Q4 2013 Canadian Tire Corporation, Limited Earnings Conference Call
Feb 13, 2014 AM EST
CTC.A.TO - Canadian Tire Corporation Ltd
Q4 2013 Canadian Tire Corporation, Limited Earnings Conference Call
Feb 13, 2014 / 05:00PM GMT
==============================
Corporate Participants
==============================
* Stephen Wetmore
Canadian Tire Corporation Ltd - CEO
* Michael Medline
Canadian Tire Corporation Ltd - President
* Dean McCann
Canadian Tire Corporation Ltd - EVP and CFO
* Allan MacDonald
Canadian Tire Corporation Ltd - COO, Canadian Tire
* Mary Turner
Canadian Tire Corporation Ltd - COO, Canadian Tire Financial Services
* Harry Taylor
Canadian Tire Corporation Ltd - COO, Mark's
==============================
Conference Call Participants
==============================
* Irene Nattel
RBC Capital Markets - Analyst
* David Hartley
Credit Suisse - Analyst
* Jim Durran
Barclays Capital - Analyst
* Emily Foo
BMO Capital Markets - Analyst
* Patricia Baker
Scotiabank - Analyst
* Vishal Shreedhar
National Bank Financial - Analyst
* Derek Dley
Canaccord Genuity - Analyst
* Mark Petrie
CIBC World Markets - Analyst
* Keith Howlett
Desjardins Securities - Analyst
==============================
Presentation
------------------------------
Operator [1]
------------------------------
Good afternoon. My name is Alana and I will be your conference operator today.
At this time, I would like to welcome everyone to the Canadian Tire Corporation Limited fourth quarter and 2013 year-end results conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.
(Operator Instructions)
Earlier today, Canadian Tire Corporation Limited released their financial results for the fourth quarter of 2013 as well as the full year. A copy of the earnings disclosure is available on their website and includes cautionary language about forward-looking statements, risks and uncertainties, which also apply to the discussion during today's conference call.
I will now turn the call over to Stephen Wetmore, CEO. Stephen?
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [2]
------------------------------
Thank you, operator. Good afternoon, everyone. I am joined by our executive team today; and of course, Michael Medline, who is joining us in his new role as President of CTC. Michael will cover our 2013 results and speak to our 2014 priorities, and then Dean will provide details on our financial results.
But first, let me begin with some overall comments on what has been an exceptional year for the Company. As you can all see, Canadian Tire, FGL Sports, and Mark's all delivered impressive comps and drove strong retail earnings. And Financial Services delivered yet another strong set of results.
During the year, we continued our long-term investments focused on improving the performance of our key heritage categories. Automotive investments are now generating real growth, both in sales and in the quality of the customer experience. Our commitment to the Living business positioned us to compete well in this increasingly competitive category. And investments in Sports are generating growth in sales, but also are a catalyst for raising the brand perception of CTC.
Make no mistake, though. We still have lots to do in these areas to continue our momentum, and in other areas of our business where we want to apply the same focused efforts that have yielded such good results for us to date.
An area of particular pride for me in 2013 has been the work of the team to build our brand in the eyes of our customers. Our Olympic and sports partnerships, our rejuvenated advertising programs, our full-on entry into the digital retailing world, all backed by an across the Company focus on enhancing the customer experience, has energized everyone at Canadian Tire, employees, dealers, vendors; and we are certainly ready for 2014.
A strong brand translates to a strong company, and an important contributor to how Canadians perceive our brand is CTC's commitment to communities. We increased that commitment in 2013 with our efforts to work with a host of groups in government, sports, and education to help children lead active lives.
These types of initiatives are most effective when we are executing well, which is ultimately the foundation of our long-term success. When the Eastern part of the country was hit with an ice storm in December and during the floods in Calgary earlier in 2013, customers came to Canadian Tire to find the products they needed; and we were not only prepared in our stores, but also had the right assortment, proving that Canadian Tire -- that at Canadian Tire, we understand the needs of Canadians and are always prepared for everyday life in Canada.
While we understand the needs of Canadians, we must more deeply understand our loyal customer base. Our loyalty program and our ongoing trial are all about looking at customer data, so we can run our stores better, sort our products better and become more relevant to our loyal customers. But it takes a lot of expertise and discipline to analyze the data and make the right decisions. I'm getting more confident each quarter in our ability to use data, but we all agree that we are only going to move at the pace the organization can handle.
So I'm not pushing the timeline for a national launch, as much as I am fully supporting our internal expertise in handling data. Anyway, with that, let me turn the call over to Michael. Michael?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [3]
------------------------------
Thanks, Stephen. And good afternoon, everyone. I'm going to cover some key operational topics in our businesses: our results, the impact of weather, areas of strength we saw, and where we're looking to improve, and some key marketing and brand initiatives.
Canadian Tire had strong same-store sales of 4% in the quarter. We analyzed quite closely how much of the Canadian Tire retail sales increase we ascribe to weather and how much we ascribe to deliberate efforts to manage inventory, in-stock position, shifts in assortment, marketing, and promotions to drive traffic and sales. All said, we believe about half of Canadian Tire's performance in the quarter is directly linked to deliberate marketing and operational efforts.
We drove a strong seasonal business in November and December; and it's fair to say that about half of Canadian Tire's performance is directly attributable to favorable weather, although I doubt many of our customers would describe this winter as favorable. But good results related to weather isn't just dumb luck. When Canadians needed seasonal necessities, they turned to Canadian Tire.
We have been asked quite a bit if the weather affected our sales negatively, given store closures. Certainly, there were store closures, but our Dealers did everything they could to keep stores open, so any effect was relatively minor. And Allan and his team at Canadian Tire did a great job in last minute sourcing and delivering key items such as salt, shovels, snow throwers, and car batteries.
Although we are classified as a general merchant, we are increasingly acting more like a specialty retailer in key categories to compete and grow our business. The best example of that is in our Automotive business, which continued to perform strongly in Q4, particularly in Parts and Tires.
