Good day, everyone. Welcome to The Home Depot Q3 2015 earnings call. Today's conference is being recorded. [Operator instructions] At this time, I’d like to turn the conference over to Ms. Diane Dayhoff, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, Allan, and good morning to everyone. Joining us on our call today are Craig Menear, Chairman, CEO and President; Ted Decker, EVP of Merchandising; and Carol Tomé, Chief Financial Officer and Executive Vice President, Corporate Services. Following our prepared remarks, the call will be open for analyst questions. Questions will be limited to analysts and investors, and as a reminder, we would appreciate it if the participants would limit themselves to one question with one follow-up, please. If we are unable to get to your question during the call, please call our Investor Relations department at 770-384-2387. Now, before I turn the call over to Craig, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations may also include certain non-GAAP measurements. Reconciliation of these measurements is provided on our website. Now, let me turn the call over to Craig.

Thank you, Diane, and good morning, everyone. Sales for the third quarter were $21.8 billion, up 6.4% from last year. Comp sales were 5.1% from last year and our U.S. stores had a positive comp of 7.3%. Diluted earnings per share were $1.35 in the third quarter. In the third quarter, as we saw in the second quarter, we had a broad-based growth across our geographies. All three of our US divisions recorded mid to high-single digit comps. Every region posted positive comps in the quarter as did all of our top 40 markets. Year-over-year, the variability in performance across our regions has narrowed considerably. On the international front, our Canadian business posted positive comps in local currency, making it 16 consecutive quarters of positive comps. In addition, our Mexican business had another quarter of solid performance, with positive double digit comps in local currency. This makes 48 quarters in a row or 12 years of positive comp growth for our Mexican business. We saw growth in ticket transactions and average basket size in the third quarter and we were particularly pleased with the strong transaction growth, as each month in the quarter had positive comp transactions. We view our growth in transactions as a positive sign of our continued relevance with our customers. As Ted will detail, we continue to see strength across our store. All of our merchandising departments posted positive comps and we saw healthy balance of growth among both our Pro and DIY categories. Our Pro business continues to be driven by a strong offering of brands that pros demand, consistent product innovation, as well as services that help them increase their business. During the quarter, we completed the acquisition of Interline Brands, a leading national distributor of Maintenance, Repair and Operations or MRO products. This…

Thanks Craig and good morning everyone. We were pleased with our performance in the third quarter as sales exceeded expectations. We saw strength across the store as well as continued growth in our online business. All of our merchandising departments posted positive comps. Appliances, Tools, plumbing, decor, lighting, hardware, building materials, and indoor garden were above the company average. Outdoor garden, kitchen and bath, electrical, millwork, flooring, lumber and paint were positive, but below the company average. Pro heavy categories continued to show great strength and we saw double digit comps in power tools, commercial lighting, HVAC, fencing and power tool accessories. Additionally, flooring tools and materials, siding concrete fasteners, roofing, builders’ hardware and compressors, had comps above the company average. The core of the store continued to perform well across the country as we saw strength in maintenance and repair categories. Watering, water heaters, ceiling fans, air circulation, hand tools and generators, all had double digit comps in the quarter. Wet drive VACs, wiring devices, pipe and fittings and ladders had comps above the company average. There was also strength in the core projects, with comps above company average in special order window coverings, vanities, in-stock kitchen and fixtures. Our Halloween and Harvest and Labor Day events provided great values and were well received by our customers, resulting in double digit comps in decorative holiday organization and appliances. Sales of grills, soils and mulches, pressure washers and cleaning, had comps above the company average. Using our assortment planning tools, our merchandising team constantly refines our assortments by bringing science to the art of merchandising. Recently, we leveraged these tools to better understand the customer preferences in roofing. We updated our roofing clusters to tailor our roofing brands to specific markets and customers and we introduced more high definition laminates…

[Operator instructions] We’ll take our first question from Simeon Gutman with Morgan Stanley

Thanks. Good morning. Nice quarter. First question on the gross margin drivers I guess for Carol or Craig, can you talk about the sustainability of some of the -- I don’t know if they are one-time items, the supply chain piece could be more sustainable, some of the lower acquisition costs. I don’t know if it that’s one time or there should be some recurring element to them.

