HD Supply Holdings Inc (HDS) Q4 2018 Earnings Conference Call Transcript
HD Supply Holdings Inc (NASDAQ: HDS)Q4 2018 Earnings Conference CallMarch 19, 2019, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to the HD Supply Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this call is being recorded.
I'd now like to introduce your host for today's conference, Charlotte McLaughlin, Investor Relations. Please go ahead.
Charlotte McLaughlin -- Senior Manager, Investor Relations
Thank you, Christie. Good morning, ladies and gentlemen, and welcome to the HD Supply Holdings 2018 fourth quarter and fiscal year-end earnings call. As a reminder, some of our comments today may be forward-looking statements based on management's beliefs and assumptions, and information currently available to management at this time. These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings. Please note that the Company's actual results may differ materially from those anticipated, and we undertake no obligation to update these statements.
Reconciliations of certain non-GAAP financial metrics with their corresponding GAAP measures are available at the end of our slides presentation, and in our 2018 fourth quarter and fiscal year-end earnings release, both of which are available on our IR website at www.hdsupply.com.
Joe DeAngelo, our CEO, will lead today's call, while Evan Levitt, our CFO will provide additional color on our recent financial performance, and our expectations for 2019. There will be an opportunity for Q&A at the end of the call. For those participating, please limit your remarks to one question and one follow-up if necessary.
Thank you for your continued interest in HD Supply. And with that, I will now turn the call over to Joe DeAngelo.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Well, thank you, Charlotte. Good morning, everyone. Thank you for joining us today for our 2018 fourth quarter and fiscal year-end earnings call. As always, it is my privilege to share our Company's results with you on behalf of the 11,500 HD Supply associates who work hard every day as one team, driving customer success and value creation. I am extremely proud of our team and their performance in 2018.
We outperformed on our top-line throughout 2018, by taking advantage of favorable market conditions and focused execution. We delivered strong profitable growth and enhanced the capabilities of both businesses throughout the year.
Turning to page 3, I will begin by discussing our fourth quarter and full year 2018 performance. We delivered 22% sales growth for the fourth quarter of fiscal 2018, and a 7% sales growth on an organic basis, excluding the impact of the A.H. Harris acquisition, and net of the change in selling days. We estimate that this represents growth of approximately 400 basis points in excess of market.
Our earnings performance continued to be substantial. We saw 23% adjusted EBITDA growth, while generating strong free cash flow. In the fourth quarter, we completed our second share repurchase authorization and began to utilize our third repurchase authorization announced in December. And we will discuss this in more detail later.
For the full year, we delivered 18% sales growth or 9% on an organic basis, net of the change in selling days. We estimate that this represents growth of approximately 500 basis points to 600 basis points in excess of market. Our adjusted EBITDA grew 19% versus prior year.
On page 4, we highlight our core 2018 achievements. I will begin by discussing Facilities Maintenance, which demonstrated strong performance in 2018. The fourth quarter of 2018 was the final quarter for accelerated investment program, and we believe we are in the early stages of seeing the returns from these investments. During the quarter, we rolled out our new Facilities Maintenance website, which now offers customers more streamlined interface for interacting with HD Supply. We listen intently to the voice of our customer, regularly releasing improvements to our website has become even easier to do business with.
2018 also saw the release of our new sales console, which provides our field associates with dynamic, customer and product data, deepening our ability to be helpful and collaborative with our customers to provide the best solutions for their specific needs. We will continue to enhance the sales console, enabling our sales associates to problem solve with our customers, ensuring their success.
Other notable full service features of our Facilities Maintenance business include our property improvement business, which provides a compelling service to our customers, enabling them to not only maintain, but also renovate their investment properties over their life-cycle. I would like to congratulate Brad Paulsen and his team on a great performance, and I look forward to an even better 2019.
I am pleased to announce that in 2019, we will be opening our new Atlanta distribution center. At over 1 million square feet, this could be our largest, most advanced distribution center, supporting our continued growth, and enabling us to improve our already best-in-class customer service, not only in Atlanta, but also throughout the Southeast. This new facility will showcase our new technologies and provide a blueprint for best practice across the wider network.
Moving to our Construction & Industrial business unit, John Stegeman and his team continued to gain market share throughout the year, while integrating the A.H. Harris acquisition, which is now substantially complete. The realization of anticipated synergies is on track and we look forward to accelerating growth with HD Supply's high performance, high growth sales culture. I couldn't be more pleased with the enthusiasm and hard work of our associates as we complete this integration.
81% of our core C&I White Cap branches are now performing at a double-digit EBITDA rate, up 3 percentage points versus prior year. 67 of our C&I White Cap branches, including a number the acquired A.H. Harris locations now have in-store contractor purchases, making up 40% or more of their sales, generating higher gross margins and lower cost to serve, and keeping guests connected with our loyal customer base. In some of our best performing districts, we saw a year-over-year core sales growth, exceeding 16%. Additionally, we opened three new locations in priority districts, New York City, Los Angeles, and San Diego. 2018 was another great year for our Construction & Industrial business.
Turning to our capital market accomplishments, 2018, saw us refinance our debt obligations, reducing the cost of our debt, extending maturities, and fixing the interest rate on close to 70% of our outstanding debt to reduce our sensitivity to future interest rate changes. Across our business, we continue to deploy capital to the highest return opportunities available. During the fourth quarter of 2018, financial markets were extremely volatile and the stock market declined significantly. As we indicated previously, we executed share repurchase program on an opportunistic basis and accelerated our repurchase activities in the fourth quarter. We repurchased nearly 11 million shares of our outstanding stock in the fourth quarter, bringing our total purchases for the year to 15.5 million shares. Additionally, we believe that quality M&A is a key value creation lever, and we will continue to opportunistically pursue acquisitions with compelling value.
Also, we held our first Investor Day in our Atlanta Leadership Development Center, and I was proud to share our strategy, execution, winning culture, and most importantly, our talented front line and support associates with the investment community. To summarize, our overall full year 2018 performance, we delivered 18% sales growth or 9% organic growth, net of the change in selling days, 90% adjusted EBITDA growth, and 47%, adjusted net income per diluted share growth versus 2017.
