Good morning. My name is Mike, and I will be your conference operator today. At this time I'd like to welcome everyone to the Anixter First Quarter 2018 Results Conference Call. After the speakers' remarks, there will be a question-and-answer session. I will now turn the call over to Lisa Gregory, Vice President of Investor Relations. You may begin your conference.

Thank you, Mike. Good morning and thank you all for joining us today for our First Quarter 2018 Earnings Call. This morning Bob Eck, Chief Executive Officer; Bill Galvin, President and Chief Operating Officer; and Ted Dosch, Executive Vice President and CFO will review our first quarter financial results and today's announcement regarding agreements to acquire security businesses in Australia and New Zealand. Following their remarks, we will open the line to take your questions. Before we begin, I'd to remind everyone that we will be making forward-looking statements in today's presentation, which are subject to a number of factors that could cause 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 presentation 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. With that, I'll turn the call over to Bob.

Good morning and thank you for joining us for our First Quarter 2018 Earnings Call. Today, I will provide some brief comments on our first quarter results and full-year sales outlook. I will then turn the call to Bill Galvin to discuss our sales results in more detail. Ted will then review our financial performance in more detail and provide additional thoughts on 2018. After Ted's comments, we will take your questions. Before reviewing our first quarter results, this morning, we announced that we have entered into definitive agreements to acquire three security products businesses for approximately $151 million. With $114 million in sales and $20 million in adjusted EBITDA, both on a trailing 12-month basis, these businesses represent a compelling opportunity for Anixter to enhance our competitive position in these attractive markets. Consistent with our strategy to pursue acquisitions that support specific product or geographic initiatives, this acquisition brings new, innovative products and solutions to Anixter that we believe will be valued by existing customers across our geographic footprint. Similar to our recent acquisitions, synergy opportunities are primarily revenue based, cross-selling opportunities in all segments. Importantly, these are higher margin and more solutions-based businesses. We believe they will have a positive margin impact on our Security business. Moving to our first quarter results, as you saw from this morning's press release, we delivered first quarter 2018 GAAP earnings per diluted share of $0.94 and adjust diluted earnings per share increased 6.4% to $1.16. Unless otherwise noted, all of our comparisons refer to the first quarter of 2018 versus the first quarter of 2017. As Bill and Ted will discuss in more detail, the quarter presented more challenges than we anticipated due to a combination of pricing pressures on our top line and inflationary pressures on our operating expense. Our…

Thank you, Bob, and good morning everyone. Beginning with Network and Security Solutions, NSS, quarterly sales of $1 billion increased by 1%. Adjusted for the $15.3 million favorable impact from foreign exchange, NSS organic sales were flat. Similar to last quarter, modest growth in our security business offset a modest decline in network infrastructure. Looking at NSS by region, North American sales of $769 million declined 0.4% on an organic basis. We continue to deliver solid growth in our day-to-day and mid-sized project businesses, as well as in Canada. As we stated previously, we expect the project business to continue to pick up as we move through the year. Our view is supported by our increasing backlog and healthy pipeline activity, both supporting our confidence that sales growth will accelerate in the second quarter and as we move through 2018. Sales in our EMEA geography increased 5.8% to $98 million, which was a decline of 3.6% on an organic basis. As a reminder, in the first quarter of 2017, our NSS EMEA business grew nearly 20% driven by a large project for a technology customer. While the current quarter did not include any billings for this project, we expect billings with this customer to resume in the second quarter. Finally, emerging markets sales of $128 million increased 1% on an organic basis. Overall, the Latin American geography remains challenging, most notably in Brazil. Looking at the security portion of the business, NSS security sales of $416 million were approximately 42% of segment sales increased 1.9% on an organic basis. Similar to what we have disclosed in prior calls, unit volume remains strong in most product categories of the security business. However, security sales continue to be negatively impacted by mix and price deflation in certain product sets, primarily video cameras.…