We are very pleased with our gross margin performance in the quarter starting with the benefits that we saw from co-op and rebate. This was effectively reaching higher purchasing turns here in certain categories like roofing. And as Ted described, we just had an outstanding roofing business. So we look into the fourth quarter, roofing can be impacted by weather of course, but we would envision that that performance would continue. Supply chain, we would expect to have continuing benefits from our supply chain as our RDC network continues to mature. I will say however, as you’re building your models for the fourth quarter, we do expect year on year for our gross margin to be down. Why? Because we will be selling a lot of lower margin goods as Ted described in his remarks.

Got it. Okay. And then one follow up on expenses. The business did a great job once again and you held the line despite some of the increased volumes. Can you talk about how much the economic model that exists in stores versus things that are behind the scene that we don’t see like some corporate or indirect savings that you continue to realize?

Thank you. We were pleased with our expense leverage in the third quarter. Marc Powers and his team do an awesome job of making sure that our stores are staffed to meet the needs of our customers. Our voice of customer results have never been higher, while also driving productivity within the hourly sales force. Hourly payroll leveraged 41 basis points in the quarter, but it’s more than just payroll. Marc again and his team have invested in new technology to lower the cost of heating and cooling our stores. Utilities were down year on year and drove 6 basis points of benefit in the quarter. While we had breach expense in the quarter, we had $8 million less breach expense this year than last year, so that was another driver of expense. For us productivity is a virtuous cycle and we see that in the third quarter results

Okay. Thanks.

Next we’ll go to Christopher Horvers with JPMorgan.

Thanks. Good morning. Just a quick follow up on the gross margin. The other piece on the fourth quarter because of Interline will be a 30 basis point headwind versus the 10 in the third quarter?

Yes. Thank you for mentioning that. We will have three months of operations of Interline in the third quarter. The Interline gross margin, as you probably have seen by looking at their public financial information, their gross margin is lower than ours, so that will be an impact year on year performance. I will also comment however that Interline’s operating expenses as a percent of sales are lower than ours so we won’t have an expense pressure from Interline in the fourth quarter.

Understood. And then on the -- Craig, you mentioned a comment about the narrowing of the performance gap across geographies. Some thoughts on what you’re seeing there, what geographies I guess are catching up to the average. Any comments on the Houston market and any other commentary you want to add there would be great. Thanks.

Yeah. Let me -- I’ll start with Texas. We have roughly 178 stores in Texas. We look at all the major markets in Texas and they actually preformed above the company average in total. The narrowing of variability by markets, it was roughly, the spread was roughly 6.5% in 2015 compared to 10.4% in 2014. So we’re very, very pleased as we work to continue to focus on high and narrow variability and drive performance up across the geographies.

Okay. Then I guess a question on everybody’s fear topic which is weather. How should we think about El Nino and how it could impact your business during the next couple of quarters? Does it pull forward demand into 4Q? I think I recall in 1Q 2012 people could do roofs in the Northeast in January because it was so warm, but on the other end you have a big home heating and snow removal exposure in 4Q. How do you think it plays out? Does it neutralize? Does it pull forward and so forth?

It really depends on obviously how this plays out. It could potentially play to a warmer northern, which means we might have a year where we have more outdoor project business running deeper into the season. The potential offset to that is a much cooler, wetter southern situation. It really depends on how this plays. We’ll be in position as we always are to try to make sure we take advantage of whatever categories will be the drivers in the different geographies and then with any luck it brings rain to California, which is desperately needed.

Understood. Thanks very much.

Next we’ll go to Seth Sigman with Credit Suisse Q – Seth Sigman: Thanks. Hey guys, good morning. Just to follow up on the gross margin outlook. You discussed a mixed impact in the Interline impact. Just wondering if you can talk a little bit about the promotional activity that you’re seeing in the industry and whether there’s any meaningful change heading into the holiday in some of the more relevant categories like appliances. A – Ted Decker: This is Ted. We’re essentially the same year over year in our promotional cadence. So there won’t be a net impact from promotions. Q – Seth Sigman: Okay, thanks. And then as you look at the Pro side of the business, very strong trend there. Wondering if you could update us on the $6,600 average Pro spend that you’ve seen historically. Obviously that captures a wide spectrum with some customers spending a lot more. When you guys dig into the data, where are you seeing the growth? Is it from existing expenders within that or is it just broad based across the group?

We haven’t seen a meaningful change in the total average customer spend. We are seeing that growth come from our larger Pro customers and we’ve seen that trend for the past several quarters now. Carol Tomé: If we look at our managed accounts and those would be large spend Pros, they grew faster than the capital average in the third quarter. Q – Seth Sigman: Okay, great. Thank you.