We continue to see results from our Automotive strategy and initiatives, which began five years ago. We believe that there's a lot more growth in Auto; and to that end, we're pleased to announce that Mike Broderick will be joining us to run our Automotive business.
Mike is a senior executive and industry veteran from Auto Zone, General Parts CarQuest, and most recently, a CEO of Federal Mogul. He has a track record of transforming businesses and delivering results. We believe it is a strong endorsement of the potential of our Automotive business for an executive of Mike's caliber to join our team.
Our increased emphasis over the last two years on our Living business has allowed us to keep this category strong, even with the increased presence of US retailers. To ratchet up that business, we have brought James Ryan on board, who has many years of retail and merchandising experience at Sears and Loblaw.
Our Canadian Tire Playing business performed very, very well in Q4; however, this is a business we believe we can grow. So one of our key senior merchants at National Sports and at FGL Sports, Barry Williams, is now leading this business.
And in late November, Carol Deacon was named Senior Vice President, Digital and Loyalty. Carol has been at Canadian Tire for some time after joining us from McKinsey, and with Allan and team helped transform our Automotive business. In her new role, Carol is developing and executing a comprehensive plan to grow digital, online, and loyalty capabilities. It's the strength of our people that will grow the triangle, and these are great examples of our talent at Canadian Tire.
Turning to our FGL Sports division, we had another strong quarter. Same-store sales were up 12.5% in the quarter. Sport Check performed particularly well, with same-store sales growing 15.6% in the quarter. Perhaps most heartening to us, our Sport Check stores grew same-store sales in 2013 full year by double digits. We were pleased with the performance of newly acquired Pro Hockey Life in the quarter as well.
Last month, we opened our first flagship store -- our first flagship Sport Check/Atmosphere combo store in West Edmonton mall. It is an 80,000-square foot store. We believe it is the most digitally advanced store in the world, and is our best store yet in terms of store design and partnering with key brands such as Nike, adidas, Under Armour, Columbia, North Face, and Arc'teryx.
Initial sales and customer reaction have been well beyond our expectations. We believe we can put at least 12 flagship stores across Canada. And many innovations in the flagship can be retrofitted into our current stores, especially as our growing in-house technology teams have found ways to dramatically cut the cost of digital deployment in-store.
Turning to Mark's, we had same-store sales growth of 5.2%. Again in this banner, we started a brand refresh in the fall with a heavier media buy than we traditionally have done in the same period that we believe contributed to our growth. We are also pleased with in-store execution, merchandising and supply chain, with key FGL Sports executives now overseeing these key functions at Mark's as well.
In terms of weather effect on our FGL Sports and Mark's businesses, we saw minimal impact. Sales in the Retail segment were strong in the quarter but not at the expense of margin. Margin rates in the quarter were 118 basis points better than last year. Every banner showed strong sales and margin performance.
We took a big step with our online business, giving Canadian Tire customers the opportunity to purchase a limited selection of products online from CanadianTire.ca. This is a first step, and we have built a strong backbone infrastructure that will evolve over time, improving the experience for all of our banners.
Again, our Financial Services business performed strongly in Q4 with revenues up 4.7% and income before income taxes up 16.6%. Revenue was driven in part to an increased focus on account acquisitions and a greater focus on integration with our retail banners.
Before I wrap up, I just want to mention what we see as much stronger marketing capabilities across all of our banners. We have had great response to our Canadian Tire "We All Play for Canada" campaign, as well as our advertising around the "Canadian Tire Guy", our Sport Check "What It Takes", and adidas Olympic collection campaigns, and our Mark's "Ready for This" brand positioning. As a result of the efforts of all of these banners, last month Canadian Tire Corporation was awarded the Marketer of the Year in Canada by Marketing magazine, which recognized what a brand-led organization we have become. And as you've probably seen over the last week, we have spent heavily on brand spots to capitalize on our premiere partnership with the Canadian Olympic team. With that, I'll pass it over to Dean.
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [4]
------------------------------
Thank you, Michael, and good afternoon, everyone.
Our consolidated results were strong in 2013; and in the fourth quarter, we saw the kind of performance that you should expect from the Canadian Tire family of companies based on the fundamental strength of our underlying businesses and especially when you experience seasonal weather across the country. In particular, I was pleased with the strong topline results from both seasonal and non-seasonal categories and strong gross margins, reflecting a favorable seasonal mix and effective promotional activity.
In addition, several initiatives that we completed this year not only strengthened our businesses, but they also unlocked value for our shareholders. The most significant of these was the formation of CT REIT. And on Tuesday, CT REIT released their results for the period ended December 31, 2013, and held their first conference call yesterday.
Getting used to our new normal in terms of consolidated financial reporting with CT REIT in our numbers will take some time, so we provided an update on our website of our October education session materials incorporating the Q4 and 2013 financials to help you navigate the changes to our financial reporting. While we won't be providing this alternate view every quarter, we will provide a breakout of the eliminations by segment on an ongoing basis. Costs associated with the formation of CT REIT are included in our results for the quarter and the year, so we've called those out and provided you with the calculation of normalized earnings for 2013 and 2012 in the MD&A that we released this morning.
Now turning to the review of our results, which are summarized in the slides provided. I'll begin with slide 4 covering consolidated results. Looking at the full year, revenue increased 3.1% versus 2012, and diluted earnings per share attributable to the owners of the Company were CAD6.91, up 13.3% over the prior year.
Normalizing for one-time costs, diluted EPS were up 8.8% on a full-year basis. For the quarter, diluted EPS attributable to owners of the Company grew 16.4% and 9.8% when normalized for REIT formation costs this quarter and one-time charges in the fourth quarter of last year.
