Lisa Gregory - Vice President of Investor Relations Bill Galvin - President and Chief Executive Officer Theodore Dosch - Executive Vice President and Chief Financial Officer.

Shawn Harrison - Longbow Research Mike McGann - Wells Fargo Securities David Manthey - Baird.

Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Anixter Third Quarter 2018 Results Conference Call. Thank you. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session.

[Operator Instructions] Thank you. Lisa Gregory, Vice President of Investor Relations, you may begin your conference..

Thank you. Good morning, and welcome to Anixter's third quarter 2018 earnings conference call. With me today to discuss our financial results are Bill Galvin, President and Chief Executive Officer; and Ted Dosch, Executive Vice President and CFO. Following their prepared remarks, we will open the line to take your questions.

Before we begin, I want 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 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 presentation includes both GAAP and non-GAAP financial results, the reconciliation of which is detailed in our earnings release and in the accompanying slide presentation that is posted on our Investor Relations website. Now, I will turn the call over to Bill..

Thank you, Lisa. Good morning and thank you for joining today's call. This morning I'll provide an overview of our third quarter financial performance including sales and gross margin trends. I will then turn the call over to Ted to review our financial performance in more detail and provide additional thoughts on our outlook for the rest of the year.

Following our prepared remarks, we will take your questions. During our comments we will reference the accompanying slide presentation for the third quarter posted up on our Investor Relations website.

As you saw from this morning's release, we had a strong sales performance achieving record third quarter sales in all segments and delivering organic growth in all segments and geographies. This reflected excellent sales execution and is a testament to our value and the value we provide our customers on a daily basis.

Let's look more closely on our results beginning with sales. As you see on Slide 5, sales in the quarter increased 8.1% to 2.2 billion which is the highest quarterly sales in our history. Adjusting for the impacts from the lower average price of copper, currency fluctuations and acquisitions, organic sales increased 7.4%.

This was above our outlook range of 4% to 5% and was the highest organic sales growth in seven years. Sales growth was broad-based driven by an acceleration in our complex services and global projects business, our security acquisitions and strategic initiatives in each of the business. Our strong sales performance drove solid earnings.

Third quarter 2018 GAAP earnings per diluted shares was $1.40 and adjusted earnings per diluted share increased 23.8% from prior year to $1.61. Let me now review our sales results by segment beginning with NSS. As shown on slide 6, record NSS quarterly sales of 1.1 billion, increased 8.5%.

Current quarter sales included the 31 million favorable impact from the security acquisitions completed in the second quarter of 2018 and the 11 million unfavorable impact from currency fluctuations. On an organic basis NSS sales increased 6.4%.

Growth was broad-based with organic growth of 5.9% in the network infrastructure business, which represents approximately 57% of NSS sales. Turning to our NSS security results, sales of 490 million or approximately 43% of segment sales increased 12.3%, driven by the security acquisitions and organic growth.

We experienced growth in all geographies and all sales initiatives including global accounts, wireless and professional audio, video. By region NSS North American sales of 854 million increased 4.8% on an organic basis driven by a tick up in large project business.

We experienced strong performance with technology and wireless customers and in government business. Growth in Canada accelerated well and was across a broad market segment and growth initiatives.

In EMEA, NSS sales of 101 million increased 13.2% on an organic basis, driven by projects across the business including in the UK, Continental Europe, Russian and the Middle East. Growth was driven by technology and financial services customers.

Finally, emerging market sales of 183 million increased 10.5% on an organic basis, driven by both our Asia Pacific and CALA businesses. Strength in APAC was driven by projects in Australia and Japan.

In Latin America, we continued to build sales in a new complex integrated supply program with an existing large customer as we had discussed on recent calls. This five year $50 million per year program began to ship late in the second quarter and is on track to reach the annual run rate by the end of the year.

Moving to Electrical and Electronic Solutions on Slide 7, our record third quarter sales of 597 million increased 7.6%. Adjusted for the unfavorable impacts from lower average copper prices and foreign currency fluctuations, organic sales increased 9%. Looking at EES by region; North American sales of 476 million increased 11.2% on an organic basis.

We experienced strong growth on both the industrial and OEM side of the business with notable strength in the US industrial project business. Natural resources including oil and gas and mining were among the strongest end markets.