Our strategic execution delivered sales growth in excess of our market estimate of approximately 500 basis points for 2018, and that translated into double-digit earnings growth. We also delivered $469 million of free cash flow in 2018, and finished the year with a net debt to adjusted EBITDA ratio of 2.6 times. Despite the slow start to 2019, impacted by harsh February weather, we remain confident and look forward to continuing deliver strong results in 2019, as we focus on our customer success within our market-leading businesses. I am proud of the performance of each of our 11,500 HD supply associates, who work hard every day to deliver on our promises to our customers, fellow associates, and shareholders.
I'll provide some closing comments, following Q&A. I will now turn the call over to Evan.
Evan Levitt -- Chief Financial Officer
Thank you, Joe, and good morning everyone. I'll begin on page 5, where we highlight areas of recent investor focus. First is winter weather. As we've stated in the past, weather can have a significant impact on our results as unusually cold, wet and wintry weather can impact outdoor construction activities, and our ability to safely deliver product.
This February, the first month of our fiscal 2019, we saw significant parts of the country experience unusually severe weather, including significant rain throughout California, and cold and wintry weather with snow and ice in areas such as the Pacific Northwest, the Midwest and the Northeast, which significantly impacted our Construction & Industrial business. February is historically our lowest volume month of the year, and therefore the effect of weather disruptions can have a magnified impact on the monthly sales growth rates. As the weather improves and we have the opportunity to deliver to job sites, our sales performance will normalize. We remain confident on delivering a strong 2019.
Next is the construction end markets. The non-residential construction markets continue to be productive with many existing large multi-billion dollar multi-year projects continuing and several large new projects either in the planning stage or having recently been announced. Areas of particular strength include airports, sports and entertainment complexes, road and bridge work, data centers and distribution centers. These large projects typically spur additional development and complementary projects in the surrounding areas for years to come, and give us confidence that the non-residential construction end market remains strong.
We saw a modest slowdown in the pace of residential construction in the fourth quarter as an uncertain interest rate environment led to moderating activity from home builders, and home affordability continued to be an issue. As a reminder, about 20% to 25% of our Construction & Industrial business serves customers working on residential construction projects, particularly on the West Coast and Southeast portions of the United States .
Next, the competitive environment. We have not seen a significant change to the competitive environment, which remains intense. As the largest scale to national distributor, focused on the MRO living space market, and by far the largest national distributor for specialty construction projects, serving 14 trades, we have a unique understanding of our customers' needs, defined execution strategies, and a clear focus free of distractions to improve and evolve the customer experience, and to extend their service differentiation.
Next, the tariff environment. As we've previously indicated, the current tariff environment is manageable, as with any increase to our costs, we work hard to offset as much of the costs as possible through supplier negotiations, and productivity. Where we are unable to offset cost increases, we do adjust our pricing to pass along the cost increase as markets allow.
We've been dealing with increase in cost and steel rebar since tariffs were first introduced in 2017. We have been successful in passing along all of the cost increases through pricing and earning the same or slightly more gross margin dollars for each unit sold. However, we have been unable to pass along enough of a price increase to maintain our gross margin rate on rebar. In recent months, rebar pricing has stabilized, but the year-over-year cost is still up about 10%. We expect gross margin pressures from rebar to moderate through the first half of 2019.
The 10% Section 301 tariffs that were imposed on Chinese imports in late 2018, have now been in place for several months. As we intended, we've offset much of this cost through negotiation and productivity, and have raised prices to recover the unavoidable increases in cost. We have seen our competitors take similar actions and overall the market has responded well.
Capital allocation. During fiscal 2017, six months earlier than projected, we normalized our capital structure within our targeted 2 times to 3 times net debt to adjusted EBITDA leverage range. Since that time, we have and expect to continue to generate substantial free cash flow that we are committed to allocating toward the highest return investments. Those investments include organic investments in our business, M&A opportunities and returning cash to shareholders currently through our share repurchase programs.
During fiscal 2018, we accelerated approximately $12 million of investment in our Facilities Maintenance business, we acquired A.H. Harris Construction Supplies for $362 million, and we repurchased 15.5 million shares of our outstanding common stock for a total price of $585 million, or an average price of $37.78 per share. Approximately 70% of the fiscal 2018 share repurchases or $406 million was completed during the recent market downturn in the fourth quarter of fiscal 2018.
Now, before we review the fourth quarter results on page 6, I'd like to remind you that the fourth quarter and fiscal 2018, contains an extra week as compared to fiscal 2017. This extra week occurs within our fiscal calendar once every five or six years. Also during the fourth quarter of fiscal 2018, we experienced a holiday calendar shift whereby Christmas Eve and New Year's Eve fell on a Monday. In fiscal 2017, Christmas Eve and New Year's Eve fell on a Sunday. Our Construction & Industrial business was closed on Christmas Eve and New Year's Eve in fiscal 2018, resulting in two fewer selling days. Facilities Maintenance was open, but experienced lower volume than normal. We refer to the extra week in fiscal 2018, net of the impact of our Construction & Industrial business closing for Christmas and New Year's Eves, as the change in net selling days.
Now, in terms of fourth quarter highlights, we delivered sales of $1,446 million, an increase of $263 million, or 22.2% over the fourth quarter of 2017. Our organic sales during the fourth quarter, adjusted for net selling days, increased 7.4% over the fourth quarter of 2017. Gross profit increased $104 million, or 22.2% to $572 million. Our gross margin rate of 39.6% was flat compared with the fourth quarter of fiscal 2017. The A.H. Harris acquisition had an unfavorable impact to gross margin rate of approximately 40 basis points. Adjusted EBITDA for the fourth quarter of 2018 was $187 million, up $35 million, or 23%. Adjusted EBITDA as a percentage of sales for the fourth quarter was 12.9%, up 10 basis points over the prior year.
Turning to page 7, we review the full year of fiscal 2018. Net sales grew to $6,047 million, an increase of $926 million, or 18.1% versus fiscal 2017. Our organic sales adjusted for net selling days grew 9.2% over fiscal 2017. Gross profit increased $342 million, or 17% versus prior year. As a percent of net sales, our gross margin rate was 39.3%, a decrease of 40 basis points versus 2017. The A.H. Harris acquisition and rebar pricing unfavorably impacted gross margin rate by 40 basis points and 10 basis points respectively. Adjusted EBITDA for the full year of fiscal 2018 was $871 million, up $140 million, or 19.2%, up 10 basis points versus 2017.
