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HD Supply Holdings Inc (HDS)
Q3Â 2019 Earnings Call
Dec 10, 2019, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the HD Supply Third Quarter Earnings Conference call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Charlotte McLaughlin of Investor Relations. Please go ahead, ma'am.
Charlotte McLaughlin -- Investor Relations Officer
Thank you, Sonia. Good morning, ladies and gentlemen, and welcome to the HD Supply Holdings 2019 third quarter earnings call.
As a reminder, some of our comments today may be forward-looking statements based on management's beliefs and assumptions and information currently available to management at this time. These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings. Please note that the Company's actual results may differ materially from those anticipated and we undertake no obligation to update these statements.
Reconciliations of certain non-GAAP financial metrics with their corresponding GAAP measures are available at the end of our slide presentation and in our 2019 third quarter earnings release, which is available on our IR website at www.hdsupply.com.
Joe DeAngelo, our CEO will lead today's call, with Brad Paul en and John Stegeman, providing further color around their respective business units. Evan Levitt, our CFO will provide further information on our recent financial performance, on our expectations for the remainder of 2019. There will be an opportunity for Q&A. For those participating, please limit your remarks to one question and one follow-up, if necessary.
Thank you for your continued interest in HD Supply. And with that, I will now hand over the call to Joe DeAngelo.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Well, thank you, Charlotte. Good morning, everyone. Thank you for joining us today for our third quarter 2019 earnings call. As always, it is my privilege to share the Company's [Technical Issues] on behalf of the over 11,500 HD Supply associates who work hard every day as one team, driving customer success and value creation.
Turning to Page three, the environment continues to be challenging. In the third quarter of fiscal 2019, we delivered 2% sales growth and saw adjusted EBITDA declined by $1 billion. But we have been encouraged by the growth trends throughout the quarter, and our strong free cash flow generation of $577 million on a trailing 12-month basis. This allowed us to take advantage of our capital allocation strategy and opportunistically repurchase a significant amount of our shares through the quarter.
Turning to Page four, I want to focus today's call on providing an update on the planned separation of our two business units. As you are aware, in late September, we hosted a conference call, and we announced that HD Supply will be separating into two industry-leading public companies. We are nearly three months into that process and have made significant progress around the planning and implementation with key milestones being hit around talent alignment and information systems architecture. As a result, we are now able to give you a little bit more information around the timeline. The current expectation is that Construction and Industrial business will become an independent company in mid-2020 through a tax-free distribution to shareholders. This business will be named White Cap, consistent with its historical branding within the industry. Both businesses are currently undergoing an in-depth strategic review with the expectation that we'll be filing a Form-10 registration statement with the SEC in early 2020. We expect that the White Cap business will have the opportunity to meet with analysts and investors ahead of the separation.
The details around capital structure will be finalized post into the planned separation in mid-2020. We can share that we'll be targeting a high non-investment-grade credit rating for both businesses. This means that both companies are likely to remain in the 2 times to 3 times net debt-to-EBITDA range with Facilities Maintenance targeting the middle- to higher-end of that range, and White Cap likely targeting the lower-end of that range. The ratings agencies will make the ultimate determination following an in-depth review of the business profile, capital structure and capital allocation policies.
We've additionally disclosed that we expect both companies to maintain good annual cash flow generation, with Facilities Maintenance generating nearly $300 million post split and White Cap generating nearly $200 million subject to final capital structure. This is inclusive of the expectation that both businesses will be regular federal income tax payers, given that our federal net operating loss carry-forwards were exhausted during the third quarter of fiscal 2019, as expected.
In November, we outlined our expectations for incremental stand-alone costs of approximately 50 basis points to 100 basis points for each business in line with historic comparably sized separation transactions. We have in the past highlighted that both businesses enjoy a significant amount of operational autonomy. However, they do share considerable back office functionality. This includes departments like payroll, tax, legal, treasury and human resources. In addition to enterprisewide IT infrastructure and applications, right now we allocate the cost of these shared functions between the two businesses.
We remain in the process of planning and executing the separation and working hard to minimize the amount of stand-alone cost for each business. We still have considerable work to do between now and separation. We believe that both companies will need around three years to offset these incremental costs through efficiency and leverage of fixed costs, as they continue to grow.
Our teams are excited and energized. Each business' sales now exceed $3 billion on an annual basis, and we believe they now have the scale to stand-alone as separate public company. This gives both management teams the opportunity to better focus on their markets and best serve their respective customers, while optimizing their capital structure and maximizing the return to shareholders. Despite the work ahead of us, we will not be distracted from the primary job of serving our customers with excellence. Third quarter saw improved growth, we're still below our expectations. We continue to listen to our customers and provide them with the best products and services to help them succeed.
I'll provide some closing comments following Q&A. I will now turn the call over to Brad Paulsen and John Stegeman, who will provide an update on the key areas of investor interest.
Bradley Paulsen -- President, HD Supply Facilities Maintenance
Thank you, Joe, and good morning. I would like to begin by thanking our nearly 6,000 associates for the differentiated experience and support they provide to our customers each day.
Turning to Page five, I would like to address some of the topics regarding our Facilities Maintenance business that are recently been top of mind for investors. End markets. The MRO market is more challenging than it was 12 months ago given that our customers are facing escalating product costs from tariff-related inflation and continued high turnover of property level maintenance professionals. These conditions paired with an increasing focus on managing property level operational costs has, in some cases, impacted customer purchase patterns. Despite this, we fully expect to continue to grow through an increased focus on our national account customer base, which represent approximately 80% of our sales and improved execution of our value proposition for our other customer segments, which is historically split purchases among multiple providers. Overall, we are still very encouraged by the resiliency of the break-fix nature of our business and are confident that we are uniquely positioned to grow in these market conditions.