Next we’ll go to Dan Binder with Jefferies

Good morning. Thanks. Ted, I was hoping maybe you could just maybe talk a little bit more about your initiatives on merchandizing by store. You‘ve given us some examples in the past. I think water heaters this quarter. You talked about roofing. Can you give us a little bit of color on where we are, if it was a nine-inning game? Are we still in the early innings or middle innings? A – Ted Decker: I would say it’s always hard to put it in the innings. I would say our tools are maturing nicely. Those are mid innings for sure and then the merchants utilization and the whole change management and speed of how we review categories and ultimately get the refreshed product set in the store, is our new focus area and we’re aiming to increase the speed of transitions of product in the store and that’s in earlier innings, but in terms of the tools, we’re getting pretty well developed there. Carol Tomé: Dan, at our investor conference in early December, Ted will go into more detail here.

Okay. Carol, I don’t think anybody asked yet, but just relative to your fourth quarter plan, how are you feeling about things today? Carol Tomé: There’s a lot of momentum in the US.

Okay. Do you think weather had helped you at all just in the third quarter?

Yeah. Weather is a -- as we talked earlier, weather is a factor in our business, whether it is in a particular category. Clearly with normal weather, you’re not selling a lot of the winter categories right now, but time will come on that. And so you do get an advantage in outdoor projects when the weather stays better.

Great. Good job. Thanks.

Next we’ll go to Brian Nagel with Oppenheimer

Good morning. Congratulations on a very nice quarter. The question I had and I guess it’s mostly for Carol, Ted maybe too. We talked about before. There’s an update given to a lot of the headlines we’ve seen about the retailers in data in general, but what you’re seeing with respect to wages and maybe some pressure, any potential pressures upon The Home Depot model from higher wages in your system? Carol Tomé: We, like every other company, are looking at what’s happening with the wage market. In parts of the country where there’s high employment and there’s wage pressure, we adjust, but we are able to work through to through the great productivity model that we have in our stores.

We’ll continue to adjust market by market as we see the dynamics of each market unfold.

Okay, that's very helpful. Then any -- I know it's early and I'm sure you'll discuss this more, a lot more at your December meeting, but any initial thoughts on Interline? Now that the transaction has closed, any initial findings or thinking about how this is going to melt into the Home Depot model?

We’re in the very early stages of integration and we’re working through that. We’re excited about the opportunity. We know that there is an overlap with our vendor community and we will get synergies from that and are beginning to get synergies already. We also know that we’ve taken our first actions on a little bit of the reorganization of folks where we have duplicate efforts that we don’t need going forward. We’re in the early stages, but we’re excited about the opportunities that we see. Carol Tomé: If I could just add a comment from the macro perspective, you saw household formation up 1 point billion households formed in the third quarter, many of those households moving into multi-family units. The Interline acquisitions gives us a great selling vehicle to serve that new household if you will.

Got it. Thank you and congrats again.

Next we’ll go to Aram Rubinson with Wolfe research.

Hey everybody, good morning. Thanks for letting me ask the question. Your Company has gone through a history of acquisitions where the pendulum has swung one way and then the other. You were doing a whole lot of acquisitions in the early 2000s and then of course you just kind of shut it down. Now you're swinging back the other way. I'm trying to figure out where that pendulum feels comfortable organizationally. Is it halfway in between where you had been or are you preferring to stay towards the conservative side?

No. What we’ve said Aram is that we will look at acquisitions where it gives us the ability to gain capabilities that we might want to go build ourselves. And so if you think about some of the acquisitions that we’ve done, the BlackLocus acquisition gave us a data science capability that’s being leveraged by our merchants for assortment and price. If you think about the Crown Bolt acquisition, that was basically a company that was built for us that we sold when we sold HD Supply. We got it back. That gives us different distribution capabilities for small packaged goods in our stores. The Interline acquisition gives us the capability to better serve our pro customer through things like open account, through 93 points of distribution where we can deliver same day, next day. This is all about how do we actually get capabilities. Beyond that, really not looking for acquisitions. Carol Tomé: Right. So you might think well, do you need to buy marketplace? No, we can build that. Do you need to buy a services company? No, we have one. Those are capabilities that we don’t need to acquire.

Thanks. And then just follow up, I know that in order to prepare for the future, you've migrated some categories out of the store, the margin patios, grills, etc., figuring you can sell that online and devote other space to some other new categories. Where does appliances fit into that mix in terms of migrating them out of the store versus in the store?

