Good morning. My name is Christine and I will be your conference operator today. At this time, I would like to welcome everyone to the Anixter First Quarter 2017 Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there’ll be a question-and-answer session. [Operator Instructions] Thank you. Lisa Meers, Vice President of Investor Relations, you may begin your conference.

Thank you, Christine. Good morning and thank you for joining us today for Anixter's first quarter 2017 earnings call. This morning, Bob Eck, President and CEO; and Ted Dosch, Executive Vice President and CFO will review and discuss our first quarter financial results. After their remarks, we’ll open the line up to take your questions. Before we begin, I want to remind everyone that we’ll be making forward-looking statements in this presentation, which is subject to a number of factors that could cause Anixter’s actual results to differ materially from what is indicated here. We do not undertake to update these statements and refer you to our SEC filings for more information. Today’s earnings announcement includes both GAAP and non-GAAP financial results, the reconciliation of which is detailed in our earnings release and in the slides posted on our Investor Relations' website. Now, I will turn the call over to Bob.

Good morning and thank you for joining us for today’s earnings call. This morning, I will provide an overview of our first quarter results, discuss our sales performance and provide my perspective on the growth trends in each of our three businesses. I'll then turn the call to Ted to further detail on our first quarter financial performance and provide our second quarter and updated full year 2017 financial outlook. As you saw from this morning's press release, we delivered first quarter 2017 earnings per diluted share of $0.91 versus $0.70 in the prior year quarter. On an adjusted basis, we delivered diluted earnings per share of $1.09, an 18% increase compared to $0.92 in the first quarter of 2016. Unless otherwise noted all of my comparisons refers to the first quarter of 2017 versus the first quarter of 2016. Total company sales increased by 4.4% to a first quarter record of $1.9 billion reflecting broad strength across the business. Adjusting for the favorable impact from the higher price copper and the unfavorable impact of the stronger U.S. dollar, organic sales increased by 4%. Current quarter had 64 billing days, compared to 65 billing days last year. Adjusted for one last billing day in the quarter, organic sales on a per day basis increased by 5.6%, which is within our long-term organic growth target range of 4% to 6%. First quarter of 2017 was our strongest year-over-year growth of the last nine quarters, driven by both organic and synergy initiatives with the backdrop of an uneven global investor economy. Dollar growth of 4% in North America was further bolstered by very strong growth in our EMEA and emerging markets geographies of 19% and 9% perceptively on an organic per day basis. We regularly discussed the value of our differentiated model…

Thanks, Bob, and good morning everyone. Today's earnings release includes a schedule which reconciles the GAAP financial results with the non-GAAP results. We believe the non-GAAP measures we disclosed excluding non-cash expenses and other items provide the best representation of our ongoing operational performance. All the following comments this morning including year-over-year and sequential comparisons are based on continuing operations only and on an adjusted earnings basis. As we do each quarter, the presentation has been posted to our website with more detail to explain our results. As Bob highlighted, we reported first quarter 2017 earnings per diluted share of $0.91 and adjusted earnings per diluted share of a $1.09, an 18% increase from prior year adjusted EPS of $0.92. As a reminder each quarter, we exclude intangible amortization, and if applicable acquisition and integration costs from our non-GAAP results. Current quarter results exclude 90 million of intangible amortization which had a net income impact of $6.1 million or $0.18 per diluted share. Prior year quarter excludes $9.7 million of intangible amortization and $2.2 million of acquisition and integration costs, which had a combined net income impact of $7.4 million or $0.22 per diluted share. Now let me review the impact of copper and currency on our results. Following five years of lower copper prices, copper prices moved higher for the second consecutive quarter. On a year-over-year basis, the increase in copper prices increased our sales by an estimated $14.9 million. The stronger U.S. dollar relative to our foreign currency exposure remained a headwind decreasing sales by $8.3 million. Together, copper and currency have favorable impact on earnings of approximately $0.05 per share. As Bob discussed, our record quarterly sales of $1.9 billion increased 4.4% compared to last year driven by growth in all three segments and all three geographies,…

Thank you. [Operator Instructions] Your first question comes from the line of Shawn Harrison from Longbow Research. Your line is open.

Digging into I guess two segments within UPS. What would have been maybe core organic ex some of the new project ramps because I'm just trying to figure out how much of that, which was a heck of a number that you put up in terms of organic growth, was just the winds ramping versus the market getting a little bit better? And then secondarily within kind of the network side of the ESS, if you're seeing particularly domestically but anywhere just any slowing in the project activity given the solid back or the solid tailwind you had for a few quarters now?