Hospitality. Sales within our hospitality customer segment have historically outgrown the Company average, but this year has slowed and underperformed the Company average. While we do believe this customer is facing its own market pressures, our team is optimistic about the growth opportunities available in this space. We plan to be opportunistic and acquiring new customers, while also selling more to our existing customers by expanding our available product offering and adjusting our service model for -- excuse me, corporate owned properties and franchise owner/operators.
Tariffs. As both Joe and I have shared, our recent investment in pricing analytics tools has been a significant help in navigating the unpredictable tariff environment seen over the last 12 months. Our category management and pricing teams have successfully used these tools to make informed data-driven pricing decisions. These tools, along with the support from our strategic supplier partners, have allowed our team to continue to offer market competitive pricing to our customers. Going forward, we do expect to be able to continue to pass on the gross margin dollar increase on our tariff impacted SKUs, but we are expecting gross margin rate contraction as the tariff costs have become too significant to fully pass on enough of a price increase to our customers to maintain gross margin rate. I am fully confident in our team and its ability to successfully navigate the go forward tariff environment.
Operations. Despite a difficult start to the year, we have recovered from our previous fulfillment issues in our Atlanta Distribution Center and are delivering the service our customers need and expect through consistent fulfillment, our next day promise across our national network. I would like to thank our leaders across our over 40 distribution centers and nearly 1,000 drivers for their daily commitment to serving our customers. We will continue to work toward flawless execution and improved productivity on our supply chain to ensure we consistently deliver an experience that exceeds our customers' expectations.
In summary, we are not satisfied with our performance in the most recent quarter, but do believe we continue to win in our markets. As the only national company solely focused on specific needs of the Living Space Maintenance Professional, we are uniquely positioned to support our customers in all market environments. Our strategy is sound. We will continue to grow through selling more to existing customers, particularly through our national account programs and we'll complement our organic growth with opportunistic M&A, like our recent Presto acquisition in the Houston market, which is now substantially integrated. We are encouraged by the results and look forward to pursuing other similar opportunities.
I want to thank you for your interest this morning, and I will now hand the call over to John Stegeman.
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Thank you, Brad, and thank you to everyone on the phone joining us this morning. I'm excited to be here again representing all of our White Cap associates. I want to begin today by walking through some recent investor questions before moving on to an update on what you can expect from White Cap after our separation.
Construction end markets, top of mind for most has been the current state of the construction end markets. Non-residential construction continues to be challenging. We are seeing growth in certain geographies like our Texas markets, and continue with strong job site presence in many priority districts. Our business remains choppy in California, certain markets in the Northeast and in the Midwest. However, we have good visibility into our markets and our teams remain very active bidding projects. While we continue to feel good about the pipeline of large, high profile projects, activity remains constrained in part by a lack of skilled labor. As we have said before, our residential exposure is significantly smaller than our non-residential business. We have seen a residential slowdown in certain priority districts like San Diego and San Francisco, where affordable housing is challenging to find.
Post split, management and strategy. I'd like to shift now to introduce you to key leaders on our leadership team. Alan Sollenberger is currently our President at White Cap. Alan has been with the Company for over 12 years, starting at The Home Depot in the strategic business development group focused on acquisitions before coming over to the HD Supply business. He has been instrumental in leading White Cap through the last nine years as Chief Financial Officer and Chief Operating Officer. We look forward to the impact Alan will have working with our field leaders to ensure our customers continue to receive exceptional customer service.
I would also like to introduce you to our Chief Financial Officer, Shawn Meredith, who joined us this year from Watsco. Shawn has over 13 years of experience in industrial products, seven of which have been in the distribution space. With over 30 acquisitions under her belt, we are delighted to have Shawn on board to oversee our future investments.
The senior leadership team will also include Betsy Malkin, our Chief Human Resources Officer, who has been with the Company for over 13 years. Betsy is an exceptional leader and we are very excited to have her expertise driving our human resource initiatives.
Over the coming months, we will be introducing you to more of our core team leaders, and expanding upon our strategy to drive customer success. This will include sharing more about our regional Vice Presidents, who are critical and fulfilling our customer needs.
Our focus will continue to be supporting our knowledgeable sales teams, filling out and densing in our national footprint, and driving success with our national account. Across multiple trades, we will continue to build out our value-added services and ensure our knowledgeable associates jobsite delivery and training continue to set us apart from the competition. Our growth initiatives continue to build on today's objectives, sales leadership, expanding product assortment and trades, greenfield expansion and M&A opportunities.
Our team is energized and highly motivated to win with our customers. Under the ownership of HD supply, we have been able to leverage our significant scale to more than triple our business than the last nine years. As an independent company, we look forward to standing on our own, strengthening our focus and ability to penetrate our markets deeper, providing opportunities to our associates for growth in building value for our shareholders.
With that, I will hand the call over to Evan.
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Thank you, John, and good morning, everyone. Turning to Page six, I will now review our third quarter results. In terms of our headline numbers, we delivered third quarter sales of $1.6 billion, an increase of $32 million, or 2% over the third quarter of 2018. Our gross margin rate of 38.9% was down 10 basis points from the third quarter of 2018. Adjusted EBITDA for the third quarter of 2019 was $247 million, a decline of $1 million or less than 1% from the third quarter of 2018.
On Page seven, I will discuss the specific performance of our individual business units. Net sales for our Facilities Maintenance business were $826 million during the third quarter of 2019, up $16 million, or 2% from the third quarter of 2018. Although not yet meeting our expectations, sales performance strengthened throughout the quarter.
Facilities Maintenance gross margins were down 20 basis points for the third quarter of 2018, driven, as expected, by margin rate pressures from tariffs. As Brad shared, we expect Facilities Maintenance gross margin rate to continue to be unfavorably impacted by tariffs. We expect Facilities Maintenance gross margin rate to be down approximately 40 basis points to 50 basis points for the full-year of 2019.
Facilities Maintenance adjusted EBITDA for the third quarter of 2019 was $149 million flat from the third quarter of 2018.