I would say on that, we already have a model that leverages a nice interconnected complement of displaying the product in the store, but then delivering direct from our manufacturers’ warehouses. We’re leveraging an interconnected model from the day we developed our appliance model.

Okay. Already showrooming then. Thank you and good luck this quarter.

Next we’ll go to Jaime Katz from Morningstar.

Good morning. Thanks for taking my questions. I'm curious if you guys could comment on capital allocation policy. Outside of share repurchases, what other opportunities you guys are seeing to deploy capital and maybe to focus on either a product or merchandising innovation in light of the fact that shares have run up pretty robustly over the last few years? Carol Tomé: We have a disciplined and balanced approach when it comes to capital allocation. The first use of cash is to invest it back in the business. This year we’ll spend about $1.6 billion in capital back in the business supporting our growth. We then take our excess cash and first pay 50% of our earnings in a dividend and the way that works is at the end of the year, we’ll look at how much we’ve earned and we will cut it in half and that will be the new dividend. If there weren’t ever to be an earnings disruption, we wouldn’t cut the dividend. We would just earn back into that 50% payout and then excess cash is used to repurchase shares. We think that’s the best use of excess cash rather than leaving it on the balance sheet, which would be value diluting to our shareholders. We do have an adjusted debt to EBITDA target of two times. We’re at that ratio right now. We have used the financial leverage judiciously both to support acquisitions as well as to buy back our shares. As it relates to evaluation of our share price, we do have a point of view. We’re not at that intrinsic value, so as we continue to outperform, that intrinsic value continues to increase.

Okay. And then I think you made some additional commentary on spend for the data breach. Do you guys see those expenses wrapping up over the next quarter or two or is it sort of to be determined? Carol Tomé: There are ongoing legal fees as well as litigation activities. We’ve estimated another $5 million of expense in the fourth quarter, but there could be more. None of that would be bigger than a bread box. It’s all manageable. The biggest numbers that we had for the numbers that we settled on with the payment card networks in the second quarter.

Thank you very much. Carol Tomé: Bigger than a bread box is not a financial term, but you know what I mean.

Now we’ll go to Seth Basham with Wedbush securities.

Good morning and thank you for taking my question. My first question is around the consumers' behavior in the store in terms of trading up. Are seeing more activity of consumers trading up to premium products?

I wouldn’t say it’s any more dramatic than we’ve talked about before, but we do look at sales by price point and again this quarter we had a progression of higher comps as you went up price points in an assortment.

Got it. That's helpful color. As it relates to the Pro, can you give us a sense of how much better the Pro is comping relative to the DIY customer and whether or not that gap has increased or decreased over the last few quarters?

Our large spend Pro, as Carol mentioned earlier is actually comping above the company average and that’s been a driver certainly in our Pro recovery. That hasn’t changed dramatically in the last few quarters. It’s been pretty consistent.

Got it. You look forward, when you think about all the services and brands you're offering to the Pro and the macro environment, do you think that type of gap can persist or would you expect it to increase?

We would certainly expect it to continue.

Got it. Okay, thank you very much.

Moving on, we’ll go to Mike Baker with Deutsche Bank.

Hi, thanks guys. A couple of questions. One, the industry data that a lot of us look at, the NAICS data has been a very reliable indicator for your comps historically, although the last couple of quarters you guys have far outpaced that data at really an accelerating pace. Do you see that as taking incremental market share and if so where do you think you're taking it from? Carol Tomé: If I could just jump in the market share. The census data, the NAICS score for one would suggest that we have grown market share.

Correct and again we compete with a lot of folks across each of our product categories and it varies widely by product category. Whether that’s other big box, whether it’s wholesale distributors, whether it’s digital competitors. So we are very focused category by category as to where are the largest opportunities to grow our business and take share. A – Ted Decker : That share on a rolling 12 through September was 56 basis points up.

Got it. Understood. One more question I wanted to ask, just on the really strong comp last year, could you remind us if weather did play an impact on that? What I'm getting at is a really harsh winter up here in the Northeast, how much did that help or perhaps hurt the comp last year and how should we think about that as we cycle against it? For instance roofing, everyone I know up here in Boston had a leak in the roof. I assume your roofing business is still being helped by what happened last winter.