On page 8, I will discuss the specific performance of each of our individual business units in more detail. Net sales for our Facilities Maintenance business was $736 million during the fourth quarter of 2018, up $94 million, or 14.6% from the fourth quarter of 2017. On a 13-week basis, net sales increased 6.4% over the fourth quarter of fiscal 2017. We estimate that the MRO market grew approximately 2% in the fourth quarter of 2018. For fiscal year 2018, revenue for Facilities Maintenance was $3,089 million, up $242 million, or 8.5%.
On a 52-week basis, net sales increased 6.6% over fiscal year 2017. We estimate that the MRO market grew approximately 2% for the full year of 2018. Facilities Maintenance gross margin improved 80 basis points in the fourth quarter of 2018, from the fourth quarter of 2017, reflecting strong category management performance and favorable business mix, led by our multi-family vertical. For the full year 2018, our Facilities Maintenance gross margin rate is up approximately 40 basis points from fiscal year 2017. This improvement is on the high-end of our expectations and reflects exceptional execution by our category management team. As we've said in the past, we believe a flat gross margin in this environment is strong performance.
Facilities Maintenance adjusted EBITDA for the fourth quarter of 2018 was $124 million, an increase of $22 million, or 21.6% from the fourth quarter of 2017. As a percent of sales, adjusted EBITDA in the fourth quarter of fiscal 2018 was 16.8%, an improvement of 90 basis points. For the full year of fiscal 2018, adjusted EBITDA was $546 million, up $47 million, or 9.4%. Adjusted EBITDA as a percent of sales for the full year of fiscal 2018 was 17.7%, an improvement of 20 basis points. Net sales for our Construction & Industrial business were $711 million during the fourth quarter of 2018, up $169 million, or 31.2%.
On an organic basis, adjusted for net selling days, our Construction & Industrial business grew 8.5%. We estimate the overall market was up approximately 4% for the quarter. For fiscal year 2018, revenue for Construction & Industrial was $2,960 million -- $2,961 million, up $682 million or 29.9%. On an organic basis, adjusted for net selling days, our Construction & Industrial business grew 12.4%. We estimate construction and industrial market was up approximately 500 basis points for the year. During the fourth quarter and full year of fiscal 2018, Construction & Industrial's gross margin declined approximately 40 basis points and 50 basis points respectively. In both periods, the acquisition of A.H. Harris unfavorably impacted gross margin by 30 basis points and rebar unfavorably impacted gross margin by 20 basis points.
Construction & Industrial's adjusted EBITDA for the fourth quarter was $63 million, up $13 million, or 26%. Adjusted EBITDA as a percent of sales for the fourth quarter of fiscal 2018 was 8.9%, down 30 basis points from the fourth quarter of 2017. As expected, Construction & Industrial's results were unfavorably impacted by the holiday shift and resulting closures of branches on Christmas Eve and New Year's Eve. For the full year, adjusted adjusted EBITDA was $325 million, up $93 million, or 40.1%. Adjusted EBITDA as a percent of sales for the full year of fiscal 2018 was 11%, up 80 basis points from fiscal 2017.
Turning to page 9, during fiscal year 2018, we generated $469 million of free cash flow. Free cash flow was impacted by the reduction in purchase price of A.H. Harris from the original contracted price of $380 million to $362 million because of less working capital being delivered at closing than targeted. The shortfall in working capital was released by the purchase of additional inventory after acquisition. Cash flow was also impacted by the decision to carry some additional inventory at year-end, buying around tariffs and the Chinese New Year.
We invested $36 million in capital expenditures in the fourth quarter of 2018, and $115 million, or approximately 1.9% of sales for the full year of fiscal 2018. We estimate our ongoing annual capital expenditure requirements to be approximately 2% of annual sales. During fiscal year 2018, we paid cash taxes of approximately $13 million, primarily associated with Canadian taxes and US state taxes. We will continue to benefit from our federal net operating loss carry forwards, which along with other federal tax credits are expected to fully offset our federal income tax liability through the first half of 2019.
Around mid-year 2019, we expect our net operating loss carry forwards and other federal income tax credits to be fully utilized, at which time we will become a regular federal income tax payer. We currently expect to pay about $65 million to $75 million in income taxes during fiscal year 2019. Fiscal year 2020 will be the first year in which we are a regular taxpayer for the full year. Our expectations through 2020 for annual free cash flow continue to be in excess of $500 million, despite becoming a regular cash tax payer. Our ongoing GAAP tax rate will be approximately 26%.
As I previously indicated, during fiscal 2018, we repurchased 15.5 million shares of common stock for a total of $585 million at an average price of $37.78. Approximately 70% of the repurchases were $406 million, and 10.8 million shares were repurchased during the fourth quarter. We had approximately $375 million remaining under this authorization at the end of fiscal 2018. Including the completion of our two previous $500 million share repurchase authorizations, we have reduced our outstanding share count by over 16% since the first quarter of 2017. We will continue to opportunistically repurchase shares. As of the end of fiscal 2018, our net debt to adjusted EBITDA leverage was 2.6 times, comfortably within our targeted range of 2 times to 3 times.
On page 10, we provide fourth quarter 2018 monthly sales trend performance as well as the 2017 comparable. In November 2018, we delivered sales of $426 million, an increase in average daily sales of approximately 14% versus November 2017. Organic sales growth in the same period was 6.8%. In December 2018, we delivered sales of $455 million, an increase in average daily sales of approximately 16.7% versus December 2017. Organic sales growth in the same period was 9.5%.
In January 2019, we delivered sales of $565 million, an increase in average daily sales of approximately 10.3% versus January 2018. Organic sales growth, net of selling days was 4.3%. In both years, there were 18 selling days in November and 20 selling days in December. There were 28 selling days in January 2019, compared to 23 in January 2018, because of the additional week.
February 2019, which ended March 3rd, was the first month of our fiscal first quarter 2019, and we have provided our preliminary sales results. We will not provide information on February results beyond sales. February sales were approximately $423 million, which represents average daily sales growth of approximately 8.1% versus 2018. Organic sales growth for February was 2.2%. Average daily sales growth versus prior year by business was approximately 6% for Facilities Maintenance and approximately 10.5% for Construction & Industrial. Construction & Industrial's organic sales for February contracted approximately 2.4%.
