particularly for our HP product lines. And maybe a new guy trying to get a little bit more involved in that.

Scott and I've also gotten several rounds on making sure that we're getting returns that he and I expect for these things that might have slowed up a little bit of capital there at the end of the year, but it was, I think, for the right reasons.

Scott Cottrill -- Chief Financial Officer

I think Scott had a really good point. The rigor in which we look at this and the hurdle rates that we have, really, we're going to be -- able to make sure that they get it so that our return on invested capital marches north like we wanted to and what we ...

Scott Barbour -- President and Chief Executive Officer

It's provided fantastic engagement with our organization around our expectations when we invest this capital and the returns we expect and then we will go back and monitor and work with them to make sure what we're getting.

Scott Schrier -- Citi -- Analyst

Great. Thanks for taking my questions. Nice quarter and good luck.

Scott Cottrill -- Chief Financial Officer

Thank you, Scott.

Operator

[Operator instructions] Your next question comes from the line of Matt Bouley with Barclays.

Matt Bouley -- Barclays -- Analyst

Hey, thank you for taking my questions. I wanted to start off with a question on the EBITDA guidance. You are calling for the $220 million to $240 million. It sounded like inclusive of $10 million to $15 million of savings.

And so if I back out those savings, it looks like a relatively modest expectation for kind of underlying incremental margins. So the question is, to what degree is there some conservatism in that guide? Or I guess, put another way, I mean, is there any reason you're incremental margins, I guess, excluding the cost savings, wouldn't look like a more normalized kind of a 20%, 25% that you typically see historically?

Scott Cottrill -- Chief Financial Officer

Yes. No problem. I would say, the way we look at it is we've got some cost as cost ups, as Scott and I mentioned during the introduction here, whether it's kind of the labor inflation, the transportation inflation. And transportation is anything from our diesel costs to our common carrier costs, to the cost of getting drivers and some of the labor shortages that us and a lot of other folks have been talking to.

So we do see those cost ups. We're making investments in IT and other areas that we talked about a little bit here on the call as well. So when you look at those cost ups and investments, then you look at the cost that we're taking out. We are very much focused on making sure that we can offset as much of it, if not all of those cost ups with our SPP initiatives and our cost savings out year over year.

So those are the key components that lead us to the guidance range that we talked about.

Matt Bouley -- Barclays -- Analyst

Understood. And then I wanted to ask a question following up on the growth side. You highlighted the 500 basis points of growth above market in fiscal '18, which was obviously higher than the prior year. Is there any reason to think that 500 basis points is sustainable in the near term? Or is that more of just kind of a reflection of the pricing success you've had? Just how should we think about your ability to -- or I guess, what your expectation is to outgrow the market this year, because it seems like the guide implies some deceleration there? Is there a reason that that 500 can't be sustainable?

Scott Cottrill -- Chief Financial Officer

I mean, that's going to be lumpy, that rate at which you convert that 500, because it might depend on kind of which state you bring on and if there's a very large project coming through in that state. So overall, we want to convert one or two points a year in aggregate in the market. We might have some years that are better than that, like that 500 basis points. We might have some that are below that.

But I don't think that the 500 is kind of going to be a repeat, repeat, repeat. It's not a number that kind of works that way.

Matt Bouley -- Barclays -- Analyst

All right, makes sense. Thank you very much.

Scott Cottrill -- Chief Financial Officer

All right. Thank you.

Operator

[Operator instructions] Your next question comes from the line of Nishu Sood with Deutsche Bank. Your line is open.

Tim Daley -- Deutsche Bank -- Analyst

Hi, this is actually Tim Daly on for Nisu. Thanks for the time. My first question is regarding some comments that were made in the prepared remarks. So you mentioned that some of this year's capex is earmarked for increasing the Green Line facilities.

I'm just curious as to the utilization rates that were seen in '17 and '18, because I know fiscal '17 was around 60%. So just curious on how you saw that trend this year, last year, and I guess, what you're expecting next year once you get those new facilities online?

Scott Barbour -- President and Chief Executive Officer

So let me unpack your question just a bit, this is Scott Barbour. Green Line Polymers is really exclusively our recycling assets, and they tend to run at a higher utilization rate than the extrusion assets. I think the overall capacity rate that you were talking about was really the extrusion or pipe manufacturing assets. And the Green Line Polymer where we do all the separating, cleaning, sorting, flake, making the pellets, which we did send to the extrusion facilities.

That, that whole Green Line Polymer recycling thing, we run on pretty much of level-loaded type of schedule year round. The pipe-making assets, we took some off-line as we did some restructuring over the last year. We repositioned some of those lines, some we put retired. I would say, our capacity right now, highly seasonal.

