Good day, ladies and gentlemen, and welcome to the CDW Third Quarter Earnings Call. At this time, all participants are in a listen only mode. Later, there will be question-and-answer session and instructions will follow at that time. I would now like to turn the conference over to Tom Richards, Chairman and CEO. Sir, you may begin.

Thank you, Shannon. Good morning, everyone. Joining me on the call today are Collin Kebo, our Chief Financial Officer; Chris Leahy, our Chief Revenue Officer and soon to be Chief Executive Officer; and Sari Macrie, our Vice President, Investor Relations. I'll begin today's call with a brief overview of our results and the key drivers. Chris will run you through our sales performance and then Collin will then take you through a more detailed review the financials. Then we'll go to your questions. But before we begin, Sari will present the company's Safe Harbor disclosure statement.

Thank you, Tom and good morning, everyone. Our third quarter earnings release was distributed this morning and is available in our website investor.cdw.com along with supplemental slides that you can use to follow along with us during the call. I'd like to remind you that certain comments made in this presentation are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Those statements are subject to risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in the Form 8-K we furnished to the SEC today and in the company's other filings with the SEC. CDW assumes no obligation to update the information presented during this webcast. Our presentation also includes certain non-GAAP financial measures, including non-GAAP earnings per share. Our non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation charts in the slides for today's webcast as well as in our press release and the Form 8-K we furnished to the SEC. Please note that all references to growth rates or dollar amount increases in our remarks today are versus the comparable period in 2017 unless otherwise indicated. In addition, all references to growth rates for software, hardware and services today represent U.S. net sales only and do not include the results from CDW UK or Canada. Also note that all 2018 and 2017 net sales amounts are reported under accounting standard ASC 606. The number of selling days were the same for both the third quarter and year-to-date in 2018 and 2017. All sales growth rate references during the call we will use average daily sales rate unless otherwise indicated. A replay of this webcast will be posted to our website by this time tomorrow. I also want to remind you that this conference call is the property of CDW and may not be recorded or rebroadcast without specific written permission from the company. And with that let me turn the call back to Tom.

Thanks, Sari. It's a pleasure to be with you today in what will be my last earnings call as CEO of CDW. I'm delighted to hand this responsibility off to Chris and I'm confident she will do an excellent job on future calls just as I'm confident she'll do an excellent job as she takes the reigns as CDW's new CEO on January 1. But for today, unfortunately for you, I'm at the helm and I'm very pleased to report that once again CDW posted an excellent quarter with strong sales and profitability. Results included an 11.2% increase in average daily net sales with net sales of $4.4 billion, up 11.4% in constant currency; a 9.3% in adjusted EBITDA to $355 million; and a 31% increase in non-GAAP earnings per share to $1.42. Year-to-date, we've delivered 10% net sales growth, 10% adjusted EBITDA growth and 35% non-GAAP earnings per share growth. Once again our ability to deliver this excellent performance was a result of three key drivers: Our balanced portfolio of customer end markets; the breadth of our product and solutions portfolio; and our ongoing execution against our three-part strategy. Let's take a look at how each of these drivers help deliver profitable growth this quarter. First our balanced portfolio of customer end markets. As you know, we have five U. S. sales channels: Corporate which serves customers with coworkers from roughly 250 and up; small business which asserts customers with roughly 20 to 250 coworkers, healthcare government and education. Inside each channel we have teams focused on specific customer end markets. For example in government we have federal and state and local teams. Each one of our U.S. channels generated more than $1 billion in 2017. We also have our Canadian and UK operations which together delivered more than $1 billion in 2017 also. The beauty of our unique customer end markets is that they often act in a countercyclical way given the different macroeconomic and external factors that impact each. This quarter each of our five U.S. sales channels as well as our UK and Canadian local markets results increased high-single digits or better. Within a couple of these channels customer end market performance was mix but overall growth was very strong, a testament to our balance. Chris is going to take you through how each of the customer end markets performed. Chris?