Yes. Shawn, let me comment on UPS and then Bob can jump in on NSS. In regards to UPS, obviously, this new customer did contribute a significant amount to that organic growth rate in the quarter. We're getting a target for what we're expecting for sales to be on an estimated basis, but as we said they were ramping in the quarter. So excluding that customer impact, we're looking at about 2% organic growth for UPS. But keep in mind in Q1 of 2016 we still had a significant amount of revenue associated with the customer contract that expire at the end of 2015. So excluding that one customer impact from 2016, the organic growth for the rest of the business was more like 3%.

Shawn, could you repeat the second half of the question again?

Yes. So, Bob you had, if I look at EMEA or even North America in the non-security portion of NSS, you had a lot of scale, tremendous growth either mid-to high-single-digits, double-digits in the case of EMEA. Just wondering if you’re seeing any slowing in the case the project activity that’s driven such robust growth?

I don’t think we're seeing so much of slowing in the case of the project activity. It certainly large projects have timing issues around them and that is no different and what we have seen. I think when we talk particularly about Q2 having a little more subdued outlook for a full year outlook. As Ted said, it really relates to the rapid growth we had from Q1 to Q2 last year. And I think that’s probably our biggest area of conservatism as we saw very significant growth across NSS. And we think hurdling those kind of actual numbers predict percentages from prior year, but hurdling those actual numbers would be a bit of challenge. But frankly, the pipeline is still very full with projects, as we've said for a long time, our capabilities to support global accounts has been a real plus for us and that continues to be a strong area that we’re seeing across the business.

Okay. And then lastly, if I may. Ted, you've cited increased investments in SG&A. Do you have a dollar target for SG&A, if we're looking at 2% to 5% organic guidance for the year that we should model?

Yes. When I think about the operating expense increased, I’m referring to beyond this obvious variable expense to support the volume growth. I think we should expect to a few million dollars of investments in primarily headcount, as we support to some of our growth initiatives that we have talked about professional A/V, some additional technical expertise in our lighting and gear area, and few areas like that as well as some systems investment in some major platforms that we’re rolling out including our digital marketing continuing.

Your next question comes from the line of Allison Poliniak from Wells Fargo. Your line is open.

Just going back to utilities [Indiscernible] that account about 2% to 3%. I know that segment can be a little lumpy. Is that a good proxy for us to go by for the balance of the year just sort of underlying core?

Well, I think two things keep in mind. We’ll continue to ramp up a little bit more in Q2 with this new customer because we weren't fully ramped up in Q1. Secondly, as I mentioned, we had a major customer that contract expired at the end of 2015 who's still shipping in 2016, so we won't anniversary against that. But I think the real key as you mentioned is also lumpiness of it Allison is the protected project spent across the industry. So, I think that low to mid on that 2% to 3% organic growth minus the impact to this customers kind of a reasonable number.

Great. And then just on the adjusted EBITDA margin there flat sequentially, you talked about customer mix. Is that customer that larger account ramps up should -- that intensify a little bit more in that pressure on that adjusted EBITDA because of the mix?

Actually, it should work the other way because the expenses built and to support the customer so as volume ramps up, we actually should get some EBITDA leverage. So, we should see some improvement as we mature that program.

Okay, perfect. And then just last, industrial, you seem to be a little bit more cautious than the others that are out there, which I think is fair to assume at least digits. But I mean, is there anything you're seeing are hearing from your customers that indicate you might get a little bit more volatility in that business before we get a consistent trend?

Allison, I don't think it's -- we'll see more volatility. I think it's that -- it's that a fairly low growth flattish short of environment, and we just don’t -- we don’t see a downtick but we just don’t see a big uptick coming based on a conversation we're having with customers. So, I think we're being just a little more cautious. We think some of the stuff we are hearing from others maybe a little ahead where the market does -- the real market is just close to the stock market.

Your next question comes from line of Steven Fox from Cross Research. Your line is open.

Good morning. I just had a few questions. First of all in terms of the new full year organic sales growth guidance, Bob, I was wondering if you could you sort of give us a sense the extra 100 basis points of growth? How much of that would you attribute to end market versus your own initiatives taking hold? And then I have a couple of follow ups.

Well, that’s kind of the tough call. I’ll compensate 50'50. I think clearly our own initiatives particularly are synergy initiatives in the Electrical & Electronic Solutions business are driving a lot of our upside there. Having said that, the OEM part of that business is performing quite well and our customers are performing well in the sense of their sales are up. So, there is a mix there, so that one skews more to our initiatives. I would say NSS right now may skew more to the markets than our initiatives. UPS, I think we pretty well covered in the last question in terms of big account versus kind of run rate beneath it.