Net sales for our Construction and Industrial business were $818 million during the third quarter of 2019, up $15 million, or 1.9% from the third quarter of 2018. As John mentioned, third-party indicators and our internal data show a flattening of growth in the Construction end markets being constrained in part by a tightening in the skilled labor force.
Construction and Industrial gross margins were flat year-over-year, while adjusted EBITDA for the third quarter of 2019 was $98 million, down $1 million, or 1% from the third quarter of 2018.
Turning to Page eight. We invested $35 million in capital expenditures in the third quarter of 2019, in line with our ongoing capital expenditure expectations of approximately 2% of annual sales. In the third quarter of 2019, we paid cash taxes of approximately $25 million. As expected during the quarter, we exhausted our federal net operating loss carry-forwards and became a regular federal income tax payer. We expect to pay approximately $19 million to $23 million of cash taxes in the fourth quarter of 2019, bringing our total expected cash tax payments to approximately $54 million to $58 million for the full year of fiscal 2019.
We continue to estimate our ongoing GAAP tax rate will be approximately 26%. In the last 12 months, we generated $577 million of free cash flow. We expect full year 2019 free cash flow generation to be about $525 million, including the impact of being a regular federal cash income tax payer in the second half of the year.
During the third quarter of 2019, we repurchased approximately 6.2 million shares of common stock for a total of $240 million at an average price of $38.39. As of November 3, 2019, the end of our fiscal third quarter, we had approximately $59 million remaining under our share repurchase authorization. Including the completion of our two previous $500 million share repurchase authorizations, we have reduced our outstanding share count by over 20% since the first quarter of 2017. We will continue to opportunistically repurchase shares. As of the end of the third quarter of 2019, our net debt-to-adjusted EBITDA ratio was 2.4 times, comfortably within our targeted range of 2 times to 3 times.
Our capital allocation strategy remains the same. We will opportunistically deploy capital to the most attractive return opportunities available, including selective bolt-on or tuck-in acquisitions, and return of cash to shareholders, currently through our share repurchase program. That being said, the teams are working hard to ensure the success of the White Cap distribution and this will remain a priority focus.
On Page nine, we provide third quarter 2019 monthly sales trend performance, as well as the 2018 comparable. In August of 2019, we delivered sales of $521 million, an increase in average daily sales of approximately 1.6% versus August of 2018. In September of 2019, we delivered sales of $494 million, an increase in average daily sales of approximately 2.6% versus September of 2018. In October 2019, we delivered sales of $629 million, an increase in average daily sales of approximately 1.7% versus October of 2018. In both 2019 and 2018, there were 20 selling days in August, 19 selling days in September, and 25 selling days in October.
November 2019, ended Sunday December 1, which was the first month of our fiscal 2019 fourth quarter and we have provided our preliminary sales results. We will not provide information on November results beyond sales. November sales were approximately $436 million, which represents average daily sales growth of approximately 2.5% versus 2018. Average daily sales growth versus prior year by business was approximately 2.5% for Facilities Maintenance and approximately 2.4% for Construction and Industrial. There were 18 selling days in both November 2019 and November 2018.
Turning to Page 10, we provide an update on our full year guidance range. Net sales will be in the range of $6,116 million to $6,166 million. This translates to an approximately 3% growth rate at the midpoint, adjusted for the impact of the 53rd week in fiscal 2018. We expect adjusted EBITDA to be in the range of $855 million and $870 million, translating to a 1% growth rate at the midpoint, again adjusted for the impact of the 53rd week in fiscal 2018. We expect fiscal 2019 net income per diluted share, calculated in accordance with GAAP, to be in the range of $2.63 to $2.69. We also expect full year 2019 adjusted net income per diluted share to be in the range of $3.45 to $3.51. Our net income per diluted share range and our adjusted net income per diluted share range assume a fully diluted weighted average share count of 167 million and does not contemplate additional share repurchases.
Our full year guidance implies a fourth quarter of fiscal 2019 sales range of $1,355 million to $1,405 million. And adjusted EBITDA range of $161 million to $176 million. A net income per diluted share range, calculated in accordance with GAAP, of $0.40 to $0.47 and an adjusted net income per diluted share range of $0.52 to $0.58. Our fourth quarter net income per diluted share range and our fourth quarter adjusted net income per diluted share range assume a weighted average diluted share count of 163 million and do not contemplate additional share repurchases.
In summary, we continue to grow in a volatile market. We continue to be cautious and we will focus on what we can control.
I'd like to thank you for your continued interest in HD supply, and I'll turn the call over to Sonia for questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Our first question comes from David Manthey of Baird. Your line is now open.
David Manthey -- Robert W. Baird -- Analyst
Yeah. Thank you. My first question is on the FM business. I'm wondering, you cited higher turnover among customer Facilities Maintenance professionals. And that seems pretty anecdotal or are you seeing that at large national accounts? Or -- it just seems like a very granular factor to be a driver here, given the break/fix nature of the business. Can you just talk a little bit about the health of that market? Is it just that, or are there other factors at play here?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
I think that's -- this is Brad Paulsen. This is an important piece to understand. To answer your first question, we're seeing it really kind of across the board at both kind of national customers, as well as the smaller regional owners as well. The reason it's so important is when you have turnover at that level, they're often the primary decision-maker. And when you have that person, who's either not there or new to the property, they don't have the history of that facility. And when you don't have the history, understanding of what's been purchased does kind of introduce some level of uncertainty. And again, for us, that's where our sales team comes into play and provides incredible value because in many cases they are the continuity, and they can have the proper -- help the property, make the correct decision to operate that in the most cost-effective and efficient manner.
David Manthey -- Robert W. Baird -- Analyst
Yeah. It would seem like an opportunity for you, given the confusion. Well, then second, as it relates to, again customer labor markets, on both sides of the business really, particularly C&I. Construction labor markets have been tight, 2018 and prior to that, But you were able to grow faster in that environment. I'm just wondering if you can talk about the changes in your markets in 2019 specifically, even before this the weakness that seems to be looming out there, where you went from an overall growth rate in the mid- to high-single digits down to sort of a low-single-digit growth rate as a Company.