In our EMEA geography, EES sales of 60 million declined 10.2% on an organic basis with modest growth in our OEM business, partially offsetting lower sales in our industrial business. The prior year quarter was very difficult compressions with several large projects in the quarter.

We will continue to have difficult comps in the fourth quarter due to the same large projects in the Middle East last year. However, we expect growth in the remaining European geographies. In our emerging markets geography, EES sales of 61 million increased 15.3% on an organic basis, driven by industrial project strength in Latin America.

Our sales growth strategy remains focused on complex and global supply chain projects, cross selling opportunities in organic initiatives and fast growing and strategic areas of the business. Finally, our Utility Power Solutions segment achieved sales of 444 million in the quarter resulting in 8.1% growth on an organic basis shown on Slide 8.

Growth was driven by our US IOU and public power customers with flat sales in our Canadian business. Our strategy to broaden customer penetration in North America is providing us with both a broad-based and strong position with utility customers. Let me now turn to gross margin on Slide 9 of our presentation.

Third quarter gross profit increased 6.8% to 424.1 million, resulting gross margin of 19.5%, a decline of 20 basis points, which Ted will explain in more detail later. Now, let me give you our perspective on tariffs.

As you know in July and August List 1 and 2 tariffs were implemented on 50 billion of product imported from China and in September List 3 tariffs were implemented on an additional 200 billion of products which were facing at 10% in September and are expected to increase to 25% in January.

We expect the direct impact on tariffs on our business will be minimal given the small amount of product that we import directly from China. We will experience a more significant impact directly through supplier price increases, the majority of which we expect to be able to pass through to our customers.

In addition to tariffs, we continue to face broader inflationary pressures in some of our markets including increases in freight and employee benefit costs.

In the face of these headwinds our top priority remains improving profitability through gross margin initiatives combined with the focus on our cost structure as we balance expense discipline with growth investments in the business.

We're beginning to see evidence that our ongoing gross margin initiatives are delivering positive results in our NSS and EES businesses and we're optimistic that our gross margin performance will improve in the fourth quarter.

To summarize, our third quarter sales performance exceeded expectations driven by the continued recovery in project business in both NSS and EES. As we look to the fourth quarter the demand backdrop remains favorable in most of our geographies.

With favorable economic conditions and strong year-over-year backlog trends in all segments, somewhat negatively indicated by macro uncertainties, we're optimistic that growth trends will continue through the fourth quarter and into early 2019.

Reflecting year-to-date organic growth of 4.7%, we are increasing our outlook for the full year 2018 organic growth to the 4.5% to 5% range, which is a 100 basis point increase from the low end of the range that we provided on our Q2 earnings call.

With that let me turn the call over to Ted for a more detailed analysis of our results and outlook for the fourth quarter..

Thanks, Bill and good morning everyone. Before we move into the details, I do want to remind that today's earnings release includes non-GAAP measures which are reconciled to GAAP measures in the financial tables that accompany our release are in the appendix of our accompanying slide presentation.

We believe the non-GAAP measures we disclosed provide the best representation of our ongoing operational performance. Expanding on Bill's overview of our third quarter record sales performance, our operating expense leverage also contributed to our strong bottom line growth.

Operating expense of $335 million compares to prior year operating expense of $316 million. Excluding the non-GAAP operating items detailed on page 11 of our release, adjusted operating expense increased 5.8% with nearly half of the increase in spend the result of the approximately $8 million in operating expenses of the acquired companies.

Current quarter adjusted operating expense of 14.9% sales a 30 basis point improvement from prior year.

In addition to the acquired company's operating expense, the increase in operating expense was driven by approximately $3 million in variable expense directly related to the higher volume as well as $4 million from inflationary impacts which was primarily higher freight and medical cost and an additional $3 million from investments in our growth initiatives including our ongoing investment in technology.

While still a year-over-year headwind, our initiatives to offset freight increases are beginning to mitigate the impact. In the first half of 2018 our freight expense as a percentage of sales increased by 20 basis points. In the third quarter the year-over-year increase diminished to 10 basis points due to the actions we've taken.

As we look to the fourth quarter, we expect our operating expense will increase by approximately $6 million sequentially driven by higher employee benefits and technology investments. Adjusted EBITDA increased 8.4% to $111 million, primarily driven by EES and NSS. Adjusted EBITDA margin 5.1% was flat with the prior year.