Yes, okay, that’s very helpful actually. And then secondly, this morning Corning discussed a pretty tight supply environment for fiber and all of the products that go around the fiber cable. I know you don’t sell necessarily into some of their big customers, but is that at all impacting your ability to by to your data center customers? Is it may be helping you little bit because they rely on you more to get tougher to get products? Can you just sort of give us your view on how that’s impacting you?

Yes, I think those comments are probably more specific to the carrier market, the wireless backhaul and the fiber of the home market. We are not seeing constraint in the fiber market, fiber availability for the enterprise base.

Okay, that’s helpful. And then just lastly on the security business, so I know you mentioned some price deflation, it sounds like hurt the organic sales growth. But I was on the impression that this business should generally perform in line to better than the overall networking market. Is that still your view? Is there some sort of end of market trends that are going on besides price deflation that holding you back? Just maybe a quick update on your outlook for security in particular for next few quarters.

So, I think the organic days adjusted growth was around 4%, so when you look at total NSS that’s a little bit slower than the network infrastructure structure growth. And I think the two can go back and forth a little bit although we see more growth in the infrastructure, network infrastructure part more recently. I think what's happening that business is we're still skewed based on our history more towards video and the Internet Protocol based video products are seeing some price decline that to us honestly not shocking. Frankly, we've been expecting that for a number of years because if you think about it, the technology in the cameras hasn't changed dramatically in recent years particularly the average IP camera. So much like any IP device, the average selling price tends to decline over time, our units of the camera sales were actually up, actually up pretty significantly. The other thing that's happening in mix for us is that as we're selling more units, we're also selling more I would say low-end less sophisticated products and that's primarily through the legacy triad kind of channel. And then that volume bulks up, it takes the average selling price down as well. So, we're seeing a little bit of price pressure in the market, a little bit of mix shift, but I think overall we're still very confident that we're going to get good growth out of security market.

Your final question comes from the line of Jeffrey Kessler from Imperial Capital. Your line is open.

Thank you. Can you talk a little bit about the margin mix that we should be seeing, if you got, you receive the number of larger project awards, going forward, if we're going to be seeing more, if you're going to be getting -- becoming more successful with some of these awards into both the utility side and perhaps the enterprise and the data side. Is there going to be some volatility in the margin mix realizing that obviously this all positively affects operating margins? Are gross margins going to be a little bit impacted by you begin to get more successful with larger projects?

So, Jeff I think larger projects and better economies have always been a big feature of our business and generally larger projects are lower gross margin, but not always depending on supply chain service mix that's included with the project. But broadly if we say there'll be a little bit of pressure on gross margin, we get a lot of leverage on operating margin. So I think as you said, it'll be good for top line and it'll be good for operating profit and EBITDA. There may be a little compression in gross margin in the middle. The other point I would make on those large projects is, they are less working capital intensive. The lower margin big projects are less working capital intensive and that can be related to the industry the project that’s in or program because the programs we can manage the demand forecast in a way that we maintain less inventory and typically can manage our AP days and AR days a little more closely together. So that reduces that. And some of the other big projects that come particularly in the EES business, there's a little more direction of content and so the margin may be lower, we still get leverage and EBITDA lend, but we also get a lot of working capital improvement because there's so little working capital in those direct ship projects. So from a return on capital standpoint, they're actually very positive for us.

One other question that is, in the security area, you mentioned that there's been large volume increases in terms of unit volume increases worldwide in terms of video sales, but there's been significant price pressure coming out of various sectors of the world. The question is, what are you going to do in terms of either, one, adding new services such as consultancy and helping the video side out a little bit to try to make it, not so much of commodity or going to other adding other areas distribution in security to offset some of the price pressure that you’ve seen on the individual quarter-on-quarter commodities in video?

So, Jeff, let me take that couple in a couple of pieces. First, we would not be likely to add services that would directly touch an end user. I think as you know our channel model or security products that we sell virtually exclusively through security integrators and installers and we expect continue that. So, the services we would offer would be primarily supply chain maybe some technology and then in fact certainly some technology and design support that would be to that integrator as opposed to the end user. So, in the sense of those services, we offer today I don’t see that stay in significantly. What we intend to change is the mix where we pull through more of the infrastructure products with that security sales, so more cabling, more power supply, certainly more VMS software, more storage. And as you know, storage is moving more to server platforms which we have good partnerships align for that. So, it's selling the complete solutions as opposed just the camera as if we just sell. And then in addition what we know is a lot of those security integrated customers have branched out into professional A/V and we’re absolutely carrying a professional A/V products that into those customers which gives us some borrowing leverage sort of fixed sales based covering that customer in that access. So, those are number of strategy that we think we’ll continue to add growth as well as profitability to that part of the business for us.