As I shared, February sales were unfavorably impacted by wet and wintry weather, particularly in our Construction & Industrial business. Approximately one-third of our Construction & Industrial business is done in the State of California. On last year's fourth quarter earnings call, we shared that dry conditions in California helped us achieve a 17% growth rate in February 2018. By contrast, in February 2019, the Los Angeles market received rain equal to 40% of its normal total annual rainfall, and the San Francisco area received nearly 40% more rainfall than normal, and then more -- and more than 10 times the amount experienced one year ago.
This year's wet weather along with unusually severe winter weather in the Pacific Northwest and parts of the Midwest and Northeast, contributed to the weak February sales. We remain confident in the strength of our construction markets as geographies not impacted by severe weather such as the Southeast continued to perform in line with our expectations.
On page 11, we shared our end market outlook for 2019. We believe the MRO market will continue to grow approximately 1% to 2%. Our non-residential construction end market estimate is up low to mid single-digits, and our residential construction market estimate is for flat to low single-digit growth. These specific end market estimates imply a 2% to 3% end market growth for HD Supply's markets in 2019.
On page 12, we introduced our guidance walk for the full year of 2019. We believe net sales will be in the range of $6,300 million to $6,450 million. Our sales guide begins by subtracting the sales from the extra week in 2018, before building on our 2% to 3% end market growth estimate, and market out-performance in excess of our 300 basis point long-term commitment. This translates to a 7% growth rate at the midpoint, adjusted for the impact of the 53rd week in fiscal 2018.
We expect adjusted EBITDA to be in the range of $900 million to $950 million. This reflects an 8% growth at the midpoint, adjusted for the impact of the 53rd week in fiscal 2018. We also expect full year 2019 adjusted net income per diluted share to be in the range of $3.52 and $3.81. This assumes a fully diluted weighted average share count of 171 million and does not contemplate additional share repurchases. Our business continues to generate significant free cash flow. In fiscal 2019, despite the increase in cash tax payments, as we exhaust our federal net operating loss carry-forwards, we estimate free cash flow to be around $550 million.
On page 13, we share our perspective on our first quarter 2019 guidance. We expect sales to be in the range of $1,465 million and $1,515 million, adjusted EBITDA to be in the range of $192 million and $207 million, and adjusted net income per diluted share to be in the range of $0.75 and $0.84. Our adjusted net income per diluted share range assumes a weighted average diluted share count of 171 million, and does not contemplate additional share repurchases. The midpoint of our first quarter 2019 sales growth and adjusted EBITDA growth rates are expected to be 7% and 5% respectively.
On page 14, we summarize and consolidate our first quarter and fiscal year 2019 outlook views. In summary, we saw a strong performance from our teams throughout fiscal 2018, and are now preparing for a successful fiscal 2019. Thank you for your continued interest in HD Supply.
And I'd like to turn the call over to Christie for questions.
Operator
Thank you. (Operator Instructions). Our first question is from Julian Mitchell with Barclays. Your line is open.
Jason Makishi -- Barclays Investment Bank -- Analyst
Hi guys. This is Jason Makishi on for Julian.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning.
Jason Makishi -- Barclays Investment Bank -- Analyst
Just looking at the demand backdrop, as we sort of head past Q1 into the back half of the year, how do you think about demand, particularly in the residential and construction markets, heading into the back half of the year, and does the guidance bake in sort of a significant moderation as you get sort of less visibility out there? I guess, what I'm trying to ask, is there any conservatism embedded in here or is this sort of the demand visibility as you have it?
Evan Levitt -- Chief Financial Officer
Yeah. So the guidance that we provided is the best information we have to date. We did reduce our expectations slightly for the residential construction market. We've previously expected that market to grow low to mid single-digits. We're now expecting that market to be flat to up low-single digits, and that is fully reflected in the guidance. We saw a slight slowdown in the fourth quarter as interest rates crept up. Now, interest rates have come down again and mortgage rates have dropped again, so we'll see whether that spurs further demand in the residential construction markets. Homebuilder sentiment improved a bit over the last month or two, so we'll see if that translates to a stronger residential construction market.
Keep in mind, residential construction is about 20% to 25% of our Construction & Industrial business. We're really more a non-residential construction shop, but we do have some exposure to residential, particularly in California and in the Southeast part of the United States. And we've also increased our guidance range, you may have noticed from -- for the full year from $40 million to $50 million, reflecting some of that uncertainty we see in the marketplace.
Jason Makishi -- Barclays Investment Bank -- Analyst
Understood. And just on the back of that the EBITDA guidance, could you just talk to any sort of dynamics as you've seen them evolve in terms of operating leverage, particularly around the Facilities Maintenance business, anything that you've seen as to call out as a tailwind or a headwind that might change, how you're thinking about these targets?
Evan Levitt -- Chief Financial Officer
Yeah. Look, we certainly expect to grow the business profitably, and when we say grow the business profitably, that means to continually expand our EBITDA margins. So we did that in 2018, particularly in Facilities Maintenance in the fourth quarter, we were very pleased with that. There will be some variation based on product mix and vertical mix as we grow our business, but we do expect to continue to expand EBITDA margins and that's reflected in the guidance as well.
Jason Makishi -- Barclays Investment Bank -- Analyst
Great. Thank you very much.
Operator
Thank you. And our next question is from Deane Dray with RBC Capital Markets. Your line is open.
Deane Dray -- RBC Capital Markets -- Analyst
Thank you. Good morning, everyone.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning.
Evan Levitt -- Chief Financial Officer
Good morning.
Deane Dray -- RBC Capital Markets -- Analyst
Hey, I also want to welcome back Charlotte and congrats on her little baby boy, Arla (ph).
Charlotte McLaughlin -- Senior Manager, Investor Relations
Thank you, Deane.
Deane Dray -- RBC Capital Markets -- Analyst
Hey, first question, just to clarify on the February weather event, so we've been through this before. Your expectation on C&I to do a catch-up here, you guys are not in a restaurant business where if you miss a snow day, people will go back and eat two meals. But for C&I, these projects just go into a catch-up. Is there -- is that the expectation here you'll see over time and how quickly does it typically catch up?