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Yeah. This is John Stegeman. We -- as I mentioned on the call earlier the markets across the country are choppy. We have some of our priority districts where growth over a much longer extended period, five or six years, was double-digit for us. And we've seen prolonged labor issues where some of our key contractors have had to slow down their work dramatically, just to be able to perform that quality work that is so important. So, I think a long-term impact from the labor force being impacted has certainly impacted a lot of our markets out there.
In certain markets where we've been very busy, also we had some I-9 issues where some of our contractors lost almost half of their labor force, having to comply with federal regulations. Those are unique situations that where a lot of labor just moves from one contractor to another to be able to account for that. So, we see all kinds of different situations out there. There is still significant opportunity for us. We are not happy with our growth performance in the last two quarters of the year. Typically, this is the time when we're able to take market share and we should be doing that. So we've got to get back to the growth initiatives that drive our business really well to be able to move forward.
David Manthey -- Robert W. Baird -- Analyst
All right. Thank you very much.
Operator
Thank you. And our next question comes from Julian Mitchell of Barclays. Your line is now open.
Jason Makishi -- Barclays Bank PLC -- Analyst
Hi. This is Jason Makishi on for Julian. Good morning. Maybe just a quick one around capital deployment. I think that was a primary driver of the two-way split strategy was the idea that both companies could focus more on deploying capital in a judicious manner that was beneficial to the businesses. So, I guess, seen significant capital expended toward repurchases, return to shareholders, et cetera, in the meantime, comes a little bit of a surprise. Can you just discuss a little bit what the capital deployment strategy will be heading into the two-way split? And if there is any sort of consideration as to the capital structure of both businesses beforehand?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. So the overall or overarching capital deployment strategy, that doesn't change in the sense that we continue to be committed to and both companies as separate businesses, we'll continue to be committed to deploying capital to the highest return opportunities available. Those return opportunities change from time to time and we'll defer business by business. So, for instance, both businesses are interested in accretive, bolt-on or tuck-in acquisitions, but those acquisitions occur when they become available. Both businesses have a robust pipeline of M&A opportunities. The Construction business, quite frankly, has a larger number of opportunities. And so, we may see more frequent acquisitions within the Construction business.
On the Facilities Maintenance side, there are opportunities as well. There aren't quite as many. There is a handful of what I'll call mid-sized opportunities and then a number of smaller ones like the Presto acquisition that we did, that was a $12 million acquisition. So those acquisitions will occur when they become available, and each business will deploy that capital without having to consider the needs of the other business once they're separated.
Excess cash flow will likely continue to be returned to shareholders through share repurchase -- our current share repurchase program. We may, at some point, consider a dividend. At this point, our Board of Directors and the management team have determined that share repurchases are the best way to return capital to shareholders, and that will continue as well. So, not surprising that we are continuing to repurchase shares at this time.
Jason Makishi -- Barclays Bank PLC -- Analyst
Understood. Thank you. And maybe just high-level around the top line. There's a lot of factors going on whether it'd be the choppiness of non-residential markets and the alleviation of headwinds and Facilities Maintenance as it relates to the Atlanta facility. Maybe just discuss relative to the November preliminary growth rates of the overall Company of around 2.5% organic, is the expectation for an acceleration as the initiatives discussed by Mr. Paulsen come to fruition? Or is this, given the current end market rate sort of a good baseline to think about heading into the Q4 and into 2020?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. Let's say, the 2.5% growth rate that we generated in November is a modest step-up from the third quarter. So we're pleased that it's trending in the right direction, but we're not pleased with the overall growth rate of 2.5%. We have higher aspirations and the teams are working hard to deliver that, and we expect to deliver more. But right now, that's our trend.
Jason Makishi -- Barclays Bank PLC -- Analyst
Understood. Thank you very much.
Operator
Thank you. And our next question comes from Deane Dray of RBC Capital Markets. Your line is now open.
Deane Dray -- RBC Capital Markets -- Analyst
Thanks. Good morning, everyone.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning.
Deane Dray -- RBC Capital Markets -- Analyst
Hey, conspicuously absent was a slide giving us your first look at fiscal 2020. And look, I understand that you may not have the perfect crystal ball here. But was -- are you purposely avoiding talking with more specifics about the coming year than you've done in years past? Is there more uncertainty? Is it more going on with the split? Just maybe share with us what's that from this point, what you're thinking about 2020?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. So, Deane, certainly 2020 will be impacted by the separation of the two businesses. We don't know exactly when that will happen yet as we described. We expect that to occur in mid-2020. So that, obviously, has a very significant impact to our outlook for next year. Beyond that, the markets, as both Brad and John described, the markets are little more challenging than they have been in the past and they're feeling like flattish type of markets right. Now, as both Brad and John indicated, there are still a lot of opportunity and a lot of business to be won and a lot of jobs being bid, so that's not an excuse for lack of growth, that's just our view of the markets today. They feel flattish year-over-year.
Deane Dray -- RBC Capital Markets -- Analyst
Got it. And then as follow-up, just a couple here, one is, it looks like free cash flow was ahead historically of what you would do in the quarter, did you take inventory down? And then Joe's comment on, if I understood it correctly, three years to normalize the stranded cost seems a bit longer than what we would expect for a size of this Company. So, maybe you could just clarify why that would take so long? Thanks.
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Sure. So first on the free cash flow. We are pleased with our free cash flow performance in the third quarter and the year-to-date, $577 million free cash flow, very strong. That, as we said, includes paying federal income tax for the first time in a long time here in the third quarter. Now, in comparison to last year, and last year's third quarter, we were carrying a little more inventory than we ordinarily would. And so, the fourth quarter of last year, as we brought that inventory down, was a good cash flow quarter for us. We still expect the fourth quarter of this year to be a good cash flow quarter as well, but in comparison to last year, maybe a little softer because of the elevated levels of inventory entering fourth quarter last year.