Adjusted EBITDA includes $2.6 million charge to establish a deferral of the intercompany profit and inventory associated with the recent security acquisitions. Let me now review adjusted EBITDA trends by segments. Beginning with NSS as shown on slide 13 of the presentation, adjusted EBITDA increased 12.9% to $82 million.

The corresponding of 7.2% compares to 6.9%. The 30 basis point increase was primarily driven by volume leverage and the favorable impact of the Q2 security acquisitions. This resulted in adjusted EBITDA leverage of 1.5 times.

On a sequential basis we had a strong 7.4% increase in adjusted EBITDA resulting in a 30 basis points improvement in the adjusted EBITDA margin, driven by a recovery in volume combined with operating expenses. EES adjusted EBITDA increased 22.9% to $37 million, resulting in a 70 basis point improvement in the adjusted EBITDA margin of 6.1%.

The increase was driven by strong expense leverage associated with the volume increase, resulting in a strong adjusted EBITDA leverage of three times. On a sequential basis, adjusted EBITDA of $37 million compares to $40 million, resulting in an adjusted EBITDA margin of 6.1% which compares to 6.7%.

The change in adjusted EBITDA margin was due primarily to customer and project mix. Finally, EPS adjusted EBITDA of $24 million compares to $25 million. The corresponding adjusted EBITDA margin of 5.4% compares to 6% in the prior year quarter.

The lower EBITDA margin was caused primarily by lower vendor rebates, customer mix, and inflationary pressures on product cost. We expect these pressures to diminish in the fourth quarter as we make further progress with passing these costs through to our customers. On a sequential basis UPS adjusted EBITDA margin increased 10 basis points.

Moving down to the income statement, interest expense of $19.3 million compares to $18.9 million, with the increase driven by higher borrowings under our revolving lines of credit due to the recent acquisitions and the increased working capital investment to support the growth in business, partially offset by the retaining of the Canadian term loan in full in the fourth quarter of 2017.

We expect interest expense to remain approximately $19 million in the fourth quarter. Foreign exchange and other expense of $1.6 million compares to $0.5 million of income in the prior year quarter.

The increase in expense was caused by the unfavorable impacts of changes in foreign exchange rates, primarily driven by the sharp devaluation in Argentina and unfavorable currency moves. Turning to taxes, our third quarter 2018 U.S. GAAP effective tax rate of 30.6% compares to 39.7%. And our adjusted ETR of 30.6% compares to 38.8%.

Our year-to-date GAAP ETR of 29.9% includes a $1.3 million net tax benefit, primarily related to the reversal of valuation allowances. Excluding the net tax benefit, our projected full year GAAP ETR of 30.6%, compares to 54.1% for the full year 2017.

The projected full year 2018 non-GAAP ETR of 29.5% compares to the 2017 full year non-GAAP ETR of 37.8%. The favorable rate changes are due primarily to the impact of the Tax Cuts and Jobs Act of 2017. Our diluted share count is 34.1 million shares, which should remain relatively flat over the balance of the year.

Turning to slide 16, our working capital ratio of 17.4%, which excludes the current portion of long-term debt, compares to 18.2% in the prior year quarter. This 80 basis points improvement reflects our ongoing focus of working capital efficiency.

We continue to drive improvements in our working capital processes to enable an even more efficient use of our balance sheet. As expected though, working capital dollars have increased to support the higher growth in sales. Year-to-date, we've generated $103 million in cash from operations, which compares to $110 million in the prior period.

This slight drop was due to an increase in our working capital to support growth in the business as I just mentioned. We now expect to generate cash flow from operations of $160 million to $180 million for the full year 2018.

Finally, in addition to investing $150 million in the acquisitions, we invested $32 million in capital expenditures year-to-date in 2018 compared to $31 million in the comparable year ago period.

We now expect to invest $45 million to $50 million in CapEx in 2018, with the year-over-year increase primarily due to increased investments in systems and technology. Turning to slide 17, our third quarter 2018 debt-to-capital ratio of 44.7% compares to 46.1% at year-end 2017 slightly below our target range of 45% to 50%.