Evan Levitt -- Chief Financial Officer
Yeah. So, Deane, we typically do catch up some of what we lost, but some gets pushed indefinitely. In the construction industry, there's only so many daylight hours in a day, so there's only so much work that can be done in any given day. Certainly, our customers will try to catch up to the extent possible. And we will be there, serving them to assist them in any way we can, which in some regards create some incremental cost for us as well in terms of overtime running additional truck routes. So it does put a little pressure on our SG&A rate as we work hard to stay in lockstep with our customers. So there'll be a little bit of catch up, which is reflected in the guidance for the balance of the first quarter. And some of the miss time when you have as much rain in California as we had, some of that just delays projects and everything gets pushed a bit. So I guess, the answer to your question is, some slight catch up and some project push.
Deane Dray -- RBC Capital Markets -- Analyst
Great. That's the color I was looking for. And then on the wind-down on the investment spending, how are you measuring the returns? It looks like you're starting to get that the type of returns, both like -- you know, on the website, that is being accessed, and so how do you measure that? And then what is -- as you ramp down, what's the normalized spend in this area, so we get a sense of what that delta is? Thank you.
Evan Levitt -- Chief Financial Officer
Yeah. So first on the return on our investment, we -- internally, we monitor each individual project that we're investing in, and measure its success. And each project has key -- key metrics that we watch, whether it's clicks on a website, conversion of a cart in a website through an order or sales through a certain sales channel. So we watch that project-by-project, and work hard to make sure that we get the return that we originally expected, and if not we go back and understand why, and work that project if appropriate to realize that return.
Now, the returns we're getting on those projects, project-by-project also inform where we're going to invest in the future. So where we're seeing good returns, those are areas where we'll continue to invest and continue to work with the customer in understanding what they're looking for and improve their customer experience in areas where we may be falling short in an investment, or areas where we'll limit our investment going forward. So that is a very important part of our investment strategy. And I agree with you, we are starting to see some of those benefits. And we think we're in the early stages of seeing some of those benefits.
Now, in terms -- in terms of how much we invest on an ongoing basis than the normal run rate, I think, we're at that normal run rate now, so that additional $12 million that we invested last year, we don't get that back, because that's now baked into our normal SG&A run rate. And a much of that cost was the cost of additional talent, and licensing fees for certain technologies that we acquired, so those costs will continue into the future. But we don't need to step them up again. So the guidance and the SG&A rate, and being able to leverage SG&A as we grow, it's something that's important to us and we think we've got the right investment cadence now.
Deane Dray -- RBC Capital Markets -- Analyst
That's real helpful. Thank you.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. Our next question is from Ryan Merkel with William Blair. Your line is open.
Ryan Merkel -- William Blair -- Analyst
Thanks. Good morning and a nice quarter, guys.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning. Thanks for that.
Evan Levitt -- Chief Financial Officer
Thank you.
Ryan Merkel -- William Blair -- Analyst
So my first question is on the first quarter EBITDA guidance for 5% growth, can you just give us some details and why margins look to be lower in both segments?
Evan Levitt -- Chief Financial Officer
Yeah. It's a good question. And it's what I alluded to previously when you do catch up -- when you are in a catch-up phase, you do incur additional costs for overtime contract labor and other incremental costs to ensure that we're available to serve our customers as they try to catch up. Now, in addition to that, in the month of February, with C&I having sales contracted, when you have a contraction that's not expected, you've got the SG&A cost that you've incurred in the expectation of a normal quarter. So we don't get a lot of warning that it's going to be a rainy month. So we're fully staffed, we're ready to serve the customer. And when the job sites aren't open because they're flooded or because of significant rain, we incur that incremental cost without the sales. So it does put pressure on our SG&A rate. It's only temporary, but it does put pressure on it.
Ryan Merkel -- William Blair -- Analyst
Got it. So just to summarize, it sounds like it's mostly in the C&I business, impacting the first quarter and the FM business for margins is looking a little better, probably some expansion year-over-year, is that fair?
Evan Levitt -- Chief Financial Officer
Yeah. That is a fair assumption, yes.
Ryan Merkel -- William Blair -- Analyst
Okay, great. And then on the FM organic growth, again really solid performance, can you just give us some details on the sources of growth, either by geography or initiative or products?
Evan Levitt -- Chief Financial Officer
Yeah. We're seeing strong -- we're seeing strong growth across the country, and in particular, in the Facilities Maintenance business in the fourth quarter, we were very pleased with our multi-family vertical. The multi-family business was strong. That also contributed to the strong margin performance in the fourth quarter. The multi-family vertical is a stronger margin vertical than say hospitality, so normally when we talk about headwinds, we talk about hospitality growing than multi -- faster than multi-family. Multi-family had a strong quarter, so we were very pleased with that.
Ryan Merkel -- William Blair -- Analyst
Perfect. Thanks, Evan.
Operator
Thank you. Our next question is from Evelyn Chow with Goldman Sachs. Your line is open.
Evelyn Chow -- Goldman Sachs -- Analyst
Hi. Good morning, guys. Just returning to...
Evan Levitt -- Chief Financial Officer
Good morning, Evelyn.
Evelyn Chow -- Goldman Sachs -- Analyst
...good morning. Just returning to the FM operating leverage and margin performance in the fourth quarter, obviously, great to see. Maybe just clarifying one aspect. I know, mix had been a headwind for you in the earlier part of the year and you called out strengthened mix in 4Q. Beyond multi-family being strong, is there anything else driving that? And secondly for fiscal '19, would you expect that mix continues to be a positive?
Evan Levitt -- Chief Financial Officer
Yes. The other mix area, Evelyn, that benefited us in the fourth quarter was property improvement, which we called out as a headwind in quarters two and three. Property improvement grew about the same as the Company average, slightly less and so property improvement is a lower margin category or lower margin business as well. And so that improved our performance on overall margins.
Also keep in mind, in the fourth quarter, property improvement is out of season. So the big seasons for property improvement are the second quarter and the third quarter, generally over the summer months when folks are moving. So it's -- it always -- it's always lighter in the fourth quarter, but didn't grow -- it grew, but not as quickly as the balance of the business. And that business also is going to be a little more uneven than the core business, just because it's product -- it's project-based. So as those projects come, we have a big property improvement quarter. When we're anniversarying a big project quarter, we'll have a light property improvement quarter. So that'll be a little uneven.
Evelyn Chow -- Goldman Sachs -- Analyst
That all makes sense, Evan. And then maybe just turning into non-res, it sounds like outside of the split in February, you feel pretty good about the end market, and you cited a number of areas where projects continue to be strong. It's a little at odds with the Dodge Data we've been seeing where I think, in the past three or four months, it's actually been down year-over-year. So I'd like to just get a little bit more context from what you are seeing to give you that confidence in the strength.