Thank you, Tom. Good morning, everyone. Our corporate team delivered a 10% increase in the quarter. Strong economic growth and full employment kept client devices front and center for Corporate customers. So while lapping last year's double-digit growth in client devices, this quarter client devices increased more than 20%. This contributed to excellent high-teens transactional growth. Solutions increases in the mid-teens in two of our end markets were offset by softness in other end markets as they faced tough compares and overall Corporate solution sales were flat. Small Business delivered an 11% increase. Customers in this space were very optimistic in the quarter about the economy and their business prospect and that certainly came through in their buying. In addition to customer enthusiasm, we also benefited from ongoing success aligning solutions resources and enhancing our focus in go-to-market approach. So while we saw high-single digit growth in transactions, we were very pleased to see solutions grow nearly twice as fast, driven by meaningful increases in security, storage and servers. Public performance was strong across all three of our large customer channels. In total, up 11%. Transactions posted solid results with mid-single digit growth. Solutions delivered excellent results, increasing high teens more than twice the rate of transactions. Our Government channel increased 8%. The state and local team delivered mid-teens growth driven by ongoing success executing against new and existing contracts as well as continuing to meet public safety needs. Federal delivered a low-single digit increase. These are excellent results given the tough comparisons the team has faced throughout the year as a result of their success in 2017 meeting DoD demand for Win 10 devices and those comparisons are even larger in the fourth quarter. The federal team drove excellent solutions performance this quarter delivering a mid-teens increase. In particular,…

Clearly, this quarter's results demonstrate the power of the first driver of our performance; our balanced portfolio of customer end markets. It also demonstrates the power of the second driver of performance, our broad portfolio of more than 100,000 products and solutions from more than 1,000 leading and emerging partners. This quarter, we had excellent balance across transactions and solutions with both increasing in line with total company growth. We also had balanced performance across hardware, software and services, all posting double-digit increases. Hardware growth of 10% was fueled by both transactions and solutions. In transactions, we delivered another double-digit quarter of growth in client devices as well as high-single digit growth in video. This was our ninth consecutive quarter of double-digit growth in client devices, the longest refresh streak in recent history. On the hardware solutions side, NetComm increased mid-single digits. While much of the growth was driven by E-rate, we also saw high-single digit or better growth in federal, state and local, Small Business and Healthcare. Data center results were excellent with double-digit growth in servers, driven by execution against programs, focused on modernization and enterprise storage, driven by new architectures. New architectures are also driving software performance as it becomes a larger component of IT solutions. You clearly see that in our software performance this quarter with network management, virtualization and security coming in as our top three software growth categories. In total, software increased 11%. Services increased 12%, led by field implementations, which was driven by several large projects as well as warranties attached to our client devices. The third driver of our performance this quarter is our ongoing execution of our three-part strategy. Our first strategy is to acquire new customers and capture share. This is all about driving productivity and making it easier for…

Thanks, Tom. Good morning, everyone. We delivered another quarter of strong results consistent with our long-term financial strategy to drive strong cash flow, deliver sustained profitable growth and return cash to shareholders. Before I get started, I'd like to remind you that all financial information I will review reflects the adoption of ASC 606. So it is an apples-to-apples comparison for 2017 and 2018. Turning to our P&L on slide eight. Consolidated net sales were $4.4 billion or 11.2% higher than last year on a reported and average daily sales basis. In constant currency, consolidated net sales grew 11.4%. During the quarter we saw currency impact reverse moving from a tailwind of 60 basis points in Q2 to a headwind of 20 basis points. The impact was primarily driven by unfavorable translation of the Canadian to U.S. dollar. Sequential average daily sales growth was 6%, roughly three times our historical Q2 to Q3 average. Gross profit for the quarter increased 11.1% to $714 million. Gross margin in the third quarter was 16.3%, flat over last year. Gross margin was positively impacted by product margin improvement. This was offset by year-over-year net sales growth outpacing the year-over-year growth in partner funding. Turning to SG&A on slide nine. Our adjusted SG&A including advertising increased 12.5% compared to last year. Adjusted SG&A grew faster than sales as a result of performance-based compensation consisted of higher attainment against goals and strategic investments funded by tax reform. Coworker count was up roughly 215 since the third quarter of 2017 to 8,937. Adjusted EBITDA for the quarter was $355 million, an increase of 9.3% compared to the prior year quarter. This resulted in an adjusted EBITDA margin of 8.1%. Looking at the rest of the P&L on slide 10. Interest expense in the quarter was $37…

Thank you. Our first question comes from Amit Daryanani with RBC. Your line is open.

Good morning, Amit.

Amit your line is open. Please check your mute button.

Hi. This is Amitesh for Amit Daryanani. Thanks for taking our question.

Good morning.

So based on the 2018 target of like roughly 9%, December quarter, as per our math, is probably like sequential decline in 8% to 9% which is above the seasonality, which is like 4% to 5%. So what is the challenge here? Is it the comps or are there any other headwinds there?