Overall, our operating expenses, excluding depreciation and amortization, have continued to be well controlled with expenses up 5% in the fourth quarter and on a full-year basis. While this increase is slightly higher than our desired target of keeping opex revenue and margin growth rates aligned, I am pleased with the returns we are receiving from our investments in marketing, advertising, and the sports and Olympic partnerships, which have strengthened our brand and contributed to our record-breaking results this year.
A reminder that the growth in opex also reflects the one-time costs associated with the formation of CT REIT, as well as higher incentive compensation costs related to the share price appreciation we saw in 2013. As we look ahead to 2014 and in our desire to improve the productivity of the organization, we will be building additional talent and capabilities to pursue sustainable long-term investments in productivity.
Turning to the Retail segment on slide 5, we saw impressive top-line growth in sales and revenue across all the businesses in the fourth quarter and over the full-year period. And despite an environment of heightened competition and a cautious consumer, we also held on to that growth and had another great quarter with strong margins and bottom line performance.
As I mentioned earlier, the Retail segment now reflects the impact of the CT REIT business, and this is particularly evident in our reported Retail segment EBITDA and operating expenses. For further information on the items impacting these metrics, I refer you to the supplementary information we provided on our website, as well as our Q4 and full-year 2013 MD&A. Income before income taxes for the Retail segment increased 24.5% in the quarter, 12.6% on a normalized basis, and were up 15.9% for the full year, 7.4% on a normalized basis. Our overall corporate inventory position for the Retail businesses was down year-over-year, and we exited 2013 in a very healthy position in our seasonal categories.
Moving to slide 7. Financial Services continued to make an important contribution to the Company, from both an earnings perspective and from its integration with the Retail business. Gross average accounts receivable was up 6.8% for the full year, driven by a focus on account acquisition and reflected an increase in the number of active accounts and higher average account balances.
We ended the year at CAD545 million for capital expenditures, which is about CAD20 million above our 2013 stated range of CAD400 million to CAD425 million, plus the cost to purchase land for a replacement DC. The slightly higher spend was largely due to investments in real estate projects to support the FGL Sports growth strategy and accelerated spending in the fourth quarter related to investments in digital capabilities, which will provide needed infrastructure for new capabilities and systems. In addition, there was approximately CAD9 million for the two acquisitions of development lands by CT REIT during the fourth quarter.
As I indicated last quarter, we expect our 2014 capex range to increase to CAD500 million to CAD525 million. This reflects planned spending for our store network renewal and growth agenda, largely due to investments that support the FGL Sports growth strategy, as well as costs associated with digital capabilities and infrastructure to support in-store technology and legacy systems.
We also expect to spend additional capex of approximately CAD75 million to CAD100 million towards the cost of a replacement distribution center. In addition, we intend to support CT REIT with its growth agenda, which may result in additional capex to CTC, depending on the opportunities they can surface during the year.
As you know, managing our capital allocation strategy remains an ongoing priority for me. We ended the year with a strong balance sheet and maintained our balanced approach to capital allocation across all our stated priorities. These include first and foremost, capex investment in our businesses; second, maintaining a strong balance sheet to support our investment-grade rating; third, returning capital to shareholders, evidenced by a 25% increase to our dividend announced in the third quarter of this year, along with an increase in our dividend payout ratio to 25% to 30% of prior year's normalized earnings. We also delivered on our commitment to repurchase a minimum of CAD100 million of our Class A non-voting shares in 2013; and as we announced earlier today, we intend to repeat this share repurchase commitment in 2014.
Finally, our financial flexibility creates firepower for us to seek growth from investments in our existing businesses, investment in productivity initiatives, and the pursuit of new opportunities to secure long-term sustainable growth in businesses that build on our existing strengths.
2014 marks the final year of our five-year strategic plan, as well as the final year for measuring the Company's performance against our five-year financial aspiration. With the inclusion of CT REIT in our consolidated results, we have updated the calculation of our return on invested capital, or ROIC, to better reflect the way we view the Company in this metric. Fourth quarter ROIC was 7.42%, an improvement of 8 basis points over the prior year on a restated basis.
As we look forward to 2014, I remind you that Q1 is our smallest quarter of the year in terms of revenue and earnings. This year, you can expect to see an unusually high proportion of our annual marketing and advertising costs reflected in our Q1 results. This reflects the ramp-up of the activation of our Olympic sponsorship across the Company. This upfront marketing and advertising spending will even out over the remainder of year, and our full-year expenses are expected to be in line with 2013 levels.
I'd also like to announce that we are planning to hold an Investor Day on September 18, 2014, and we will provide additional details as we get closer to that date.
Finally, we are excited about our new 2013 year-in-review digital summary that showcases the great accomplishments of the business through video and text and gives site viewers a chance to hear directly from our senior leaders and employees. It went live this morning and can be accessed at 2013.CanadianTireCorporation.ca. And with that, I'll turn it over to the operator moderating the call for Q&A.
==============================
Questions and Answers
------------------------------
Operator [1]
------------------------------
Thank you.
(Operator Instructions)
Irene Nattel, RBC Capital Markets.
------------------------------
Irene Nattel, RBC Capital Markets - Analyst [2]
------------------------------
Thanks and good morning, everyone. Or I guess it's good afternoon now. If we could focus for a moment on Canadian Tire Retail, certainly the, let's call it, 2% of same-store sales growth that was not due to weather is consistent with the prior quarter and really is outperforming the broad retail space in Canada. So wondering if you could address some of the specific changes you've made to -- whether it's to offering, to promotions, programs, how you go to market, that help contribute to that?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [3]
------------------------------
Well, hello, Irene. It's Allan MacDonald. Thanks for the question. You know, there are a number of things that have been in the works over the last 24 or even 36 months that have been really focused on generating sustainable long-term growth within CTR, and we're starting so see them pay dividends for us. Most obvious example is the Automotive group, and you're familiar with a lot of the work we've done there; introducing our Living strategy; our Pro Shop strategy; some augmentation to smaller categories, both on the pricing side and, most importantly, on the assortment side, things like introducing Cake Boss; and then the improvement we've had in our marketing right across the board. Our Tested For Life in Canada products are really resonating with customers. The brand marketing we're doing is really resonating, and some changes we've made to our flyer, we're starting to see it become slightly more productive and really resonating with our customers. So it's hard to point to one thing, thankfully. It's a number of initiatives. And as we look forward into 2014, that's how we're going to continue to manage the business, just really looking at the fundamentals and being the best we can in as many aspects as possible.