Evan Levitt -- Chief Financial Officer
Yeah. There's certainly mixed data points out there, when you look at economic data. And so we look at all those data points as well, and as you said, the Dodge Data has been a little weak. If you look at the construction put in place data for non-res that's been published by the U.S. Census Bureau, it's been quite good. So there is that variance in third-party data. Like I said, we look at it all as well as having conversations with our vendors and our customers. But the best data that we get surveying our own people in each of our markets in which we operate and we see a lot of product -- a lot of project activity. There is half a dozen major airport expansions and renovations occurring across the country, multiple large sports and entertainment complexes or stadiums being built, data centers and distribution centers, corporate headquarters. So these are all big projects that, as I said in the prepared remarks, not only do we get the benefit of those big projects, but we get the benefit of all the small projects and the construction activity that occurs around those areas of development. So we feel good about the residential -- about the non-residential construction market.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Yeah. We had World of Concrete at the end of January, and I had the opportunity to meet with hundreds of customers, suppliers, hundreds of our own associates, and universally, the non-res construction market for all 15 priority districts, look very solid.
Evelyn Chow -- Goldman Sachs -- Analyst
Thanks guys. I'll get back in queue.
Operator
Thank you. Our next question is from Patrick Baumann with JPMorgan. Your line is open.
Patrick Baumann -- J.P. Morgan -- Analyst
Hey, guys, good morning. Thanks for taking my call.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Good morning.
Evan Levitt -- Chief Financial Officer
Good morning.
Patrick Baumann -- J.P. Morgan -- Analyst
A couple -- maybe I'll just start off on the free cash flow guide for '19, which looked a little bit better than you're expecting. Is there anything unusual to highlight for the year along the lines of the dynamics you talked about 2018, any pluses or minuses just to highlight?
Evan Levitt -- Chief Financial Officer
The only big unusual item or new item is becoming a cash tax payer, so we now expect to pay $65 million to $75 million in cash taxes in 2019, versus $13 million that we paid in 2018, so that is certainly a headwind. But the kind of the framework we've given in the past on free cash flow is to take EBITDA, subtract cash interest, which call it, $105 million, $110 million, subtract 2% of sales for CapEx, the $65 million to $75 million in taxes, and then we estimate about 18% of sales growth for working capital investment, and that should get you pretty close.
Patrick Baumann -- J.P. Morgan -- Analyst
Okay. So nothing along the lines of the -- you know, the plus -- the puts and takes that are unusual for 18, that are going to impact '19 apart from those factors?
Evan Levitt -- Chief Financial Officer
Yeah. No other impact. Absolutely (ph) .
Patrick Baumann -- J.P. Morgan -- Analyst
Yeah, fair enough. In terms of your gross margin outlook for '19, should I assume you continue to view stable as the benchmark, and then just along those lines, how do you think pricing is going to develop for the year with what your expectations are?
Evan Levitt -- Chief Financial Officer
Patrick, (ph) actually we still -- we still continue to believe that a flat gross margin is good performance, that's our target, if we can eke out 10 basis points here and there of improvement, that's great. If we go backwards by 10 basis points or 20 basis points in any given quarter, that's not unexpected either. And in terms of the pricing environment as I shared, we did take up some prices, reflecting some increases in cost inputs that we saw late in 2018. We'll continue to monitor the market, continue to manage our costs. And the expectation is, if we have additional cost increases, we work hard to offset them, and then we'll pass along anything we can offset in price as the markets allow. And as of now, it looks like our competitors are taking a similar approach.
Patrick Baumann -- J.P. Morgan -- Analyst
Got it. And then just last one for me. In terms of C&I, a bunch of questions on this already, but -- so down 2% in February, it looks like for total Company, you're still expecting mid-single digit organic growth for the quarter. And I guess, I'm just wondering what kind of visibility you have to add or what gives you confidence that you can pick back up to kind of get there after the weather impacted the C&I business in Feb?
Evan Levitt -- Chief Financial Officer
Yeah. So obviously the guide reflects an improved March and April, and that's our expectation based on improving weather in the break of spring. So -- and what gives us confidence in that is the areas where we've not seen significantly bad weather, like the Southeast, like some of the Texas markets, our growth has been very good, and very much in line with our expectations in our recent trends.
Patrick Baumann -- J.P. Morgan -- Analyst
Got it, makes sense. Okay. Thanks a lot, guys, congrats on a good year.
Evan Levitt -- Chief Financial Officer
Thank you.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. Our next question is from David Manthey with Baird. Your line is open.
David Manthey -- Baird -- Analyst
Hi, good morning, guys.
Evan Levitt -- Chief Financial Officer
Hi David.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Hi David.
David Manthey -- Baird -- Analyst
First off, could you put a finer point on the price increases, Evan, what are your expectations for each of the two segments?
Evan Levitt -- Chief Financial Officer
Yeah. So for Facilities Maintenance, like I said, we did institute some price increases, not overly significant. I'd say, it would be less than a 100 basis points worth of price increases on total Company. But we look at it -- we look at it very methodically, category-by-category, SKU-by-SKU looking at where we're priced relative to where the competition is priced, relative to any cost pressures we see, and price appropriately to remain competitive, and to continue to ensure that, that we're providing compelling value to the customer. We think we can do that and maintain gross margins.
On the Construction & Industrial basis, a little different -- a little different business for Construction & Industrial since it's a bid-based business. So every bid is different and every bid is very competitive, so we have to stay price-sharp in order to win those bids. And then we work hard to maintain and develop relationships with our contractors to get them to visit us, to get them to come into our branch locations where we can sell them the consumables for the job, the saw blades, the drill bits, the work gloves, the things that keep the job running that aren't necessarily bid and tend to have a little higher margin. So we do think flat gross margins in this environment is good and we do think we can execute on that.
David Manthey -- Baird -- Analyst
Okay. So it sounds like low-single digit should be the expectation there, maybe in both segments?
Evan Levitt -- Chief Financial Officer
For price increases?
David Manthey -- Baird -- Analyst
Yes.
Evan Levitt -- Chief Financial Officer
I'd say that -- that'd be on a high -- that'd be higher than on our expectation.
David Manthey -- Baird -- Analyst
Flat to low-single digits?