Our debt-to-adjusted EBITDA ratio of 3.1 times is flat with the year-end 2017, and slightly above our 3.0 target. Both of these metrics reflect the impact of the Q2 security acquisitions.

Our weighted average cost of borrowed capital of 5.4% compares to 5.6% at the end of 2017, and our liquidity position remains strong with total available liquidity under revolving lines of credit and secured accounts receivable and inventory facilities of $701 million at the end of the quarter.

Turning to our outlook for sales growth, as Bill said, we have increased our outlook range for full year organic growth to the 4.5% to 5% range, which is 100 basis point increase from the low end of the range.

Based on current trends in the business through the first 3 weeks of October and supported by continued strength in economic indicators including industrial production and EMI, we are estimating fourth quarter 2018 organic growth to be in the 4.5% to 5.5% range.

As Bill indicated, we'd expect gross margin to improve on a sequential basis as our gross margin initiatives become fully implemented across the organization.

We also expect operating expense and percent of sales to increase slightly as we continue to invest in technology and innovation to provide customers with state-of-the-art electronic business platforms and an enhanced customer experience.

To further help with your modelling, I'll provide an estimate for the impacts of acquisition, copper and currency on fourth quarter and full year 2018 sales, as detailed on slide 20 of today's presentation.

Based on the current projections, we expect sales from the acquired businesses of $25 million to $30 million in the fourth quarter and $60 million to $70 million for the full year, reflecting seven months of ownership.

Based on recent copper prices, we estimate an unfavorable sales impact of $5 million to $10 million in the fourth quarter and a favorable $5 million to $10 million sales impact for the full year. As a reminder, average copper price was $2.89 per pound in the third quarter of 2017 and $2.80 for the full year of 2017.

With the current price of approximately $2.75, we project the full year average price to be approximately $2.90. Based on the current value of the U.S. dollar against other currencies, we estimate a fourth quarter sales headwind of $10 million to $15 million. We had a favorable impact in the first half of the year.

But at current rates, we expect a flat to somewhat negative impact for the remainder of the year, resulting in a full year benefit of $10 million to $15 million.

Given the current strength and demand in our markets, we are optimistic that the majority of inflation and tariff-related price increases will ultimately make the way to the end customer, such that the negative impact for our margin will be temporary.

We are continuing to monitor this issue and take actions to ensure that we're able to mitigate any unfavorable impact on our business.

Let me conclude by reiterating that we were pleased to deliver record sales growth in the quarter and we remain focused on the significant opportunity to leverage our unique set of products and innovative solutions across our global network.

With actions underway to improve our gross margin, we're optimistic that our margin trends will improve in the fourth quarter and into 2019 as I just mentioned. We continue to take actions to improve our cost structure, balancing expense discipline with inflationary pressures.

Additionally, we are incurring higher operating expense related to ongoing technology investment and expect to continue to invest in our system and supply chain capabilities going forward to support growth and innovation in the business.

We expect this expense growth to continue into 2019 as we focus on delivering best possible customer experience to every channel we serve. Our priorities remain focused on accelerating in organic sales growth while improving profitability enabling us to deliver on the significant operating cash flow potential of our business.

With that, we will now open the call for questions..

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

Good morning, everybody. Congrats on the results..

Thanks, Shawn..

Thanks, Shawn..

Ted, I want to go back to the last comment just the OpEx investments, on a dollar basis, I think you highlighted $6 million into the fourth quarter sequentially.

As you move into 2019, do you expect it to continue to grow on a dollar basis or will it begin to plateau and you'll see some offsets from some of the cost reduction initiatives you announced last quarter?.

Shawn, I think we will definitely see the benefit of the of the cost take out associated with restructuring initiatives and with the remainder of that benefit through the first half of next year. But we will continue to invest in innovation and our technology investments to improve the cost of our experiences as I refer to in my comments.

It's a little to say what we think the full impact to that will be for 2019 going forward, but I think as we continue to drive growth across each of our businesses, we ought to able to drive operating expense leverage but from an absolute dollar standpoint. We would expect some of these investments to continue in the next year..

I guess, in addition to the top line growth, may be your comment and Bill's comment that we'll start to see some gross margin expansion here into the fourth quarter.