As far as the ability to recover the incremental stand-alone costs for separating the businesses, as Joe indicated, we're estimating that at about three years right now. Keep in mind, we're in a slower growth environment right now, this 2.5% makes it -- this 2.5% -- 2% to 3% growth rate that we're in and that we're forecasting for the fourth quarter, that growth rate makes it a lot more difficult to leverage fixed costs. So it's going to take a little bit of time. We're, obviously, going to work hard to reduce costs and leverage and grow as quickly as we can. But we want to set realistic expectations.
Deane Dray -- RBC Capital Markets -- Analyst
Thank you.
Operator
Thank you. And our next question comes from Michael McGinn of Wells Fargo. Your line is now open.
Michael McGinn -- Wells Fargo Securities -- Analyst
Thank you. I mean, I was wondering if we could put a finer point on the gross margin target for FM, you mentioned, I think it came down maybe 10 basis points. Are we still in kind of a plan for the worst, hope for the best tariff environment? Or what scenario planning are you doing around December 15, if anything?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. So the incremental tariffs that are scheduled to go into effect on December 15, aren't -- actually, aren't as impactful to us as the tariffs that are already in effect. The tariff list in December 15 is more consumer products than the products that we deliver. However, certainly, tariffs are having an impact. We are expecting 40 basis points to 50 basis points of margin contraction in Facilities Maintenance in fiscal 2019. We expect continued pressure on gross margin rate into 2020 under the current tariff environment, and we're managing it, I believe better than most. As Brad shared, we've made significant investments into pricing analytical tools and our teams are working hard and doing a great job every day, ensuring that we continue to provide compelling value to our customers, while recovering the cost of those tariffs.
Michael McGinn -- Wells Fargo Securities -- Analyst
Okay. Thank you. And then I just want to talk a little bit about the M&A strategy post or pre-split. You mentioned targets within the FM, can you just -- there is a lot of competitors out there who -- a big box competitors where there -- it's operating within a large organization and you're targeting, it seems like more of these mid-sized bolt-ons. Can you just walk us through what is the buy versus build framework when you're looking to outgrow the market and just how you think about that conceptually?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. Well, look, we're always looking to outgrow the market and we do that with the best sales team in the industry, and offering the broadest product assortment with the best service in the industry. So that is the bread and butter of expanding share and growing faster than the market. That being said, where there are players in the market and many of these are local or regional players that have a good niche or an expertise in a specific product category, that could be interesting to us if it's a customer that has expertise in repair -- in appliance repair parts or HVAC or some other product category that would enhance our capabilities within, not only that market, but the ability to take that learning from the market that we acquired in and spread it across the balance of our business would be very interesting to us.
Michael McGinn -- Wells Fargo Securities -- Analyst
Okay. And then if I could just sneak one more in, this is just more numbers based. The 53rd week, it adds a little bit of complexity, historically in your business, you've seen a pretty substantial ramp down at the end of the year. Just, it never seems like you've got that peak with from either HVAC or at the Atlanta DC. Now, we -- interest rates for residential are heading in the right direction for you guys in terms of market tailwinds. Can you just walk us through what is -- if there is any excess built up demand in the channel that you see for the next quarter that maybe those seasonal headwinds aren't as dramatic this year?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
I don't know that we've got built up demand. Certainly, this year was a disappointing year, starting off with unfavorable weather in the first quarter that we hoped would create some built up demand that we see release through the balance of the year. Didn't play out exactly as we had hoped. I do believe there is still a lot of activity out there to be won, but whether you characterize that as built up demand, I don't know that I would characterize it that way.
Michael McGinn -- Wells Fargo Securities -- Analyst
All right. Thanks. I'll pass it along.
Operator
Thank you. And our next question comes from Ryan Merkel of William Blair. Your line is now open.
Ryan Merkel -- William Blair & Company -- Analyst
Thanks. So first off on FM, you mentioned focusing on national accounts during this period of MRO market disruption. Can you just elaborate on your national account strategy? And then sort of secondly, it seems at this turnover issue is going to be with us for a bit. So does this imply that the MRO market will be flattish sort of for the foreseeable future?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
So, as I stated, national accounts represent about 80% of our business. Spend the lion's share of our time in the field and with our inside sales team supporting their efforts at the property level. From a structure perspective, we've got the benefit of having a national distribution footprint that they can leverage to support their properties, plus we have a pretty extensive structure, national account manager structure, to support their day-to-day issues. So, with such a high percentage of our business being run through those customers, it makes sense for us to make sure that we give them everything they need during this very, very difficult time.
Ryan Merkel -- William Blair & Company -- Analyst
And then do you think that the market is flattish for the foreseeable future as long as this turnover issue is going to be with us?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
The turnover issue has -- is not a new thing. I would say, it's certainly accelerated with the level of unemployment that we have today. As Evan stated, we're seeing it being flattish today. That being said, we feel like we're really well positioned to grow regardless of the market condition. So if it is flat, we do have higher expectations going forward.
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
It is -- this is always been a pretty slow, steady growth market. I mean, I think the best we've ever call that was 1% to 2% growth. So, flat isn't that measurably different. The -- as you know, the nice part of the -- or the nice thing about this business is that, resiliency of that break/fix model for a living space creates that endless ongoing demand. So we do expect the market to remain healthy. And as some of the uncertainty that we see in the marketplace is lifted, whether it's around tariffs, the election, labor constraints, but we do expect the market to continue to grow.