But our capacity right now, I would say even over the last 60 days, has been in the mid- to high 80s. It will stay in the high 80s, we'll creep it up some, running quite a bit of overtime as we're going through the peak part of our season right now. So -- and I would add that we've also done a lot of work in the scheduling and what I call the loading of those facilities over the last six, seven months with new tools that we invested in previously to do our production planning, and we're seeing great benefits from that. And we're really able to manage our inventory quality and our inventory velocity a lot better from that.

So if you think about the pipe making, think about it as approach up into that mid- to high 80s. We can be pretty well loaded here for the last several months as we go through the season and then we'll continue to try to dip down as we get out of the season, but new tools are allowing us to do a better job on those assets.

Tim Daley -- Deutsche Bank -- Analyst

Well, thank you for that. That was great clarification. I appreciate it. And then, I guess, thinking about something you mentioned, though, the kind of loading, so the loading component within the kind of savings that you experienced this year on the freight side of things.

So could you just help us understand this kind of freight dynamics? You mentioned that there is -- you do use some common carriers, there are kind of in-house drivers as well. Just how does that split come from, I guess, an expense perspective of what is allocated toward freight? If you could kind of split third-party versus, I guess, in-house?

Scott Barbour -- President and Chief Executive Officer

So if you take our total freight, it's 8% to 10% of sales, right?

Scott Cottrill -- Chief Financial Officer

Ten percent, yes.

Scott Barbour -- President and Chief Executive Officer

Let's use -- let's call it 10%. It kind of goes up month to month in different months. And of that 10% that we've spent on freight, probably, 90% of it we spend internally on our own fleet and driver activities. So we're -- outside spend is nothing significant, but it's less than our internal spend.

And as you can imagine, that outside spend has been pretty volatile and we're doing all kinds of things that we can to manage that and have predictable cost around that, that common carriers spend. So we can control our internal spend. We've done a lot of work with our customers around freight policies, minimum orders, the way we build diesel fuel pricing into this, and we've made a lot of different actions around those kinds of things to be fairly paid for the transportation and distribution services we provide. And I think we're seeing some benefit from that.

Those really just kicked off midpoint of last quarter, and we watch them pretty closely and all of them are kind of showing the right trends from our actions. But it's -- we work on that every day and trying to find ways to eke out efficiency in that transportation network. We called it the inflation that's going to creep up on us if we're not careful, and I think we're doing a decent job of trying to keep an eye on that and take actions before it hits us in the teeth.

Tim Daley -- Deutsche Bank -- Analyst

Well, that's definitely positive to hear. So you mentioned the productivity actions were started just a few months ago, so did we see a lot of that in the quarter or kind of it's really not fully in there?

Scott Barbour -- President and Chief Executive Officer

No, no, no. We're talking about productivity assets on freight-related, transportation-related things. That as we kind of came into the new calendar year, you have a chance to reopen certain policies with customers around freight and transportation. So we did that and we began to get those in place.

But productivity-based, we've been working on, in some cases, for several years, are now coming to bear and there are other things that we've been doing that becomes a continuous rolling stream of activities that we do around productivity in our factories, productivity in our distribution, productivity in our volume.

Tim Daley -- Deutsche Bank -- Analyst

Sounds great. Thanks for the time.

Scott Barbour -- President and Chief Executive Officer

Thanks, Tim.

Operator

This includes the Q&A portion of our call. I would now like to turn it over to Scott Barbour for closing remarks.

Scott Barbour -- President and Chief Executive Officer

OK. Thanks, Jack. In closing, we're pleased with how we ended fiscal 2018. The top-line growth reflects the strength of our underlying markets.

Our continued success in executing our material conversion strategy through strong growth of our pipe products as well as our water management solution strategy due to growth of our Allied products. We demonstrated our commitment to profitable growth this year and we'll continue to focus on the fundamentals of our business and driving execution across all aspects of our operations in fiscal 2019 and beyond. Thank you all again for joining us today. We look forward to speaking with many of you very soon.

Operator, that concludes our call.

Operator

[Operator signoff]

Duration: 33 minutes

Call Participants:

Michael Higgins -- Director of Investor Relations and Business Strategy

Scott Barbour -- President and Chief Executive Officer

Scott Cottrill -- Chief Financial Officer

Mike Halloran -- Robert W. Baird & Company -- Analyst

Scott Schrier -- Citi -- Analyst

Matt Bouley -- Barclays -- Analyst

Tim Daley -- Deutsche Bank -- Analyst

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