Evan Levitt -- Chief Financial Officer
Flat to low-single digits is fine, yes.
David Manthey -- Baird -- Analyst
Got it, OK. And then on the new distribution center, could you talk about the financial dynamics there? Is that leased or owned? And how do the operating cost, depreciation whatever flow through the P&L here in fiscal '19? And then if you could also talk about the working capital drain, I would assume there'll be a ramp up of inventory there, and how would that look on the balance sheet this year?
Evan Levitt -- Chief Financial Officer
Yeah. So all good questions. So first in terms of the structure of that facility, it is a long-term operating lease, so we generally like to lease those large facilities with 10 to 20 year leases, and then options beyond that period, so that we control the facility for quite some time as it is a big investment for us. And so that rolls through the P&L as rent expense. As far as our investment in the facility in terms of leasehold improvements, racking equipment, that is part of the CapEx, the 2% CapEx, or 2% of sales for CapEx that I shared, and then that gets depreciated for the book purposes over the life of the asset. For tax purposes, some of that can be depreciated immediately and deducted on our 2019 return, some of it gets deferred and is depreciated over time for tax purposes.
As far as rent expense, it does put a little pressure on rent expense. Any time that we move into a new larger facilities like that or renew a lease on a long-term facility, we typically see an increase in rent. And the accounting rules are such that the -- we expense the average rent over the initial lease term, so for the 10 year lease, even if it's got rent escalations over the course of the year, you expense the average rental cost for that 10-year period, each year. So then when you renew it 10 years later, you're getting a step-up to market value 10 years later. And so that does put some pressure on rent expense. And it's baked into the guidance, but those are costs that we have to overcome as we grow. And that's not unique for 2019, that happens every year.
David Manthey -- Baird -- Analyst
Okay. And then -- so -- and then the -- the working capital drain, anything you can discuss there?
Evan Levitt -- Chief Financial Officer
Yeah. So working capital, as we move into that facility and open that facility, we may carry slightly more inventory for a short period, but actually over time, we hope that, that gives us the ability to reduce working capital, by better managing inventory, not only in Atlanta, but throughout the Southeast as we run line hauls between Atlanta and several other smaller markets in the Southeast, enables us to be a little more efficient with our inventory in the additional space.
David Manthey -- Baird -- Analyst
That's great. Thanks, Evan.
Operator
Thank you. Our next question is from Robert Barry with Buckingham Research. Your line is open.
Robert Barry -- Buckingham Research -- Analyst
Hey, everyone, good morning.
Evan Levitt -- Chief Financial Officer
Good morning, Rob.
Robert Barry -- Buckingham Research -- Analyst
Congrats on a solid finish to the year.
Evan Levitt -- Chief Financial Officer
Thank you.
Robert Barry -- Buckingham Research -- Analyst
So back in 3Q, you were talking about EBITDA growing 9% to 10%, and now it's growing 8%; I think, the math is maybe like $12 million less. Is that all the weather in February or is there other factors affecting that?
Evan Levitt -- Chief Financial Officer
Yeah. So it's the slow start to the year in February and the weather, and obviously you can see the guide for Q1 reflects that as well. And we did take the resi construction market expectation down slightly, but then we as you -- as we also talked about, we've broadened the range for EBITDA, we're certainly not giving up on that 9% to 10%, we are going to work hard for it. But we're calling it the way we see it right now and the mid-point is our best expectation.
Robert Barry -- Buckingham Research -- Analyst
Got it. And do you have an estimate for how much weather impacted growth in Feb?
Evan Levitt -- Chief Financial Officer
Yeah. So we think in our Construction & Industrial business, in the month of February, probably $14 million to $15 million is what our expectation is for -- just for C&I.
Robert Barry -- Buckingham Research -- Analyst
And any in FM?
Evan Levitt -- Chief Financial Officer
FM, would be minimal. I mean, we did have some disruptions, particularly in markets like Seattle, where we saw a significant ice and couldn't run trucks, but generally we're able to catch up pretty well. So, while it may have had a modest impact, it's not something that we specifically thought out.
Robert Barry -- Buckingham Research -- Analyst
Got it. Just lastly, could you just say what -- if you put aside rebar, what price-cost was in the quarter, and maybe just differentiate between kind of pure price versus product cost, and more broadly price and productivity versus inflation, freight, labor et cetera? Thank you.
Evan Levitt -- Chief Financial Officer
So excluding rebar and A. H. Harris, our gross margins would -- for the total Company would have been about flat, up to about 10 basis -- I think, up 10 basis points is where we've landed for the year. So price and cost pretty well balanced outside of A.H. Harris, which is more of a mix issue than anything else, and the rebar exposure, which is diminishing as we start to anniversary that increase in costs.
Robert Barry -- Buckingham Research -- Analyst
All right. Thank you.
Evan Levitt -- Chief Financial Officer
Thanks, Rob.
Operator
Thank you. Our next question is from Hamzah Mazari with Macquarie. Your line is open.
Mario Cortellacci -- Macquarie Group -- Analyst
Hi guys. This is actually Mario Cortellacci filling in for Hamzah. How are you?
Evan Levitt -- Chief Financial Officer
Good. How are you?
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Great.
Mario Cortellacci -- Macquarie Group -- Analyst
Good. Just quick on your FM business, can you give us a sense as the business is different structurally versus prior cycles that -- like maybe for example, it's even more critical mass in certain verticals or maybe you're using more data or maybe you have a tighter go-to-market strategy. Just trying to see if there's any changes versus prior cycles, and maybe what that looks like longer term as well?
Evan Levitt -- Chief Financial Officer
Well, certainly, we've got better visibility into the market and to our customers, and better use of data. We're able to evaluate our pricing relative to the market and our competitors on a near-daily basis by SKU. That is something new over the last couple of years and we previously did not have that. Now, as the business grows, our hospitality vertical is bigger than it was in the past, that's a newer vertical for us, and so that -- you know, we continue to grow share in that vertical faster than in our multi-family vertical. And beyond that, I think, the business is pretty similar to where it was in the past. Obviously, we're making it better all the time. We're getting closer to our customers and understanding our customer better. Our private -- our proprietary brand penetration is a little higher. But that's how I'd view it.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Yeah. Look I think, structurally the business is the same and we are the leader in this space, and we'll continue to extend that leadership via customer experience. And now we have a steady state year of investment that we can look forward to kind of forever, and we'll just continuously invest that and making sure that we create a customer experience and extended competitive advantage. So it's going to be a pretty simple story going forward.