Bradley Paulsen -- President, HD Supply Facilities Maintenance
Yeah. Look, I think, Ryan, if the uncertainty in the market, that really drive anybody as an operator to drive toward a flattish budget. I mean, that's what our properties are trying to do is maintain their execution within something that's flat. I think in the short-term, it kind of puts pressure on everybody. I think in a long-term it's very healthy for us because we're the ones that can provide the solution. If you only have the same amount of spend that you did last year, and there's a lot of inflationary pressures, we can find ways to help you do that. And in doing so and being on that property, we can help you purchase more from us at the same time. So, look, I think it's a tougher environment, but it's certainly nothing that's remarkably different than when folks feel like they don't know what's around the corner, they tend to hunker down a little bit. I think in a hunker down environment we can be the solution and we can play that to our advantage.
Ryan Merkel -- William Blair & Company -- Analyst
Got it. That's helpful. If I could slip one more in, as you look at 2020, if the top line remains sluggish, are you going to be looking at cost reductions to protect margins or do you have any contingency plans?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. No question. We're always looking at ways to be more efficient and more productive and that includes cost out. You always have a sharper focus and a refined focus on cost out in tougher market environment. And so, we certainly will be doing that. And particularly with the margin rate pressure we talked about in Facilities Maintenance, cost out and cost containment is very important.
Bradley Paulsen -- President, HD Supply Facilities Maintenance
Yeah. So I think we are very much focused as we separate the businesses, there are things that are going to be unique for each business that are going to be additive, but also we're doing a full sweep on all of our organization structures to make sure those are right. We're making sure we're doubling down on our processes going into 2020 so we can get the efficiencies aligned with whatever growth is going to be available. And then that in-depth strategic review that we're doing is really all around actionable market-specific, in many cases, property-specific data, so we can be successful in those markets. So, I feel that all the effort we're putting in will allow it for a better planning and execution in 2020 for both businesses.
Ryan Merkel -- William Blair & Company -- Analyst
Great. Thanks for the color.
Operator
Thank you. And our next question comes from Robert Barry of Buckingham Research. Your line is now open.
Robert Barry -- The Buckingham Research Group -- Analyst
Hey, everyone. Good morning.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning.
Bradley Paulsen -- President, HD Supply Facilities Maintenance
Good morning.
Robert Barry -- The Buckingham Research Group -- Analyst
So, I think historically, right, the target for the outgrowth has been 3 points. Just curious if you anticipate that holding for both businesses post the separation. And then if you look over the last decade, I mean, in most years you handily outgrew that, exceeded that target, outgrowing 4-, 5-, 6-plus basis points. Curious about, what needs to happen and what's the line of sight to getting the outgrowth back to 3 and beyond?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. So Rob, this is Evan. We are always going to be growing as fast as we possibly can in the given market environment. That 300 basis points of outgrowth that we've historically targeted, that was set when we did our IPO back in 2013. And it was set when we had seven different businesses as an easy way to model our businesses and model the growth expectations for the Company combined. Now, that today we're two businesses, by next year, we'll be individual businesses, we can be more refined than that. So that 300 basis points of growth was really just a kind of a rule of thumb or a benchmark. But we're going to grow as fast as we can in any environment. So, as you pointed out, many times we've been successful growing faster than 300 basis points. We'll try to do that going forward in the future as well. Obviously, we're not growing as fast as we'd like today. And so, the focus is on returning to that accelerated growth.
Robert Barry -- The Buckingham Research Group -- Analyst
Got it. I guess, also just to follow-up on the gross margin questions was, did you mean to imply that price cost was neutral in the quarter?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
We -- what we are...
Robert Barry -- The Buckingham Research Group -- Analyst
Or price cost in the quarter?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. What we're trying to indicate is that, the increase in cost from the tariffs is being passed along to our customers, but not enough of a price increase to get a margin on that cost. So while the gross margin dollars that we earn on those, in general, I'll call them tariff-related SKUs or tariff-related categories. The gross margin dollars that we earn per unit of sale is roughly the same as it was a year ago, but the margin rate is lower.
Robert Barry -- The Buckingham Research Group -- Analyst
Got it. So it sounds like neutral on a dollar basis.
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
On a gross margin dollar basis, neutral.
Robert Barry -- The Buckingham Research Group -- Analyst
Got it. And if the current tariff regimes kind of hold and just roll in as anticipated, when do you expect the peak headwind to be vis-a-vis this tariff-related inflation?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yeah. So if there is no additional tariffs, we'll see the peak in the middle of next year. So it takes time for the tariff-related cost to flow through the supply chain, our imports generally turn more slowly than our domestic product because of the long lead times.
Robert Barry -- The Buckingham Research Group -- Analyst
Got it. So like 2Q, 3Q and it sounds like you -- I don't want to put words in your mouth, but feel pretty good that you can continue to raise price to offset that even though the markets are weak or what is the feeling about that?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
We feel good right now that we can pass along that cost increase to keep the gross margin dollars neutral. Now, that is dependent upon market conditions and, as you know, we monitor our competitors' pricing multiple times a week.
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
The other piece, I mentioned partnering with our suppliers across the board, what we're also seeing is they're exit out of China at an accelerated rate. So that partnership that we have, I think relative to our competitors is also a huge advantage as we navigate through this environment.
Robert Barry -- The Buckingham Research Group -- Analyst
Got it, got it. All right. Thank you.
Operator
Thank you. And our next question comes from John Inch of Gordon Haskett. Your line is now open. And if your phone is on mute, please unmute.
And our next question comes from John Inch...
John Inch -- Gordon Haskett Research Advisors -- Analyst
Hi. Hello? Hi, sorry. I hit mute button. Okay. Good morning, everyone.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning, John.
John Inch -- Gordon Haskett Research Advisors -- Analyst
Good morning, guys. You pegged -- and Charlotte. You pegged C&I non-resi markets as choppy and I don't know -- I don't want to read too much into it. The language seems to be perhaps incrementally a little more negative. I'm curious, how are you then seeing the core -- the quality of projects and associated competitiveness and kind of price dynamics, given your characterization of choppy markets?