Well, I think if you think about – there's a couple of things. One is, I think I'll start by saying, we feel good about the fourth quarter. I think part of the challenge for us is how good the third quarter was. And if you talk about what happened we had a number of events that kind of simultaneously improved the performance in the third quarter. So first was, think about that K-12 Chromebooks that didn't get out in the second quarter. We expected them to get out in the third and fourth quarter and they all got out in the third quarter. Then there was, what I'll call, the return to norm of the E-rate process, which last year had a tendency to drag out because it took a while for the funding letters to get done. This year it was efficient and on time, and all of that got done in the third quarter. And then I think to your point, the last thing that we think about is just the federal sales organization and you heard Chris alluded to the comps they've been fighting. I mean, those three things kind of explain why they might appear to be bigger than normal deceleration but I'll take it if it comes on the heels of such a strong third quarter.

Perfect. I guess, if you could just have a follow-up on that Tom or Collin. If I look at your overall leverage today, it's below this 2.5 to 3.0 times target that you guys have talked about. And given the strong free cash flow generation you guys would expect for the next several quarters, do you think that leverage is going to keep going below the target ranges? Or do we just have to think that buybacks perhaps could be ahead of what the total free cash flow generation is? Just walk through the free cash flow generation, how you use it, given the fact you're below your leverage targets right now. And then best of luck in your future Tom.

I'll say thank you and then I'll let Collin answer the question.

Thank you, Tom. Yeah. as I said in my prepared comments, we continue to believe 2.5 to 3.0 times is the right leverage ratio. When we thought about the plan for 2018, we built it assuming the first quarter and the fourth quarter would be our strong free cash flow quarters. And when you look at history, third quarter, fourth quarter timing can be a little volatile and what we saw was more of that free cash flow show up in the third quarter than we had originally planned. So I think of that as just timing versus the fourth quarter. I would expect us to – as we cycle through the fourth quarter and follow our capital allocation plans and free cash flow timing normalizes that we would be closer to that lower end of the range over time.

Perfect. Thanks.

Okay.

Thank you. Our next question comes from Matt Sheerin with Stifel. Your line is open.

Good morning Matt.

Thank you. Good morning, Tom and everyone. Just a question regarding your comments on the PC refresh cycle which, as you pointed out, has been strong for a few quarters now. And there's also talk about that (35:23) because with Microsoft dropping support for Windows 7 in early 2020 and this conversion to Windows 10, what are your thoughts on that? Are you having conversations with customers about that? Do you think there's more legs to this cycle here?

Yeah, Matt. There's a lot I think that we need to think about when it comes to the continuation of the PC refresh. I mean there are all kinds of discussions going on with customers. And as you can imagine, they run the gamut of gee, I'd like to stay on Windows 7. How do I do that? Can I accomplish that? Is there a possibility of buying ahead? Is there a possibility of buying Win 10 devices and then doing the downgrade? Then you have the notion of just, what's going on with the chips and should I be acquiring more inventory? I'm speaking as a customer. So I think it gets hard. We continue to feel very good. If you think about what's going on. You have full employment in the economy. That type of environment has driven what we believe is the continuation of a really strong refresh cycle in our Corporate segment, as customers need to have the technology to support the full employment environment. So I think, we would expect the refresh to continue. Maybe not at these incredible growth rates that we've experienced, but I would also say Matt, you got to step back and say, there's a lot going on over the next couple of quarters that could kind of move that one way or the other.

Fair enough. And then on tariffs. It doesn't sound like you're seeing much impact there. There does seem to be concern, particularly with networking products which could be subject to 25% tariffs in January. Again, there are you seeing any desire or conversations with customers about pulling in some inventory or product in advance of that?

Well, there are discussions as you point out. Everybody is talking about it. I think in some cases, people have already increased their purchasing. I believe we saw some of that in the third quarter. I can't prove that. But I don't believe we're having what I would call a mass trend of people – I wish we were kind of – mass trend of people saying, can we acquire NetComm equipment in the fourth quarter? I don't believe we've seen that in mass yet.

Okay. All right, thanks a lot.

All right. Thanks, Matt.

Our next question comes from Shannon Cross with Cross Research. Your line is open.

Thank you very much. My first question is just can we dig a bit more into your expectations of increased market growth and then obviously, CDW outperforming that in terms of what specific areas you're looking at whether its geographic or within some of the products in terms of what's really sort of outperforming and what you think is going to do well in the next few quarters? Thank you.