------------------------------
Irene Nattel, RBC Capital Markets - Analyst [4]
------------------------------
That's great. Thank you. And if we could, thinking ahead through 2014, obviously the decline in the dollar is going to have a negative impact, at some point, on your purchasing power. So can you talk through how you think about that, how you plan for it, and how should we expect to see it play through your P&L as we go through the year?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [5]
------------------------------
Irene, it's Dean. I think, as most of you on the call are aware, we have a hedging strategy that we've employed over many years now. And the way I would characterize, as you're looking forward, is what that hedging strategy allows us to do is moderate against any impacts of movements in the Canadian dollar, and that gives the business lots of time to respond to those types of changes over time. And the FX is just one element of costing, right? So, many things change over time. We don't get worked up when the price of metal changes, as an example. So I'd say two things. One is the moderation as a result of our FX strategy and hedging strategy will help us with managing to that change in the environment. And then secondly, over the long term, the business has time to respond to it.
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [6]
------------------------------
Great answer.
------------------------------
Irene Nattel, RBC Capital Markets - Analyst [7]
------------------------------
Thank you for that. And then just finally, if I may, on the whole e-commerce, what was the consumer response to the limited offer that you had on Q -- up in Q4, and how should we think about it evolving through 2014 and '15?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [8]
------------------------------
It's Allan here again, Irene. The response was good. I would describe it as a very soft launch, because e-commerce and the strategy that we're developing is -- especially considering the nature of our products, the size, the cube and that we're pursuing a click-and-collect in-store program, we have got a lot of operational elements of that that we're working through. So very, very pleased with the initial results. It was as much about testing our execution in store and understanding the systems behind that as it was the public response. And through 2014, you're going to see us continue to evolve our offering and to continue to work to make it as operationally effective as we can. So for the time being, I think you'll continue to see an evolution similar to what you've seen in the past eight weeks.
------------------------------
Irene Nattel, RBC Capital Markets - Analyst [9]
------------------------------
That's great. Thank you.
------------------------------
Operator [10]
------------------------------
David Hartley, Credit Suisse.
------------------------------
David Hartley, Credit Suisse - Analyst [11]
------------------------------
Thanks. Good afternoon. Just want to ask you a bit about FGL and your new square footage program that runs out over the next, I guess, four years now, three to four years. Could you tell us where you are with that and how much square footage you're still plan to go add to that store network?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [12]
------------------------------
Sure. It's Michael. Hello, David. We had said that we had a five-year plan to put in 2 million square feet in Sport Check and Atmosphere, mostly in Sport Check. We are completely on that plan. In fact, I think we might put in a little bit more over the next five years. I'm sorry, in the five-year period. That would grow Sport Check's square footage by about 50% over that period. In 2013, we put in just under 400,000 square feet of incremental square feet in Check Atmo; and in 2014, we expect that to be just under 500,000 square feet. And I think increasingly we're finding better and better real estate, as our very strong real estate group has had some time now to get some good locations. So we're very pleased with that. And as we roll out, you're going to see more flagship stores, as well, especially in the key GTA market.
------------------------------
David Hartley, Credit Suisse - Analyst [13]
------------------------------
Great. And so could you just maybe take me through, when I look back over the past three, four, five quarters, and the store closures that you had within the network of the various banners, where are we now, when did that stop happening and when did you start just adding square footage? I mean, broadly. I know there ' always store closures. But in terms of the program you had to shutter space that you no longer wanted to operate?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [14]
------------------------------
Yes. I mean, we had -- and we have shut down all of the Sport Mart and Athletes World stores. That was completed in Q1 of last year. And at this point, we have more square footage in the network, even with the closures of those stores. And over, when you say three or four quarters, that would have been approximately 100, 110 stores we closed down in those three or four quarters. So you can see the growth in terms of, especially Sport Check across that, to already capture back all that square footage. Those were non-strategic, non-profitable banners. And we closed them and it went very well, and that has allowed us to focus on our key banners and our key brands.
------------------------------
David Hartley, Credit Suisse - Analyst [15]
------------------------------
So I guess the answer then would be that you've kind of cycled through all that impact, which I suppose is positive to your margins and negative to your sales. And now going forward, it's really more about new square footage, new sales growth, and new profitability, right?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [16]
------------------------------
Yes, I mean, we'll have a bit of noise, because in Q1, because we closed a lot of stores in that quarter, and we were discounting heavily to get rid of all the inventory in those stores. But it's not a huge impact in the quarter. And then from the beginning of Q2 on, it's clean.
------------------------------
David Hartley, Credit Suisse - Analyst [17]
------------------------------
Okay. That's really helpful. Thanks a lot. And I asked Dean this earlier, but I thought I'd ask again about -- just about the Olympics, and I guess you have the World Cup coming up, and the impact you're expecting. Will we see Q4 to Q2 of 2014, when we look at these quarters a year from now, will they be tough comparable quarters for you to lap against?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [18]
------------------------------
No. I mean, I hope not, is the answer. And we'll make sure they're not. And it is a good year. We have the Olympics and we have the World Cup coming up. But in terms of our whole merchandising program, these are relatively small numbers in the whole scheme of things. So, yes, we will capitalize on them this year, and the next year we'll have something else exciting. I think what we're able to do through big events and what you're seeing in terms of our branding and our advertising and our partnerships is we're building the brand. And that's what's, I believe, growing our sales in all of our banners. But you saw it especially in Sport Check this quarter, in Q4. So I think we can keep that momentum up. We've just got to keep doing what we do, which is we're partnering with the best brands in the world. We're getting better product from those brands. We're getting new brands, like Roxy and Quick into our stores. We've taken up our game in terms of store ops. And I believe that the rebranding that we have done of Sport Check has worked. So I think that will carry us through. But it's always nice to have a World Cup in the year. That will help. But, good question. Thank you.