Thanks, Bill, and good morning, everyone. Before we move into the details, I want to remind you that today's earnings release includes non-GAAP measures, which are reconciled to GAAP measures in the financial tables of the company earnings release. We believe that non-GAAP measures we disclosed provide the best representation of our ongoing operational performance. I will begin with a summary of these expense items. First quarter 2018 results included a $9.8 million pre-tax, $7.6 million after-tax impact due to the amortization of intangible assets and acquisition and integration costs, as well as a small expense to relocate our largest warehouse in EMEA, which we were forced to move due to a government-backed rail line that will run right through our operation. Although the expense was only $200,000 in the first quarter, over the course of this year, we will incur approximately $6 million associated with this move. Of which, approximately 70% will be CapEx and approximately 30% will be operating expense. Prior-year results included amortization of intangible assets and acquisition and integration costs which combined had a pre-tax impact of $9 million and a net income impact of $6.1 million. Excluding the impact of the above items, first quarter 2018 adjusted earnings per diluted share was $1.16, a 6.4% increase compared to the $1.09 in the year-ago quarter. All of the following comments this morning, including year-over-year and sequential comparisons, are based on continuing operations only and on an adjusted earning basis. Turning to sales, our record quarterly sales increased 3.6% to $2 billion with growth in all segments and geographies. Organic sales increased by 1.6%, which is slightly below the low end of our outlook range of 2% to 3%. Bill covered gross margins, so let me move next to our expense trend. Operating expense of $323.2 million…

Your first question is from the line of Shawn Harrison with Longbow Research.

Good morning. This is Gausia Chowdhury calling on behalf of Shawn. My first question is with regards to the percentage of COGS that would be freight and the amount of inflation that you saw, and what is the timing on being able to recoup that? I think construction materials companies have been saying they are seeing a 15% increase in freight costs, such does that sound correct?

Yes. Typically, we don't disclose the specific amount of our freight expense within our operating expense budget. Although I will tell you after people costs, which we have historically said represent 60% to 65% of our total OpEx, freight is one of the top two areas of expense for us. The increases that we're seeing, which are only partially driven by fuel costs and driven to a large degree to supply and demand capacity-related constraints vary by mode. We see double-digit percentage increases in some forms of freight, such as flatbed shipments and so forth, which obviously has a significant impact in parts of our business. In others, we see high-single digit type increases. But for the quarter overall, we were in the mid-teens as far as rate expense increase. And as I said, that translated into approximately 20 basis points increase in our overall OpEx.

Okay. Thank you. And then that 20-basis point increase was the remainder customer and product mix, what about the lower vendor rebates, was that another – could you break that out between the basis point increase?

That, obviously, has not been in the gross margin, not affecting our operating expense. That alone contributed approximately 10 basis points to the change in gross margin. But that varied between the three segments.

Okay. All right. Thank you. And then I wanted to ask about the working capital velocity decline. Just some comments on the second quarter and the second half of the year, can it improve, and then why? Thank you.

We tried to stay on our questions. Was that the last part related to working capital?

Yes. The velocity decline, and can it improve, correct, working capital.

Yes. So we expect that we will end the year with working capital as a percent of sales slightly better than where we were last year. We do typically have an increase in working capital sequentially from Q4 to Q1. I will say that increase was a little more than what we historically had. But I would also point out that, as I said in my comments, last year's Q1 was a bit abnormal for us where the significant improvements that we made in the recently acquired businesses more than offset the seasonal increase in working capital that typically happens in Q4 to Q1. But the initiatives that we're working pretty much across all three of our segments should result in a working capital performance level, as I said, by year-end that will get us down below where we ended last year as a percent of sales and contribute to that cash flow target that we're using.

Thank you.

The next question is from Dave Manthey from Baird. David J. Manthey - Robert W. Baird & Co., Inc.: Yes. Hi. Good morning. First of all, could you talk about how you feel your share is going among large data center projects? And how do you measure your effectiveness there? Are you looking at reports or competitor reports, or how do you measure your share gain or loss?

Yeah. I think what we would say is, on the hyperscale side and the data center, where obviously there's a majority of the spend that we believe we're holding our share. However, we do know that there's timing in that as these projects are substantially larger, right? So we, for instance, we will see a significant impact and are already seeing, as we've mentioned, an acceleration in the second quarter for our hyperscale business and I mentioned also in EMEA, we had a large spend in Q1 of last year that we didn't have this year. So from a timing perspective, we believe that there's lots of movement there, but we believe we're holding our share. And we've based that share based on, obviously, a lot of different types of things -- reports that we can gain from the market, as well as what we're hearing from our manufacturer partners, and how they see that business. So to me, a lot of that is about timing, and we expect that to accelerate throughout the year. David J. Manthey - Robert W. Baird & Co., Inc.: Okay. And then as it relates to NSS, and I apologize if you addressed this, there were some technical difficulties getting on the call. But when you look at the NSS segment specifically, with EBITDA being down $8 million on $10 million higher sales year to year, could you talk about how that happened and where the majority of that degradation was concentrated?