Yes. Good morning. Shannon, it's Tom. I'd say a couple of things. One, it's almost, all of the above would be probably the way to start. If you think about the quarter we just experienced and the balance of execution, not only across the segments but also across the products and solutions suite. In some ways, this is the quarter you dream about because you've got all of your segments having meaningful growth for the most part and you've got balance across all the different products and solutions; hardware, software and services. Now predicting that into the future is always a little bit of a challenge. But when we looked back over what we had accomplished to this point and assessed CDW's overall performance compared to where the market had grown, we thought it was appropriate to take up not only the market growth from what we had shared with you before, but also our outperformance. And like I said, while we're only one month into the fourth quarter and there's a number of wildcards that are sitting out there that could impact the quarter we've been thrilled with the momentum in the business.

It reminds me a lot of Microsoft's quarter in that there's very few things to pick at. So I just wonder how long it continues. I guess, my second question is just then looking again, sort of, going back to your leverage ratio and how you're below it, thoughts on acquisitions – expansion from that standpoint in terms of use of cash?

Yeah. I think we've – I don't think, as you heard Collin talk about why the leverage ratio was a little below our range. We don't think of it as that's a reason for us to go out and be aggressively looking for acquisitions. We think about acquisitions in a strategic perspective and I think I've mentioned on a number of calls, we continue to look for those opportunities that are out in the marketplace that seem to meet our strategy and have the right kind of financial picture. So I wouldn't connect the dot there that the cash flow that you saw would motivate that at this point in time. Collin, you want to add anything?

The only thing I would add on to that is we have said that if we were to do something on the M&A front we would use that as an opportunity to add some leverage and move more within the target range.

Great. Thank you. And Tom, good luck on the golf course and enjoy your era sleeping in. I'm sure that probably doesn't happen very much right now.

Those are two things that are high on the list Shannon. Thank you.

Thank you. Our next question comes from Adam Tindle with Raymond James. Your line is open.

Good morning, Adam. Adam Tindle - Raymond James & Associates, Inc.: Thanks. Good morning. I just wanted to start just kind of building off the strategic question, and if I could ask this to Chris. On one hand you've had success with obviously the UK expansion, and one could say you could copy and paste that model elsewhere. On the other hand, it looks like you might have an opportunity to pursue more solutions-oriented business and further expand outside of hardware. Can you just talk about the decision process and very best opportunity for inorganic expansion would be in your mind?

I think, Adam I'd start with where we serve, which is across the entire portfolio and what the customers need in each end market. So for example, if you take Canada, Canada was more highly transaction-oriented market and customers were talking with us more about their needs in the solutions space and we've made some significant investments in our resources out there, our technical resources, our go-to-market approach, et cetera. And have expanded the mix in that market quite heavily over the past couple of years. In the U.S., I would say it's the same thing. So, if you look across Corporate as an example and the solutions that we're selling within different end markets and the performance within those end markets, it can be while there are similarities in terms of what customers are looking for advice about, what we're actually selling can be different. And so we tend to focus at the micro-level first with the customers and their needs and then build-out very specific plans around those. Adam Tindle - Raymond James & Associates, Inc.: Okay. That's helpful. And maybe if I could just ask one demand related question, I don't know if Tom wants to answer this one. But upstream in the supply chain, obviously, we're hearing the chip companies citing slowness, downstream trends are more mixed, but obviously very strong revenue growth from CDW here today. I'm sure we'll get the question if this is the peak, especially with the sequential growth implied in Q4. So I'm hoping that you can maybe break apart some of the moving parts to Q3 and would we be seeing seasonal trends in Q4 ex the Chromebook outperformance and other things like that? Or are you implying that Q4 is actually going to be below seasonal ex those things? Thanks.

Well, I think the other thing that I mentioned in there Adam was the comps that we have in federal, which were pretty meaningful in the third quarter and will continue to be so in the fourth quarter. Because if you remember, last year we had the, what I'll call, the tail end of the Win 10 DoD flush, which was just amazing when you look back at the amount of product that moved through the system. So I think that sits on top of the growth that we talked to about what was going on in the third quarter. And the other thing is in fairness to the guys in the UK, we continue to say that the percentage of increase on their comps is incredible. And look up to this point they've done a pretty meaningful job. But you have to kind of be realistic about looking at those two scenarios and their implication. The demand in the marketplace feels good. And yes, I think you're right. You've got, well, what's the impact of the chip short is going to be. And one of the things that CDW has been able to do, it's part of our competitive advantage is because of our scale and our warehousing capability is to be very aggressive in acquiring inventory for our customers. That doesn't necessarily mean you can eliminate the total effect of a chip shortage, but it does mean you can mitigate a fair size of it. So we feel pretty good about that going into the fourth quarter. Adam Tindle - Raymond James & Associates, Inc.: Okay. Thank you.