------------------------------
David Hartley, Credit Suisse - Analyst [19]
------------------------------
I won't ask any more, as there's a hockey game on right now. (Laughter)
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [20]
------------------------------
How are we doing?
------------------------------
David Hartley, Credit Suisse - Analyst [21]
------------------------------
I don't know. That's the problem.
------------------------------
Operator [22]
------------------------------
Jim Durran, Barclays.
------------------------------
Jim Durran, Barclays Capital - Analyst [23]
------------------------------
Good afternoon. First of all, thanks for the very good presentation and the disclosure. Compliments to you guys. As far as questions are concerned, Target, right? So in the 4th quarter, they would have been more amply deployed, in terms of store count. And everybody knows that there's been some struggles. But would you be able to identify any negative impact they might have had on your business through the quarter?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [24]
------------------------------
Hello, Jim. It's Allan. We're seeing pretty consistent performance against Target. And Q4 wouldn't have been any different than the rest of the year. So we're really pleased with kind of sticking to our game. Being the best Canadian Tire has always been our strategy. And it's paying off for us. So really nothing noteworthy there.
------------------------------
Jim Durran, Barclays Capital - Analyst [25]
------------------------------
Okay. And with respect to your inventory position at store level on CT Retail, I assume because retail sales out paced your revenue growth modestly that you might have been in a fairly lean position coming out of the quarter and then going into Q1?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [26]
------------------------------
Actually, no, we're pretty good, virtually flat, from an inventory standpoint. We've got a few gaps in some products that are tough to get our hands on right now, like road salt. But for the most part, we're feeling pretty good about our inventory position.
------------------------------
Jim Durran, Barclays Capital - Analyst [27]
------------------------------
And last question. Just on the loyalty program, what are the primary reasons that you're taking such a go slow approach? Is it an IT backbone issue? Is it that and maybe personnel skill set?
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [28]
------------------------------
Jim, it's Stephen. It's the latter. And in addition to the skill set, it's the processes inside the organization to be able to handle it. And so the data is fascinating. We know it's unbelievably valuable. We have a tremendous amount of it already being collected across the country, through Mary's organization, which we are also developing the talent and processes to handle. But perhaps even a little bit more complex for Canadian Tire Retail is our operating model, in terms of the dealers using the data, because we very, very much want them to be able to use it at the store level. And then obviously, at the corporate level.
So therefore, we're getting much, much better. And it's not that we're not using it at all. But I guess, like everything else, you just want to take your time, figure out exactly how you're going to handle this, benefit from it, and gradually roll it out. I'm very pleased with where we are, very excited about the data that we've collected in the trial and across the country and the analytics that CTFS has been able to do for us. Allan is using a lot of it. But when you want to make a national kind of positioning on this, you just have to be careful of the impact, at the same time you're trying do everything else. So it's just kind of weaving it into the timelines of all our other projects, I guess.
------------------------------
Jim Durran, Barclays Capital - Analyst [29]
------------------------------
Great. Thanks.
------------------------------
Operator [30]
------------------------------
Emily Foo, BMO Capital Markets.
------------------------------
Emily Foo, BMO Capital Markets - Analyst [31]
------------------------------
Hello. I'm Emily from BMO standing in for Peter Sklar today. First question we have is about the same-store sales growth this quarter at FGL. You have already mentioned that the weather impact is minimal. But we were wondering if there was any other special quarterly effects, such as maybe improportionately more new brand launches, et cetera, that you could share with us?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [32]
------------------------------
Thank you, Emily. Thanks for your question. It was all over the place. We saw strength in hard goods. We saw special strength in soft goods and footwear, and we saw growth across the country. And we saw it throughout the quarter, as well. So there's nothing particular I could point to, other than I believe that the rebranding, again, and the store ops and the merchandising and the ability to get product to the store, and the right product and the right stores is really helping us here. Overall, we're just pleased. So there's nothing in particular that drove it, other than it was across the board.
------------------------------
Emily Foo, BMO Capital Markets - Analyst [33]
------------------------------
Okay. I see. And with respect to operating costs, you've mentioned in your prepared remarks that we should assume to keep it flat year-over-year, I believe. So does that imply that at present, you're at the peak of the marketing expenses where you expect to sponsorships, et cetera, except aside from the Olympics that's going on right now?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [34]
------------------------------
So, Emily, it's Dean. You know, my view on opex is down is better than up. But from the perspective of looking forward, yes, we've gotten great value out of the increase in our opex this year, in terms of the way that the guys have approached, particularly in the marketing. But as I also mentioned, I think earlier, is there is also some shift in our operating cost structure, as the proportion of our business that is composed of corporate-owned stores as opposed to, if you will, dealer-owned stores, is shifting a bit. So that muddies the numbers a little bit, as well. But all that said, from a marketing point of view, as we said, we've invested heavily in marketing and we've gotten great results out of that. And great results get opex for the guides. So looking forward, I think we want to continue to control opex. And certainly as a percentage of our revenues, we want to manage that percentage on an ongoing basis looking forward. But we'd like to become more productive, as well.
------------------------------
Emily Foo, BMO Capital Markets - Analyst [35]
------------------------------
Okay. Thank you. Those are my questions.
------------------------------
Operator [36]
------------------------------
Patricia Baker, Scotiabank.