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Yeah. When I say choppy, right, the US is a big place. So we have priority districts where we're performing very well, and we have markets that we have historically performed very well, where we're not growing to our expectation. So that really defined choppy for me and a lot of that is driven by significant job work that we typically have in our portfolio at any given time. We still are on a lot of very big projects. We're still operating very well as a Company. We're maintaining our margins, Evan indicated, our margins were flat in the third quarter. I consider that an excellent performance considering how challenging the market is right now and how competitive it is. But our associates out there are significant number of account manager stay very, very close to customers. And we make service a priority over price, and I believe that's why we're able to maintain the margins that we're maintaining as a Company.
John Inch -- Gordon Haskett Research Advisors -- Analyst
John, are you sensing competitive pressures ratcheting higher because of the choppiness or relatively static versus the previous trend?
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Any time the markets tighten up it's always more competitive. We have significant competition that's very local, very fragmented that compete with price to stay relevant and keep market share. So, yes, I would say that, in certain markets, the competitive nature of the business is always there, but we're seeing that ramp up a little bit and having to fight more for some of the big work that we typically get.
John Inch -- Gordon Haskett Research Advisors -- Analyst
And then switching to FM, with these operational issues, Atlanta, et cetera, kind of, mostly behind you, are there other items that you see, call it, in 2020 that could play some sort of adverse roll toward your operating leverage?
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
No. Our focus is, like I said, executing our strategy. I feel as good about our operational effectiveness today as I felt in the four years that I've been here, which is a real vote of confidence for that team, and I think a reflection of the hard work. So, as we've said a couple of times, our expectation going forward is that we're going to operate at very high level and exceed our customers' expectations every single day.
John Inch -- Gordon Haskett Research Advisors -- Analyst
With -- so on that score, if -- it's highly possible that these markets stay relatively flattish for an extended period, right, for lots of different reasons that we don't have to opine about. Is there an opportunity for FM to drive incremental operating leverage through, say, more cost out actions to actually create more of a self-help framework? Because right now you're sort of -- I get the point, Evan, that you made, we're sort of writing that kind of flat top line, flat bottom line, flattish, waiting for some volume leverage. But in the absence of volume leverage, is there something you could do to create more of a self-help through some sort of a big IT program or other restructuring or something like that?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
There is always opportunity to get more effective, particularly in the supply chain and the distribution network. So we operate 44 distribution centers across the country. We monitor very close to the cost of those 44 facilities and the cost per unit, and the flow through those facilities. So, yeah, we've got opportunity to improve productivity in those distribution centers, no question about it. And the Atlanta Distribution Center, it's unfortunate that we had the misstep that we had in 2019, because that is now our -- that that will go to our best distribution center in the network. It's the most advanced, well-thought out well design distribution center and we expect to get efficiency out of it going forward. And we'll take those learnings and replicate it across the network.
Now, what we have learned is -- from the Atlanta distribution center is, we're going to take things in small bite size chunks to make sure we don't have a service disruption like we did this year. We'll make sure that we operate in parallel anytime we make a change like that. But yeah, there is certainly opportunities to improve the efficiency.
John Inch -- Gordon Haskett Research Advisors -- Analyst
And it almost sounds like, Evan, if the markets were to soften further, which may or may not happen, you could perhaps, without putting words in your mouth, cast the net over these 44 points of distribution to perhaps come up with some more offsetting cost actions if you needed to, is that a fair statement?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
There is always opportunity to take cost out.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
It's an ongoing activity, John. So, certainly, we've been ramping up our focus on efficiency and effectiveness in our distribution centers and networks and it is a large portion of the costs as our other SG&A, which is primarily organizational. And in both cases, we are going to continuously put a finer point on that. So you're exactly, right, the self-help makes a big difference.
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
And when done correctly, the improved efficiencies and the cost out in the supply chain, actually improves the quality of service kind to the customer.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Enormously. Right?
John Inch -- Gordon Haskett Research Advisors -- Analyst
Yeah. Got it. Thanks very much. Appreciate it.
Operator
Thank you. And our next question comes from Hamzah Mazari of Jefferies. Your line is now open.
Mario Cortellacci -- Jefferies LLC -- Analyst
Hey, guys. This is Mario Cortellacci on for Hamzah. So there were some talk about competition at the regional level. But just within FM just wanted to know if there's any changes in the competitive environment that you may be seeing from the big box retailers?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
No. Our competitive environment hasn't changed as far as new entrants into the market, and we continue to feel really good about our ability to win relative to some of the new entrants in our space. What we are seeing is expansion. This space has been strong for a number of years. So we are seeing new customers expand into markets. But again, we see that as an opportunity for us to get better every single day, and deliver an experience that's different and better from what our competition offers.
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Yeah. Look, I think the split is really, really important, I mean, with both of these businesses having a uniquely defined swim lane that is all customer back and solely for that customer is the way we're going to win. And so, this in-depth strategic review we're doing for both businesses is going to give us the exact precision required to win in our market and certainly, the big boys play in multiple markets, inclusive of us. And so, we believe that that focus will make a tremendous difference and certainly, that's our intent is to make sure we listen to those customers better than anyone else and we act on a more precise basis on a market-by-market, property-by-property basis.
Mario Cortellacci -- Jefferies LLC -- Analyst
Great. And then just a quick follow-up on FM. Just looking at like the online business, could you just remind us of what your exposure is? And even longer-term or even in the medium term, what your expectations are for your SKU count online? And do you think that changes significantly over the next few years?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
So, I'd say, about 70% to 75% of our business currently goes through a digital channel. And, I would say, that's ordered, if not shopped, and I think that's an important distinction to make. We continue to invest in our online assortment. We've had huge investments over the last couple of years. I think it's pretty easy to understand, we can only stock so many items in our DCs. And as our customers continue to evolve, they want to buy more and more from us. It's been a huge success for us. We've got a team that's dedicated to that each and every day. And we'll continue to expand our assortment to make sure that we can support our customers' needs on a daily basis.