Sure and I think that’s the key is, is that based on the weather and we did have impacts from weather last year, it then impacts categories differently from a timing standpoint. As you mentioned, tough winter last year in the northeast. Certainly, as you get into the spring, you see people making repairs on things like roofing and in some cases, a lot of live goods needed to be repaired as well, but then that obviously is offset by categories. If it's a warm winter, nobody is doing -- you're doing outside projects and nobody was doing that last year. Those are the dynamics category by category that affect our business particularly as it relates to start of spring and then through the tail end of the winter season. Carol Tomé: The good thing is that over time weather normalizes and if you look at our US comp on a two year stack basis, we’ve seen acceleration from Q1 to Q2, Q2 to Q3 and now with the guidance that we’ve just given you, that’s acceleration into Q4 as well.

Understood. Okay. Yeah, we all learned the term ice dam and roof rake up here in New England last year.

It was a tough winter. Carol Tomé: It was just winter

Thanks.

Next, we’ll go to Matthew Fassler with Goldman Sachs.

Thanks a lot and good morning. My first question relates to big-ticket projects, which continue at a very nice clip. Anything in the business that gives you leading indicators as to project-oriented business, whether it's people looking for bids, taking samples, etc. on some of the more project-oriented categories?

I think as Ted mentioned, while we had pressure from deflation in lumber, we're very pleased with our unit productivity and pleased with what we saw in our Pro business. As we said, the larger spend Pro is leading the pace there and above the company average. That clearly, those lean to bigger ticket projects, the building materials business, bigger ticket projects. We’re very encouraged by that spend with the customer. And then likewise, you look at categories like appliances, that's a big ticket spend as well. So we don't really see a slowdown if you will in big ticket. Carol Tomé: Matt, if I can add from a macro perspective, as we look at home equity lines of credit, you know they're down 29% from the peak, but 17 million home equity lines have been planted this year and 28% of the banks who are underwriting those lines of credit are stating that their underwriting is starting to ease a bit. But think about how people use their home equity lines. It typically goes into a bigger project, like a kitchen remodel or that sort of thing. It's a bit encouraging as we think about Q4 and beyond.

Thank you. And then a quick follow-up. Craig, you spoke earlier about the reality that retail is changing. Consumers are shopping differently and your online business continues to grow nicely, though still only 5% of the mix. How do you guys think about the long run operating margin implications of this? You think about the amazing flow-through you've had, the very modest expense growth relative to sales, I know that this will move pretty slowly for you just because of the roll in the business, even as it grows rapidly. I'm not sure if it's possible to think about the incremental margin on a transaction delivered versus picked up in the store or shopped without any e-commerce intervention. But as you look out the next two or three years, you might tackle this a bit in early December, how do you think about the role of Omni-channel in impacting your financial model?

The way we look at it quite candidly is as one business and an interconnected approach. A couple of things. One, we shared with you that we did what we called cog A, so we looked at normalizing how we account for things in both channels so that our merchants have a common view of all costs and expenses. And then as I mentioned earlier, 42% of our online orders are picked up in our stores. It's very much a blended mix and we look at it as a blended mix. And so we see it more of the same going forward. We’ll probably, will provide a little bit more outlook as we go into our December investor conference in terms of how the business is coming together by channel, but certainly view it as one Home Depot for the customer.

Thank you.

Now we go to Kate McShane with Citi. Ms. McShane, your line is open. Please go ahead.

Good morning. I was wondering if I could follow up on the e-commerce questions, with the opening of the third fulfillment center, how do you view the actual store as a fulfillment center? And are you looking to use anything like Instacard or Google Express as a way to further your Omni-channel experience?

I’d just say that we do a lot of deliveries from store today, but Mark Holifield is here. I’ll let him comment on this.

Our stores have been a base for delivery for quite some time where we take orders in the store and deliver them. This buy online deliver from store initiative that we have rolling in 180 stores now and we’ll roll out in 2016 allows us to take orders online, drop them to the store and use those same delivery assets to get to our customers. We continue to stay abreast of the various offerings in the marketplace. We think the most important thing for us to focus on right now is our deliver from store initiative, utilizing the assets that we have in place now.

Okay. And if I can just follow up on that question. Have you seen any meaningful change in the consumer behavior with regards to again mobile shopping or shopping through the website sequentially, so a meaningful change from Q2 into Q3?

No, not really. We’ve grown pretty comfortably quarter to quarter.

Thank you.

Next we’ll go to Michael Lasser with UBS.

Good morning. Thanks a lot for taking my question. We've seen the spread between your same-store sales in the category expand for a couple of quarters now. So can you tie your share gains to specific categories that you've invested in? Or do you think it's coming from the expense of just some competitors who are experiencing turbulence as a result of self-inflicted wounds? Or alternatively could we just be at the point in the cycle where the incremental consumer who's coming into the home improvement market is more compelled to go to the big-box on center channel? Carol Tomé: Do you want to start, Ted or?