------------------------------
Patricia Baker, Scotiabank - Analyst [37]
------------------------------
Thank you very much. Dean, can we talk a little bit more about the capex? You discussed the spend that you -- that took place in 2013, and it was a pretty big ramp from what we saw in 2012. On the third quarter call, you noted that you thought that if we're looking out into '14 and beyond, that the rate would fall somewhere between CAD425 million and CAD500 million, but you hadn't given it much thought. Are you at a point now where you can talk about a little bit about what the spend is going to be like in '14, and what are the particular areas where you really feel you need to invest in the existing business to make sure that you are well positioned and have the model going forward to be able to deliver results like we saw in the fourth quarter?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [38]
------------------------------
Yes. Thanks, Patricia. We've talked about where we think our capex should be going forward, right? And we're in the 5 to 525. And then with the DC, at 75 to 100 there. So we've updated that. Then within that, where we're focusing additional money is, obviously, as Michael mentioned, we're very pleased with the roll-out strategy and unified strategy with respect to FGL Sports, and particularly the Check businesses. So investing heavily in that. And we continue to grow the Canadian Tire banner businesses, as well as the Mark's businesses. So our existing businesses are gathering more and generating growth for it.
Similarly, obviously, we've mentioned the DC, and we have to replace -- we're on a path to replace the Brampton DC. So obviously, that's pushing things up. And then the third bucket is, we'll continue to support the REIT as we go forward. And then all of that is over top of continued investment in digital. You heard the guys talk about putting a base in place in terms of e-commerce and digital and the representation of our brand in the stores. And some great work's been done to date on that. But we expect to continue to invest in that as we go forward. So those are kind of the buckets.
------------------------------
Patricia Baker, Scotiabank - Analyst [39]
------------------------------
Is there any way you can provide us with a little bit of a breakdown there, or is that too much detail?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [40]
------------------------------
That's too much detail, I think.
------------------------------
Patricia Baker, Scotiabank - Analyst [41]
------------------------------
Okay. Thanks.
------------------------------
Operator [42]
------------------------------
Vishal Shreedhar, National Bank Financial.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [43]
------------------------------
Thanks very much. Just a question on margins. Margins were up nicely, which was nice, given the increase in sales, as well. Just thinking, given the competitive environment, what are the puts and takes in margin? For instance, mix versus promo activity versus rebates, sourcing, et cetera?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [44]
------------------------------
Well, from a CTR standpoint, I mean, it's been a bit of a mixed bag. We've had a focus now for well over a year on margin management. So you're seeing gains from -- I would say improving our promo activity, not necessarily holding back on it, but being much more thoughtful and selective in how we're promoting our products to drive traffic. Equally, as mix continues to change, you see the impact there. So coming into this season, some of the benefit of weather, some of the way we've been pricing, you see a bit of a margin mix that's being helped there. But primarily I'd attribute it to just much more careful management of our promo strategies.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [45]
------------------------------
Are gross margins at CTR, are those up year-over-year?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [46]
------------------------------
In the fourth quarter -- Vishal, this is Dean. What we said was that we were pleased with the margins in all of our businesses. And on an overall basis, we are up 118 basis points.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [47]
------------------------------
Okay. In Q4 year-over-year, given the 2% increase, if I heard that right, related to weather, is the impact on gross margin dollars greater?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [48]
------------------------------
Sorry. Repeat that for me.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [49]
------------------------------
There's a 2% lift in sales at CTR related to weather. I was just wondering if the lift on gross margin dollars year-over-year was greater than 2%?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [50]
------------------------------
So as you know, Vishal, we don't break out margins by banner. We do it on an overall basis, in terms of the Retail banners. And as I said, we were pleased with the margins in all of the businesses. We were up in all of them. And that included, obviously, the weather effect products that we referenced. So that's as far as I would go.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [51]
------------------------------
Okay. Thanks for that. In terms of Financial, just shifting gears here a little bit, the back drop seems to have gotten more competitive, in terms of the market. Just wondering your thoughts on marketing spend going forward, given an environment which appears to be getting more competitive?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [52]
------------------------------
Sorry. In Financial Services?
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [53]
------------------------------
That's right.
------------------------------
Mary Turner, Canadian Tire Corporation Ltd - COO, Canadian Tire Financial Services [54]
------------------------------
Well, I think -- sorry, it's Mary. So the market is more competitive. But I think the -- we have a different strategy than I think the other main credit card issuers, who are going after more of a high-spend -- they have more of a high-spend focus. I think we are really trying to service all the customers of Canadian Tire. And because our acquisition is really focused inside our retail banners, we have a unique capability of acquiring customers very effectively and at a very favorable cost. So I think for us, although it is more competitive, I believe we have a unique value proposition and a unique positioning in the market that's going to make it continue to be successful for us.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [55]
------------------------------
Okay. Thank you. Thank you for that. And my last comment. Dean, I was just hoping to clarify the opex comments. So correct me if I misinterpreted, but you said as a percentage of sales, we should think opex being flattish, if not slightly improving? Is that the gist of it?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [56]
------------------------------
What I said was we wanted our opex -- we wanted to manage our opex as a percentage of revenue on a go-forward basis. And yes, the desire would be to improve it. But that's how we're sort of thinking of opex. Particularly in the context of the changing nature of our business, because that's the other factor in terms of understanding any movement in our OpEx, Vishal.
------------------------------
Vishal Shreedhar, National Bank Financial - Analyst [57]
------------------------------
Okay. Thank you very much. I appreciate your comments.
------------------------------
Operator [58]
------------------------------
Derek Dley, Canaccord Genuity.
------------------------------
Derek Dley, Canaccord Genuity - Analyst [59]
------------------------------
Hello. Just a question on your Financial Services. ROR was obviously again very, very high, 7.32%. Have you guys adjusted your target or guidance up from the 5.5% to 6% range that you guys are at now?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [60]
------------------------------
Mary is pointing at me again. No, we haven't upped our guidance. I think, as Mary enters the period which we've all longed for where we are actually really growing receivables again and growing active accounts, which the team there has done a tremendous job, and it really shows up in this fourth quarter, you should see RORs start to come back in line over time, as that growth comes -- finally comes to fruition, in a meaningful way.