And then in 2019, how much gross margin expansion are we talking about it, is it 5 basis points or is it 10 basis points, because for better or worse, it's been a while since we've seen gross margin expansion..

Sure and great question. Again, I'd say, it's a little premature to comment on how much more for 2019, but we do expect see improvement here in Q4. We feel as we saw the trends across each of these three businesses, we think we clearly hit bottom in both NSS and EES.

We do still have, as you saw in the numbers for UPS, we do still have a bit of a challenge there with a lot of the fixed price contracts and so forth and so live factor in passing on some of the price increases from products takes a little bit longer in that business.

But I think we should see some gross margin improvement in the fourth quarter compared to Q3 at least in the 10 basis points to 20 basis points range..

And Shawn, this is - as you know, this is something we've been working on for quite a while and it's not what we would consider quick hit things into long-term strategy of driving improvements across a lot of facets of the business.

So, we're optimistic as we said in our notes that we're starting to see some of that benefit, and of course, that's a big part of the strategy and the plan for next year..

Okay. Then lastly the OEM business, you highlighted the strength quarter, I know that business is tied to auto demand to an extent and we've seen weakening production globally.

Are you seeing any weakness in the business? Or you seeing some offsets with share gains and expanded relationships that would mitigate some of the lower global auto production that's occurring?.

Yeah, it's good question, Shawn, we don't have the auto pieces is a big mix for us in that business, the market that we've seen a little bit of weakness is more on the chip manufacturing side of that which is a typical market phenomena right now.

But there is strength in all - in so many of the other aspects and industries we're serving in that, that we're feeling pretty good about our approach and strength in that business..

Yes. And just to add to that Shawn. We clearly are taking share in that segment.

So whatever weakness there is relatively speaking on auto as Bill said which is a smaller part of that OEM business and the weakness in the chip side and to clarify, when we say in the chip side, we're selling to the companies that manufacture equipment, OEM equipment into the chip manufacturers. We're not selling directly to chip manufacturers.

But the growth that we've seen in our market share across virtually every other segment in that OEM space is more than offset some weakness in a couple of those areas..

And Shawn, I'd also add that as we talked in the past, the focus on this services that we are providing to that industry is not - is a very strong part of that value proposition to that market. So, we are feeling good and we'll continue to look to invest and grow in that area..

Perfect. And once again, congrats guys on the results..

Yeah, thanks Shawn..

[Operator Instructions] Our next question comes from Allison Poliniak from Wells Fargo. Your line is open..

Good morning. This is Mike McGann stepping in for Allison.

How are you?.

Good morning, Mike..

Just a couple of quick questions, you guys cited project visibility. EES segment looked really positive from a leverage standpoint.

I was hoping you could touch upon maybe any product scope changes you are increasing - or seeing with the tariffs either positive or negative and how that playing out for the balance of the year and maybe into 2019?.

Yeah, as it relates to the projects, Mike, I would tell you that the tariff play that we see comes from supplier impact on their products. We're not getting direct impact on it as we said in the notes; I think though that the time which we get notifications from the suppliers and that business allows us to move a lot of that price into the market.

There is some elasticity to that where there's a time frame when our inventory might be in different price and whatnot, but we are typically able to manage through that and since we've started seeing some of that volatility and not just in tariffs, but in freight costs and things like that.

We've been working really hard to move that into the market on a quicker time basis. So I think we'll have that cadence down pretty well and be able to manage through that..

Yeah, and Mike, maybe just to add another twist to that, If you think about what impact might higher tariffs have on the volume of project activity, we are not seeing any noticeable impact or decline or softness in project activity due to the impact of tariffs on the input costs.

Now, ultimately, it could - it could ultimately reach that at some point because who knows where the end game is on tariffs which based on what's actually been implemented into the marketplace at this point in time, we don't see or anticipate any negative impact on the overall demand side..

All right. And then just second one from me, I'll hand it over. In terms of the sales guidance, great outperformance this quarter increased the bottom end of the range for the full year.

I'm just wondering what were the big surprises? And then heading into the Q4, the comp is tougher, billing days look the same, but - I mean, is this - are you firmly - you think that the top end of this full year range now considering the momentum or - what are the puts and takes there?.

Yeah, Mike, I think you read it right. The top comps from last year put us in a pretty strong need to have good growth in the fourth quarter, right.