Yeah. I would start on the investment piece first. Absolutely we see terrific productivity in the areas that we have invested and from what we can track. We believe we’re taking share in these areas and I’d highlight three. One would be with lithium ion battery technology in power tools and now migrating to outdoor power. We have an extremely robust lineup of brands and product and values in power tools and believe we’re taking meaningful share there. LED in light bulbs and now increasingly integrated into light fixtures where we’ve been very aggressive following the development of that technology. We’ve partnered with some of the best folks in the industry in our light bulb and now again integrated fixtures with LED are very strong and we believe we’re taking share. Then in appliances certainly. We’ve been expanding square footage for some time now, investing into floor space and adding some additional brands to our portfolio there. We saw double digit comps in appliances yet again this quarter and believe we’re taking share in appliances. Carol Tomé: To your question about where are we on the cycle. We’re doing a lot of work in this regard, trying to come up with our own point of view. One thing we learned looking at data coming out of the Harvard Joint Center for Housing Studies as well as John Burns Real Estate Advising Firm, is that homes that are older than 45 years tend to be, have higher repairs. And in fact, the amount of money spent on repairs on those older homes is 5.6% higher than the amount of money paid to repair a home that’s about 20, 24 years old. There are 40 million homes in the United States that are older than 40 years. As the housing stock ages, it just bodes very well for big-box home improvement retailers to sell to those customers who need to make repairs in their homes.

Carol, do you have any insight into whether someone who lives in an older home would have a greater propensity to go to a big-box store versus some other retailer like a specialty player? Carol Tomé: Don’t have that kind of insight, but we’ll continue to study.

What I would say on that is the merchants will continue to focus on products that make it easier for our pros as well as our consumers to be able to do those kind of projects.

Okay. And Craig, you've been very careful on the call to categorize your large Pro spending customers as outperforming the overall business. What about the Pro business in totality versus the rest of the business?

Our Pro business in total is good, whether it’s, as Carol mentioned, managed accounts, whether it’s our consumer credit card data that shows -- our Pro credit card data that shows. We’ve lost some visibility in the small Pro with our data breach that we’re working to regain. That’s probably why we don’t talk as much about our smaller Pro, but all of the data points that we have indicate that our Pro businesses is very solid and we’re pleased with the results, whether that’s within categories or whether it’s at the customer data that we have specifically. Carol Tomé: To put some numbers behind it, if you just look at Pro sales on our private label credit card as well as managed accounts, we know those sales. They make up 20% of our sales in the third quarter and they grew faster than the company.

My last question you fully anniversaried the data breach from a year ago. Do you think -- as you look back now, do you think that the breach had any impact on traffic to the stores in light of how strong traffic was for this period?

It’s really, really hard to tell clearly. If you think back a year ago on our call, we talked about the fact that we’re pleased that each month had positive transaction growth despite the breach. We again saw positive transaction growth as Carol mentioned just a minute ago. When you look at a two years back comp basis, we’ve seen progression in two year comps quarter after quarter after quarter and we anticipate that we’ll be able to do that again this quarter. So it’s really difficult to get at that number. The only other thing I can tell you is as we said last year, we know that there are customers who were upset based on the emails that we got. So there had to be some impact. It’s just really hard to quantify.

Understood. Thank you so much and have a good holiday.

Allan, we have time for one more question.

Then we’ll take our last question from Scot Ciccarelli with RBC Capital Markets.

Hey guys, how are you? I believe you guys saw a bit of a slowdown in some of the energy heavy markets in Canada maybe nine months, 12 months ago or so after entry prices turned down. So I guess the question is, are you surprised you haven't seen more of an impact in some of the energy heavy markets in the US and what would those differences be?

It’s something that we were watching very, very carefully and certainly thought we might see some impact, but candidly in Texas would be the biggest market that would have those kind of impacts, we really haven’t seen it at all. As I mentioned earlier, all of our major markets in Texas actually outperformed the company average comps and we’ve seen strength across the store.

And then I guess the last question since this is the last question on the board here, Carol, any update on the extended terms test for the Pro customer? I thought we were expected to hear something about that sometime in the fall timeframe. Carol Tomé: You’re going to hear all about it on December 8.

Got you. All right, thanks a lot, guys.

Thank you all for joining us today, and we look forward to speaking with you at our investors and analysts conference next month.