------------------------------
Derek Dley, Canaccord Genuity - Analyst [61]
------------------------------
Okay. Yes. Fair enough. And then, any update on the credit card partnership process?
------------------------------
Dean McCann, Canadian Tire Corporation Ltd - EVP and CFO [62]
------------------------------
I don't think I had the opportunity to talk to you this morning, Derrick. But as I said to everybody, even if I had an update, I wouldn't tell you. So irrespective of working through these negotiations, that's the position we expected to be in. I'd repeat, there's great interest and we're working through the process with potential partners.
------------------------------
Derek Dley, Canaccord Genuity - Analyst [63]
------------------------------
Okay. Great. Thank you very much.
------------------------------
Operator [64]
------------------------------
Mark Petrie, CIBC.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [65]
------------------------------
Good afternoon. I just want to ask broadly about your investments in marketing and the brand, and in the context of you growing your e-commerce platform, both from a fulfillment standpoint, but also from a marketing standpoint, and how those investments relate, if at all, to how you look at your flyer program and the spending there?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [66]
------------------------------
Well, not really. If I understand your question, the brand advertising component parts is incredibly important for us, as we continue to keep Canadian Tire top of mind for Canadians. The e-commerce platform right now and our digital spend is meant to be a complement to a lot -- our businesses in almost every respect. And in terms of its association with our promotional advertising, it would be a complement to it. But in our minds, they are separate and aside, for the time being.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [67]
------------------------------
So when you think about what the flyer looks like, three or four, five years from now, what are your thoughts?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [68]
------------------------------
Well, I think there's no question that there will be an evolution of promo advertising and how we bring promotions to Canadians in the sort of medium- to long-term. It will be a component -- it will consist of the way we communicate through CanadianTire.ca, how we communicate one to one with customers, how we leverage things like customer data loyalty, credit card information, how we leverage our e-commerce business, and then the digital nature of flyers, as things like our e-flyer get even more and more popular. So I think you see convergence in the medium term. But in the short-term, those capabilities really are just getting off the ground.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [69]
------------------------------
Okay. But none of that really affects your core belief that the fundamental value proposition is as a high-low retailer?
------------------------------
Allan MacDonald, Canadian Tire Corporation Ltd - COO, Canadian Tire [70]
------------------------------
That's right.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [71]
------------------------------
Yes. Okay. And then I just had a question about the distribution center, the new distribution center. Is that just a matter of additional capacity? And what are the new capabilities or improved capabilities that the new distribution center might bring, in terms of either additional products flowing through there that aren't going through Brampton now, or different types of fulfillment that you might be able to do?
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [72]
------------------------------
It's Stephen. It's primarily a replacement facility. But the new facilities are obviously more efficient than old facilities. So the fact that we are getting more distribution capabilities. The new techniques within distribution centers will add greatly to the efficiency. And one thing that we can do with this distribution center, which we can't do today, is operate probably Canada's most efficient tire distribution center. And so we very much look forward to that. The rest of the facility, though, is pretty much the same design as we would have in our current facility, and only because of the nature of the product that we're handling and our operating model. But it is -- we kind of -- we look forward to it from an efficiency point of view, and also picking and product storage, all these sort of things will have the latest technology within it.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [73]
------------------------------
And is there any need or opportunity to invest in improved distribution for Mark's or Forzani?
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [74]
------------------------------
Yes. And that -- I mean, that is all part of our kind of -- well, probably a five- to six-year distribution center and channel management strategy. More right now, they are obviously short of efficient distribution facilities in the west. So that we are addressing. And as the market increasing -- their market increasing as it is and facilities have to increase within central Canada. So we will be -- so we're managing all of that as part of a kind of a CTC distribution strategy, if you will.
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [75]
------------------------------
It's Michael here. There's a real advantage to having two retailers in Calgary who are both in soft goods and footwear. And so we're going to see some real, let's say, synergies from being able to have a distribution center out west, which can -- can handle both divisions out of that. So that's going to really, really be great for us and pay off. So that should be about a year away, probably, from putting that facility together. And again, and Harry is saying also, that in terms of transportation out of there, trucks are leasing the facilities and Mark's are right next door to Sports Check, and there is going to be efficiencies there, as well. We're finding more efficiencies as we go forward, and that won't stop.
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [76]
------------------------------
But as far as capital investment, it's minimal. Minimal for our apparel business.
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [77]
------------------------------
In fact, it's not much more in terms of cost or capital than before.
------------------------------
Mark Petrie, CIBC World Markets - Analyst [78]
------------------------------
Okay. Thanks a lot.
------------------------------
Operator [79]
------------------------------
Keith Howlett, Desjardins Securities.
------------------------------
Keith Howlett, Desjardins Securities - Analyst [80]
------------------------------
Yes, I had some questions on FGL Sports. Just in terms of the Sport Check store and the Atmosphere stores, how many net new doors do you see in 2014 and over the remaining four years of the plan?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [81]
------------------------------
Well, I'm looking in terms of -- I'm looking in terms of square footage. You could probably do the math. But I'm looking at between 400,000 and 500,000 square feet per year going forward. And by the way, just as we said it, we talked about five years, doesn't mean it suddenly dries up in five years, okay? There will be new store opportunities through that period, is our belief. But it is a significant number of stores. But the stores are going to be larger, Keith. And so the flagship stores are going to generally be between 60,000 and 80,000 square feet. We believe that there is an opportunity to put in larger general stores in urban markets. So 30,000 to 35,000 square feet. But where we're also seeing some success in rural markets, or smaller markets, where we can put in a 10,000 to 12,000 square foot Sport Check to serve our customers in those markets. And so it depends, throughout those years, in terms of the mix. But I would go by the square footage rather than by the number of stores. And I should say, as well, in 2013 and '14, we said we were going to up our number of stores in terms of percentage in Ontario and in the GTA, where we were really under stored, and we did that in '13, and in '14, we'll be doing the same.