So when you average that out and add that in, you look at it and say okay, that means the trends will continue on similar basis and translate based on that comp from fourth quarter last year into the range that we provided..

Yeah, and I would just add to that.

Yes, I think you said it right Mike, the number of days in each quarter is identical year-over-year, so there isn't a projected impact of shipping days, but Q4 from a seasonality standpoint always is a little weaker than Q3, not just because there is projected to be won by shipping day, but just the seasonality within UPS.

There's less project spend by the big utilities due to colder weather and then also to a certain degree in EES as well from a project spend standpoint.

But despite that to Bill's point, the projected growth that we're talking on here in Q4 on top of last year's Q4 growth would deliver a cumulative two year growth pretty much identical to what we had in Q3..

Yeah, Mike just one more color on that in the NSS business too you see a lot of retail companies that shut down projects in the November, December timeframes obviously getting ready for their busy season, so you will see that kind of impact, but again based on everything we're seeing in the trending of the business, we're comfortable on the range we provided..

Thanks..

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

Good morning. First question, the third quarter OpEx being flat quarter-to-quarter despite adding 8 million from acquisition was a pretty good outcome I think. But I'm a little surprised by you saying that you think SG&A now is going to be up by 6 million into the fourth quarter. I assume that includes 2 million of benefits from the restructuring.

It just seems like trends that we haven't seen historically normally seems like the pattern is flat to down slightly on the weaker revenue quarter.

Can you talk a little bit about why you think operating expenses are going to be up in the fourth quarter?.

Sure Dave, certainly a valid question. First off, the medical expense will be up even further in the fourth quarter. So we've got not only the trend continuing here, what we saw in Q3, but on a year-over-year basis will be up a couple of million dollars more and that's a reflection of the broader inflation from a medical expense standpoint.

And again despite all the initiatives that we have and I think we do a pretty good job in managing the structure of our programs and plans. This is the broader medical cost inflation.

In addition to that as we mentioned just a moment ago, we do expect to continue our investments in driving innovation and technology and that might sound like a little bit different terminology than what we said in past years.

We've been referring to our digital marketing initiative which we said would be many year investments and platforms and so forth, but it's really broader than that if we look at trying to further improve the customer experience whether it's the online experience, whether it's mobile apps et cetera that we believe are so critical in enabling us to provide the value add services that we do for our customers..

David, I'll add another piece to that too. As you saw in our notes the EES business has had tremendous expense control if you will, but at this point you see effect of growth we're experiencing there.

We need to invest more in that growth and when we saw as a positive for us long-term, but it's definitely an area that we got to put some focus on to continue the trend..

So as you think about these investments, do you view them as the cost of playing the game or do you view them as you're giving out in front and they're going to translate to faster sales growth and more profitable growth? It sounds like some of these things you're talking about, I'm not clear that they're going to drive incremental profitable growth for you, am I hearing that wrong?.

Yeah, I'll tell you, if you want to be in this game you'll have to provide better tools to the customers. So we are looking at this as necessary to give the type of experience that customers are requiring in the market we're in today and I think it's a common shift you in the distribution business anyways.

Everyone's looking at more efficient ways to do that and we have to invest in technology to do that. We think long-term that puts us in a growth position as well as long-term Dave we've talked getting more expense leverage and part of that is also using systems to allow that to happen, but that happens overtime.

So I think it's the combination of those things..

Okay and Bill you mentioned expense leverage and earnings leverage and when you look at the current quarter, there wasn't a whole lot of it and I'm just wondering as you think about the outlook for 2019, are you going to hit an inflection point here that if you continue to grow mid-single digits you can start to see that 1.5 to 2 times leverage again or is there some reason that the tariffs and some of these investments and things that you won't be able to achieve that level?.

Yeah, Dave, let me take a shot at that. So in the quarter we did have about 30 basis points improvement in the operating expense as a percent of sale. Going forward, with these kinds of investments we're talking about, I don't think we're going to be in the 1.5 to 2 range. I think it will be aimed at mid single digit top line growth.

I think it will be more in the 1.5 type of range, but not pushing to it..

Okay, thanks very much guys..

Thank you..

And we have no further questions in queue. I will turn the call back to the presenters for closing remarks..

Great, that concludes 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..