Thanks, Adam.

Thank you. Our first question comes from Katy Huberty with Morgan Stanley. Your line is open.

Good morning, Katy. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Good morning. Thanks for the questions. I'm intrigued by the analytics campaign that you trialed in the Corporate segment this quarter. So just wondering if you can talk about whether that's something you think can extend to other segments over time and if you've been able to quantify what that could do for the business in terms of productivity or overall revenue upside over the long-term.

The answer to – I think the first answer is yes. We are excited about extending it to other parts of the business. And as you heard me saying in the formal part of it, we're going to extend it to all of Corporate next year. I think it's a natural to think about Small Business as another place where you'd have that kind of benefit but we were obviously very pleased. I'm probably not going to tell you what I think the potential would be for CDW. Although it's going to be fun to tell it and then have Chris have to deliver it, but I think I'll just pass on that and say we're very, very pleased that we think we've got a winning formula there. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Okay. Thanks. And then as memory prices come down, particularly in NAND, are you seeing that flow through to storage prices and any impact on demand? Or are vendors and yourselves sort of keeping that margin and is that part of why the product margins came up in the quarter?

No. Okay, let me start with the last one. I don't think that was the reason you saw increased product margins for us. I think more of that was the balance you saw in the business and our success of selling just solutions in mass which, as you know, tend to have higher margins and tends to bring up the product margin. I wouldn't say there is kind of a uniform response as far as the memory pricing driving demand in storage. I just think quite honestly, Katy, it's just the digitization of everything is driving storage demand and customers are in search of expanding capacity and we're just in the right place at the right time with the right number of solutions to take advantage of that. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Okay. Thanks for that. Tom, good luck in retirement.

Thanks, Katie.

Thank you. Our next question comes from Keith Housum with Northcoast Research. Your line is open.

Good morning, everybody. Thanks for the opportunity to ask question. You guys – obviously tariffs are top of mind for everybody here. Can you guys help us understand like what part of the portfolio or the product portfolio that you guys sell both solutions as well as products are going to be subject to the 25% tariffs assuming they stay in existence here the first of the year. And then the ability for you guys, I guess, to pass on increased costs, what's your thought process there as well?

Well, so even in the first part of the tariff trilogy so to speak, we have been able to pass along those costs not literally but for the most part to customers because we operate in a cost plus environment. Again here, although you're always gated by competitive response but so far we've been able to do that. I think in the back half, you're going to see products if in fact it goes in like desktops and I think NetComm are a couple that people who have talked about pretty frequently that that could be impacted if the next shoe drops so to speak on the tariff. But again we'll approach it the same way as far as passing along costs to customers, again pending market conditions.

Would you say that the majority of your business though is going to be subject to the tariffs? Or is it less than half?

I wouldn't say it's the majority that's for sure. And like I said, for those products that started to get touched in whenever it was, September or October, that's already kind of in the system so to speak. So I don't think you're going to see the majority of our business get impacted at this point based on what we know today.

Okay, great. Maybe just changing gears then slightly here. In terms of your sales offices (49:56) across the U.S., can you just remind us if there is any major metropolitan areas you guys are not in yet or I guess underpenetrated in your eyes?

No. I think we're pretty much everywhere we would like to be. That doesn't mean that we don't continue. When you hear me talking about adding customer-facing coworkers that is an indication of our recognition that there's increased opportunity in the marketplace, increased demand that we think we can take advantage of and that's – those gets spread across the U.S. geographically. They're actually more allocated by those vertical market segments that you hear us talk about.

Great. Thank you.

Thank you. And I'm showing no further questions at this time. I would like to turn the call over to Tom Richards for closing remarks.

Okay. Look before we – before I close, just a few comments, I think, of appreciation for those who are on the call. For the CDW customers that are on the call, thank you for the opportunity to serve you. For the CDW coworkers that I know listen to these calls, thank you for taking such great care of our customers. For our shareholders, thank you for trusting us with your investment, and to the analysts who covered us, thank you for your coverage, your questions. They've helped us tell a pretty amazing story, and you have made us better. And finally, for you parents on the call as tonight is Halloween, I'm inspired by your willingness to protect your children's health by eating their candy, each Halloween night. I hope you are also as inspired to be in the gym tomorrow morning. Thanks everybody.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation and have a wonderful day.