------------------------------
Keith Howlett, Desjardins Securities - Analyst [82]
------------------------------
And just in terms of Atmosphere, is the strategy stand-alone? You have boutiques. You've got side by side. You've got stand-alone. Where actually are you going with the Atmosphere?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [83]
------------------------------
I think where we're going with Atmosphere, it has to be a brand on its own. And you're going to see us building that brand as we go forward. I think in some stores, we got away from enough hard goods to give us credibility in the Atmosphere stores. So the boutiques, we don't like. We don't think it really portrays the brand of Atmosphere or meets the customers needs as much. So you may see us pull back and give some space back to Check, which needs space in certain stores. However, stand-alone Atmospheres we really like, and combo stores, where the Atmosphere can really shine. So in the West Edmonton store, there is a 55,000 square feet of Sport Check. There's 25,000 square feet of Atmosphere on the second floor, in the mezzanine. And that is as good an outdoor store as you're going to see. And we are not going to do that size store everywhere, but that's the feel it has to be. So it's a very good question. Over the last, say, 18 months, we've really been examining the Atmosphere brand. We think there's a real niche here for us. But we can't be everything to everyone all the time. And these boutiques just aren't working for us.
------------------------------
Keith Howlett, Desjardins Securities - Analyst [84]
------------------------------
And in terms of online at FGL Sports and Mark's, I don't know where you are -- FGL sports used to use a third-party provider and I think Mark's did it in house, I think. But where are you with online at those two brands?
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [85]
------------------------------
I'll speak for FGL, and then Harry can speak for Mark's. At FGL, we are growing online, in terms of percentages, like you wouldn't believe. In December, we doubled the December before, in terms of online. The base, though, isn't what we believe it can be going forward. And to speak frankly, the brand of our online business does not reflect what you're seeing in the stores or through media channels like we would want. So over the next 12 months, we're going to be working very hard in terms of our online business to reconfigure it, rebrand it and make it feel more like what Sport Check should feel like. I would say in 2015, we'll be in very good shape. And the goal is in 2016 to be best in world, best in class. So that's our goal. In terms of third-party, we currently are still third-party in terms of our e-commerce.
------------------------------
Harry Taylor, Canadian Tire Corporation Ltd - COO, Mark's [86]
------------------------------
And this is Harry Taylor. From Mark's point of view, we are in-house. And similar to Sport Check, we're routinely doubling our sales online. We are taxing the capacity of the system we built. So we need to -- we're already starting a Marks.com version 3.0 to roll out not this year, but hopefully next year, that will be even more robust and even more on brand what we'd like to be, and will be world-class in terms of front of the house, in terms of what our customers see and behind the scenes in terms of robustness, stability, and integration.
------------------------------
Michael Medline, Canadian Tire Corporation Ltd - President [87]
------------------------------
And I should make one more point. It's Michael. When we talk about online and e-commerce and the capabilities, the digital capabilities, the big pay offs -- for sure, there is going to be a payoff in that business. But the big payoff could also be in store. So currently, if you go into a Check store and we don't have the color in terms of the Adi workout shorts you want, you may leave without those shorts. And so we do have some people walking, and we do as good a job as we can in order to meet our customers' needs. But I think the real payoff her is to be able to use our staff in these stores, who are great, in order to say, we can get this product for you in the next 24 hours, and they will hunt down any product in our system. And so that's where a big payoff can be as we get better at this.
------------------------------
Keith Howlett, Desjardins Securities - Analyst [88]
------------------------------
And in terms of the -- I know that people have been around this a bit before. But in terms of the direct to home internet, I gather Canadian Tire is going to be the order and pick collect, or whatever it is, click and collect. But I presume both FGL Sports and Mark's do offer and will continue to offer direct-to-home. Is that something the new warehouse can do? Or is that a different matter?
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [89]
------------------------------
Well, the warehouse itself could potentially. But it's not -- it's very complex, Jim, when you set up a distribution center like we do, and then try to do too, too much of continual overnight traffic. We can, though, do it and it's intended to be able to do with our tire business. No doubt about that. We may well in the new DC be moving out some of our auto parts, and that would be short delivery times, as well. But not -- the facility would not be set up, from a traffic and design point of view, to be running a whole bunch of direct-to-home out of it. And where I see the big benefit of direct-to-home, to tell you the truth, with CTR. And it kind of dawned over us over the last two to three years is that our dealers actually run many distribution centers. And while it means that the system itself, the retail system, carries a lot of inventory that the dealers carry, it means that we're probably, oh, I don't know percentage-wise, but a lot more efficient than an integrated retailer would be in order to serve our customers. So they are used to doing that sort of thing. So can we do it out of the dealers to home? Next evolution that Allan would work on, I'm sure, get the first thing down pat, get the systems down pat, and then I think anything he wanted to do, he could. We would supply most customers, though, out of store or out of the small DCs, wherever they are located. And as customers grow, then we might put in regional centers.
------------------------------
Operator [90]
------------------------------
Thank you. Due to time restrictions, there will be no further questions taken at this time. I will now turn the call over to Stephen Wetmore, CEO, for any closing remarks.
------------------------------
Stephen Wetmore, Canadian Tire Corporation Ltd - CEO [91]
------------------------------
Thank you, everybody. It seems, I know we're into February, but thank you for your coverage during 2013, and we're very pleased to have concluded a very successful year and here we are off in 2014. So talk to you in May on our first quarter. So thank you very much.
------------------------------
Operator [92]
------------------------------
Thank you, ladies and gentlemen. A telephone replay of today's conference call will be available for one month, and the webcast will be archived on Canadian Tire Corporation Limited Investor Relation's website for 12 months. This concludes today's conference call. Please disconnect your lines at this time and we thank you for your participation.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------