Mario Cortellacci -- Jefferies LLC -- Analyst
Great. Thanks, guys.
Operator
Thank you. And our next question comes from Chris Dankert of Longbow Research. Your Line is now open.
Christopher Dankert -- Longbow Research LLC -- Analyst
Hey, good morning, guys. Thanks for taking my question. Appreciate the difficulty trying to provide any commentary on 2020, given where things move around. But if I take all your comments so far, I mean, you've got flat market growth, kind of get back to 300-ish basis points of market share growth, gross margin down, and difficulty leveraging here. I guess, can you guys commit to at least seeing EBITDA growth next year? And I assume just continued EBITDA margin pressures, is that the way to think about it in the 2020?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Yes. So, certainly, leveraging at lower sales growth is more challenging than when you've got mid- to high-single-digit sales growth. We do expect to be able to leverage our costs as we grow even in a slower growth environment. And so, for 2020, while we haven't provided guidance for 2020, yes, we do expect to grow both sales and earnings in 2020.
Christopher Dankert -- Longbow Research LLC -- Analyst
Got it, got it. And then we talked about competition a bit here, but I guess, within FM, historical data has always been a huge driver of the stickiness in that business. I guess, are you seeing competitors really step-up in terms of their data capability and is that causing some friction for you guys at all?
Bradley Paulsen -- President, HD Supply Facilities Maintenance
No. I've been fortunate. I've spent a significant amount of time with our customers across all the verticals that we support. And in general, we believe that we are offering experience, it's truly differentiated relative to our competition. There are a lot of folks that promise what we do, but we're the one national provider that does a day in and day out. To answer your question, specifically, I'm not seen that. We have decades of information on our customers across the board, and I think that's a distinct advantage that we have.
Christopher Dankert -- Longbow Research LLC -- Analyst
Got it, got it. Thanks so much, guys.
Bradley Paulsen -- President, HD Supply Facilities Maintenance
Thank you.
Operator
Thank you. And our next question comes from Patrick Baumann of J.P. Morgan. Your line is now open.
Patrick Baumann -- J.P. Morgan -- Analyst
Hey, good morning, everyone and thanks for taking my questions. Maybe just a quick one for, Evan. What do you estimate one-time cost of separation? And what exactly you're spending on and kind of how will that flow? It looks like fourth quarter you have some -- maybe you had some in the third quarter. I'm just curious into next year, should we expect that continue possibly into next year?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
So one-time cost for separation are difficult to estimate. The difficult components of that to estimate are cost to potentially make modifications to the capital structure, which will be determined over the next couple of months, and IT-related cost to separate the businesses and ensure that both businesses are set up for success with a good IT infrastructure. Today, we share a data center. And so, exactly how we split that out is in the works. But to give you kind of very, very rough early indication, including those costs, as well as all transaction costs, bankers, lawyers, accountants, we could be looking $50 million to $70 million one-time separation cost.
Patrick Baumann -- J.P. Morgan -- Analyst
And what exactly is the capital structure cost that you're referring to?
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
Should we need to pay down debt or adjust our interest rate swaps that we've got in place to continue to manage the fixed versus variable debt -- fixed versus variable nature of our interest rates? There could be cost with retiring debt early.
Patrick Baumann -- J.P. Morgan -- Analyst
Understood. Understood. Okay. And thanks. Maybe one for John. Yeah. We know FM's largely break/fix-type business. But wondering if you can talk maybe about any plans you have to increase C&I exposure to more of that recurring maintenance and repair, retrofit-type work versus new construction?
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Yeah. I think there is the misnomer out there that our business is basically a new construction business. In reality, we have customers that buy from us every day that are buying repair products, that can be utilized in both new construction or in repair-type application. So, we certainly try to promote a lot of the products that drive profitability in our business, particularly over our counters where customers come in to see us every day. We, of course, deliver a lot of product to job sites as well. So, probably a good time to start making some commentary on the mix of our business in terms of the fact that we are just not in new construction business, but we actually do a lot of repair work in our markets as well.
Patrick Baumann -- J.P. Morgan -- Analyst
What -- so you said it's a misnomer, what is kind of the mix of new construction? Do you have a good estimate for that now? Or is it tough to kind of reconcile?
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
It's very difficult. When a customer comes to the counter, we don't capture the application, right? We sell a product, but we don't capture whether they're using that to repair something, whether it's a driveway or sidewalk or something that went wrong on a job or whether they're using that in just the new construction application for the first time application. So, it's very difficult for us to capture. Although, a big part of our product mix are repair-type products.
Patrick Baumann -- J.P. Morgan -- Analyst
Understand. Okay. Thanks, guys. Good luck.
Operator
Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Joe DeAngelo for any closing remarks.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Well, thank you for your questions. We continue to work hard, although we're not happy with our current performance, this quarter did show improvements. I'm proud of the team and remain thankful for your continued support and interest in HD Supply.
Operator
[Operator Closing Remarks]
Duration: 63 minutes
Call participants:
Charlotte McLaughlin -- Investor Relations Officer
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Bradley Paulsen -- President, HD Supply Facilities Maintenance
John Stegeman -- Executive President, HD Supply and President, HD Supply Construction and Industrial, White Cap
Evan Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer
David Manthey -- Robert W. Baird -- Analyst
Jason Makishi -- Barclays Bank PLC -- Analyst
Deane Dray -- RBC Capital Markets -- Analyst
Michael McGinn -- Wells Fargo Securities -- Analyst
Ryan Merkel -- William Blair & Company -- Analyst
Robert Barry -- The Buckingham Research Group -- Analyst
John Inch -- Gordon Haskett Research Advisors -- Analyst
Mario Cortellacci -- Jefferies LLC -- Analyst
Christopher Dankert -- Longbow Research LLC -- Analyst
Patrick Baumann -- J.P. Morgan -- Analyst