Mario Cortellacci -- Macquarie Group -- Analyst
Got it. And then just a quick question on the potential China trade deal. Does that end up being a positive for you? Or because of the work that you've done in managing through the tariff situation, does it end up just being a net neutral if we do get a trade deal?
Evan Levitt -- Chief Financial Officer
Yeah. We're comfortable operating in any environment that comes at us. We believe we're -- being the largest in both of our markets that we've got the ability to properly source and price product best for our customer segment, and we can be nimble. So we're not afraid of any environment, we'll react to it as it occurs. Current environment quite frankly is just fine. We're very pleased with it and are happy to compete and execute in this environment.
Mario Cortellacci -- Macquarie Group -- Analyst
Got it. Thank you.
Operator
Thank you. Our last question is from John Inch with Gordon Haskett. Your line is open.
John Inch -- Gordon Haskett -- Analyst
Thank you. Good morning, everybody.
Evan Levitt -- Chief Financial Officer
Hi John.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Hi John.
John Inch -- Gordon Haskett -- Analyst
Good morning, guys. And Charlotte, congratulations.
Charlotte McLaughlin -- Senior Manager, Investor Relations
Thank you.
John Inch -- Gordon Haskett -- Analyst
So if these tariffs come off for whatever reason in the future, how does that work? Do you guys have to ultimately reverse and take prices down, or do you think you can kind of just keep it absorbed like how -- what's your expectation?
Evan Levitt -- Chief Financial Officer
Yeah. So John, as I shared, the price increases we've taken so far less than a 100 basis points on the total business, so it's not overly significant. And then it all depends on the market and other cost pressures as well, right. The tariffs are one component of cost. We do see other components of cost, and beginning to rise as we appear to be entering a more inflationary environment. And the last month or two of data that's come out has indicated that maybe the inflation fears have been overblown, but I think, there's still some inflation out in the marketplace. And so it all depends on the market. As I said, we've got the ability now to be monitoring price SKU by SKU where we're priced relative to our competitors. And we're going to -- we are going to remain competitively priced, and we'll offer compelling value to our customers at whatever price that is. So I wouldn't assume that prices come down if tariffs roll off, that could be the outcome, it all depends on other cost inputs and the market dynamics.
John Inch -- Gordon Haskett -- Analyst
Yeah, and what competitors do. No, that's fair. Facilities Maintenance core growth in Jan, step down 6 points, and I'm curious, do you guys think that there might have been some pre-buying in December, did you observe that in the FM business? I'm not quite sure what the context of that would be, but maybe to get ahead of some of the anticipated cost increases or maybe not, I'm not sure. Just what do you think the dynamics were kind of December through January in Facilities?
Evan Levitt -- Chief Financial Officer
Yeah. So December and January, always difficult to measure because of the holiday period. So if you look back historically, we've got significant move between December and January, and so oftentimes what we'll do is, we'll combine the two and look at them combined as a holiday period. This year, in particular, January was a tough year because of the holiday shift, so Christmas Eve and New Year's Eve on a Monday this year, Facilities Maintenance was open and making deliveries, but as you can imagine, business was light on Christmas Eve and New Year's Eve falling on a Monday. Last year, Christmas Eve and New Year's Eve fell on a Sunday, so everybody was closed anyway. So we have some pretty significant holiday shift. And keep in mind, for our fiscal calendar, both Christmas and New Year's fell in fiscal January. So that's kind of some of the dynamics around the holidays, while oftentimes we'll look at December and January together.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
But John, we did not see anything abnormal relative to folks rushing to buy in the calendar year. We didn't see anything like that.
John Inch -- Gordon Haskett -- Analyst
Yeah. Well, that would make sense. So I wouldn't understand the context of FM pre-buying. Just lastly, I want to go back to the point that someone raised about sort of the mix, I think, Evan you even said the non-resi stats were mixed. And it's always easy to look at the positive non-resi stats versus the more mixed ones or negative ones. And I think, you gave a good read on your own customer set. Maybe if you could flesh that out a little bit, sort of the pipeline of activity, maybe talk a little bit about like what's book-to-bill, and how long do these projects go on for if you never booked any other projects? I mean, do you have a two-year run ahead of you, or what's -- what gives you the confidence to not be a little bit more cautious at this point in the cycle when debatably there might be a little bit of peaking going on in the macro?
Evan Levitt -- Chief Financial Officer
Yeah. So John, hard to answer because some projects do have a two or three year run, others are six months. So certainly as -- the further out you go, all right, the less build that you have. But we don't see the slowdown in the activity. We've got the airport in Chicago, O'Hare, hasn't even begun yet. That's an $8.5 billion project over the next eight years. Sea-Tac in Seattle, that project is still in the planning stage, that's going to be a multi-billion dollar project. We've got corporate headquarters that have been announced in the Washington area, significant investments in New York and Austin from some of the big tech players. And these are all just recent announcements, work that is just now beginning or has not yet begun.
John Inch -- Gordon Haskett -- Analyst
Good stuff. Thanks guys, appreciate it.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. And that does conclude our Q&A session for today. I'd like to turn the call back over to Mr. Joe DeAngelo for any further remarks.
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Well, great. Well, thank you for your question. In summary, on page 16, 2018 was a fantastic year. The team is focused and energized to continue to deliver for our customers, associates, shareholders and communities. Thank you for your continued support of HD Supply.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude today's program and you may all disconnect. Everyone, have a great day.
Duration: 68 minutes
Call participants:
Charlotte McLaughlin -- Senior Manager, Investor Relations
Joseph J. DeAngelo -- Chairman and Chief Executive Officer
Evan Levitt -- Chief Financial Officer
Jason Makishi -- Barclays Investment Bank -- Analyst
Deane Dray -- RBC Capital Markets -- Analyst
Ryan Merkel -- William Blair -- Analyst
Evelyn Chow -- Goldman Sachs -- Analyst
Patrick Baumann -- J.P. Morgan -- Analyst
David Manthey -- Baird -- Analyst
Robert Barry -- Buckingham Research -- Analyst
Mario Cortellacci -- Macquarie Group -- Analyst
John Inch -- Gordon Haskett -- Analyst
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