The next question comes from the line of David Manthey from Baird. Your line is open.

Thank you. So question on the UPS business, it sounds like this quarter you had a 100 basis point headwind from this expired contract but that will close up next quarter. And you said without that in the mix the kind of base growth would have been about 300, let's say 3 percentage points. If we do the math on the fully rolling out the contract, it’s something like 600 or 700 basis points of growth from that. So I’m just -- I’m try to peace all this together and understand, looks like you’ll be talking high-single-digit maybe low-double-digit in UPS in the second quarter through the year-end and with that being 20% of sales, that’s 2 percentage points of overall growth rate there. So I’m just -- first of all just trying to understand, is that math sound correct to you? And I’ll move on to the second question/

David, you’re a little high on that. As I said in my comments, we would anticipate the incremental revenue from this customer for the full year to be approximately $80 million. Remember, we started shipping them a little bit in Q4 of last year, we didn't have a full quarter in Q1, and we would expect to be fully ramped up by about the middle of Q2, so 80 million will be slightly over 1% on a total company basis and about 5% on UPS segment basis for the full year.

Okay. But run rate on a per quarter basis from there would be about 25 million?

The run rate in Q3 and Q4 will be 25 million. In Q2, it will be a little less than half.

Got it. Okay that makes sense. And the as it relates to the momentum you are seeing across your three segments, I understand that the arrow as you're showing in the slide refer to sequential trends, but with those all sort of being flat to higher across the Board. You are guiding to 1.5% to 3% organic growth year-to-year versus the 5.6% organic growth you saw this quarter. So, I am wondering if you recalibrate and think about on a year-to-year growth rate basis. What segment of your business you expect to decelerate from first quarter to second quarter? It sounds like you are seeing pretty good momentum. I am just wondering, is there some kind of channel selling utility? Or was there these projects rolling off? Why we would expect that rate to be lower?

Yes, I think the answer is that in NSS and ESS, we had very significant way above traditional seasonality between Q1 and Q2 last year. So that makes the comp tougher going into Q2 for this year. So while we say the trend is favorable, because we are such dramatic growth last year then I mean year-over-year basis, we won't be able to achieve the same kind of growth we achieved in the first quarter of our prior year.

Yes Dave, let me just add to that and you can get a little cut up in the numbers when we start talking about the variance to a variance. All three segments, we would expect to see an increase Q1 to Q2 in average daily sales. So -- but we won’t see the same kind of sequential increase to Bob's point that we saw from Q4 to Q1. And a good example of that would be in EMEA, which we looked in the NSS and ESS with the combining 19% increase. We are not going to have a 19% increase for the rest of the year there for all the reasons that we talked about. But that’s why we see on this charts, sequentially we show it is yellow or stable as opposed to increasing sequentially from Q1.

Okay. Yes and not to get too tight up there and maybe we can take this outline, but when I look at that year-to-year comparison, if you look at the growth rates, the year-to-year growth rates you experienced in the second quarter of '16, it doesn’t seem like those comparisons are that difficult. Your overall organic growth was down I think 2.2% versus kind of flat in the first quarter '16, so I am -- if you look at the comparison, it's easier, but regarding to a year-to-year growth rate that decelerate, so I am just -- again I know some of this is conservatism, but I am just trying to get my head around which segments we might expect to growth rate decelerate the most?

Yes, so Dave, also keep in mind last year Q2 had one less day in Q1. So, if you look at the sequential average daily sales, whole company was up over 9%, a lot of it called a 7.5% reported was over 9% on an average daily sales basis, but we showed very strong improvement in each of the businesses last year Q1 to Q2. Now this year, we are comparing two quarters at the same number of days both Q1 and Q2 of this year and Q2 of last year will both have 64 days, so it's a little cleaner from that perspective and as I said, we still expect to see significant sequential growth. But because of the strength last year, the year-over-year growth will be less than what our sequential growth is Q1 to Q2.

Okay, that concludes today's call. Thank you for all your questions and for listening to today's call. If you have additional questions, please do not hesitate to reach out to Ted or Lisa, and as always thank you for your interest in Anixter.

Thank you ladies and gentlemen. This concludes today's conference call. You may now disconnect.