Yes. Sure, Dave. And first, it's good to hear your voice back on the call. Part of that, as we mentioned, is related to customer mix, and that customer-mix impact is shown also in the regional mixes. We were up 1% as the total sales showed across total NSS, but we were up 6% reported sales in EMEA and 3% in CALA. And both EMEA and CALA are lower-margin businesses for us, and that has a lot to do with both product and customer mix there. And so, that was the single biggest driver of the gross margin change within that NSS segment. And as Bill mentioned, with significant growth with some large customer programs in CALA, that also has tended to have a little bit of a negative mix on the margin, but still drives a very favorable ROTC for us as we look at the overall program offering we have with some of the customers like that.

Dave, this is Bob. If I can add one more piece of color, part of the comparison year-over-year for Q1 was very high volume – abnormally high volume in the NSS business in Q1 of 2017 based on some large customer projects, as Bill mentioned. So we got operating leverage in Q1 of 2017 that we did not have in Q1 of 2018 as a result.

Yeah. That's a great point, Bob. Q1 will be by far and away our most difficult comp for NSS on a quarter-by-quarter basis. So we expect that we would see this type of a kind of a leverage profile in this quarter. David J. Manthey - Robert W. Baird & Co., Inc.: Okay. And then just last question, corporate expense was elevated – I think it was about 1.6% of sales. Did you talk about why that is? And will we expect to see that drop back down to the 1.2% to 1.3% of sales for the remainder of the year?

No, I think it'll be somewhere in between those two. I do not think it'll be at the 1.2% level for the balance of the year. The biggest driver, as I mentioned, partly is in medical benefit expense, partly is in increased spend in the technology area within our IT group, investments in our digital strategy and so forth. I think we mentioned that on the fourth quarter call that we would expect that to be a continued area of expense growth for us this year in support of a lot of these new customer programs and offerings. David J. Manthey - Robert W. Baird & Co., Inc.: Okay. Thank you.

Okay. Operator, do we have any other questions pending?

We do have...

I'm sorry?

We do have a question...

We'll take one...

Go ahead.

We have a question from the line of Brian Bernard from Morningstar. Your line is open.

Hey. Good morning, guys. Thanks for getting me in.

Good morning, Brian.

Two questions for you here. As you know, we thought your stock was undervalued before, even more so now today. So, going forward, with the stock now in the low $60s, is that going to influence your decision to repurchase shares as opposed to maybe doing some more acquisitions like you announced today?

Brian, that's a very fair question. And we would share your opinion that the stock is undervalued at this kind of a price point. I wouldn't want to foreshadow what the board may decide to do at an upcoming board meeting. Our strategy around capital allocation is of more of a long-term perspective. And so, we tend to try, as you've seen in the past, not to react to short-term anomalies in the share price. But certainly, in the past, we've repurchased shares when we thought they were undervalued, so I wouldn't preclude that in the future. But I also don't want to set an expectation that we'll do a share buyback.

Okay. Fair enough. And then, I think we all get caught up in quarterly volatility from time to time. So really just more of a longer-term perspective here, but why should investors be excited to own Anixter stock?

Brian, I think that's a great question. Look, you raised a great point about volatility. And those of us sitting around the table here on this side of the call would tell you that we feel like we've had too much volatility in our own results here over the last couple of quarters. We've had some good quarters and couple of quarters that didn't meet our expectations. We see our markets improving. Our growth outlook, we're maintaining the growth outlook that we have for the year. We generate a lot of cash, which I think is a positive attribute that an investor should be attentive to. We've had a capital allocation strategy that's been very investor friendly. I think if you look at the acquisition that we've just announced, the multiple on the acquisition in round numbers if kind of a 7.5 times EBITDA. There hasn't been a distribution acquisition that we're aware of that's publicly been addressed with a multiple that low. We think we're paying a very reasonable multiple for some very strong businesses. They have not just accretive to earnings, but accretive margin percentage and in addition will bring capability in physical security information management platform that we don't have today and we think is very scalable across the organization. So, I think if you look at where we've positioned ourselves in our markets, we are over the longer term, we feel like we're positioned well geographically. We're positioned well from technology. And if you think again about this physical security information management platform capability we've acquired, that sits right in the heart of our technology differentiation that we've talked about for years – our three pillars of differentiation, technology, supply chain and working as one global company. So I think if you look across that, and you think about the impact on capital spend from tax reform, we ought to be in a good position and a good investment.

All right. Great. Thank you.

Well, with no more questions in the queue, we will conclude today's call. If you have additional questions, please do not hesitate to reach out to Ted or Lisa. As always, thank you for listening to today's call.

This concludes today's conference call. You may now disconnect.