Good morning, everyone, and welcome to Lowe's Companies' Fourth Quarter 2017 Earnings Conference Call. This call is being recorded. [Operator Instructions] Also, supplemental reference slides are available on Lowe's' Investor Relations website within the investor packet. While management will not be speaking directly to the slides, these slides are meant to facilitate your review of the company's results and to be used as a reference document following the call. During this call, management will be using certain non-GAAP financial measures. The supplemental reference slides include information about these measures and a reconciliation to the most directly comparable GAAP financial measures. Statements made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Management's expectations and opinions reflected in those statements are subject to risks, and the company can give no assurance that they will prove to be correct. Those risks are described in the company's earnings release and in its filings with the Securities and Exchange Commission. Hosting today's conference will be Mr. Robert Niblock, Chairman, President and Chief Executive Officer; Mr. Richard Maltsbarger, Chief Operating Officer; and Mr. Marshall Croom, Chief Financial Officer. Joining during the Q&A session will be Mr. Mike McDermott, Chief Customer Officer. I will now turn the program over to Mr. Niblock for opening remarks. Please go ahead, sir.

Good morning, and thanks for your interest in Lowe's. Fiscal 2017 represented the highest sales in net earnings in our company's history. In the fourth quarter, we delivered comparable sales growth of 4.1%, exceeding our expectations, through compelling consumer messaging, strong holiday event performance and integrated omnichannel customer experiences. Our U.S. home improvement business delivered a 3.7% comp for the quarter with positive comps in 13 of 14 regions. From a product view, we posted positive comps in 9 of 11 product categories, while 1 category was essentially flat. Appliances led product category growth with another quarter of double-digit comps. We achieved above-average comps in tools and hardware, rough plumbing and electrical and lumber and building materials. Internationally, we delivered another strong quarter with high single-digit comps in Mexico and mid-single-digit comps in Canada, both in local currency. We've made significant progress integrating RONA, delivering double-digit online sales growth, rolling out appliances to approximately 100 locations, completing 5 RONA big-box conversions, driving strong growth in our affiliated dealer business and further optimizing shared supplier partnerships and procurement efforts. We're pleased with the strong momentum we built throughout the year culminating in RONA posting its highest comp in 13 years. We believe that we're well positioned for continued growth and remain on track to double operating profitability in Canada by 2021. For the quarter, we delivered adjusted diluted earnings per share of $0.74. Delivering on our commitment to return excess cash to shareholders in the quarter, we repurchased $133 million of stock under our share repurchase program and paid $341 million in dividends. And our Board of Directors recently authorized an incremental $5 billion of share repurchases, which further underscores our commitment. Turning now to our progress against our strategic priorities. I'm particularly proud of how we've grown sales with Pro…

Thanks, Robert. Good morning, everyone. As you just heard, we've achieved some important milestones this year and identified actions necessary to drive future success. First, we refined our marketing strategy, successfully launching a new campaign, Start with Lowe's, which has captured mind share and improved measured campaign effectiveness. We've also continued our evolution from analog to digital marketing, delivering more personalized, targeted messages. And we've optimized our messaging content, driving critical improvements in value perception. Together with our incremental marketing investments, these improvements have increased awareness, leading to robust traffic growth. Second, we capitalized on customer excitement for the holiday season. We provided cohesive decorating solutions as well as compelling gift ideas across our product assortment, connecting our in-store display with digital assets such as Pinterest, Facebook, Instagram and YouTube and delivered a seamless shopping experience on Lowes.com. In fact, we drove double-digit comps in appliances, leveraging our investments in customer experience, both in-store and online as well as our best-in-class selection of leading brands and our services advantages of next-day delivery, haul away and facilitation of repairs and maintenance. As cold temperatures and winter storms hit, our never-out strategy ensured that we were in a strong position to serve demand for critical items customers needed. Combined, our strong holiday performance and never-out strategy drove above-average comps in tools and hardware and rough plumbing and electrical. We also continue to execute on our strategic priorities, driving comp growth of 28% on Lowes.com, the result of strong customer response to our enhanced online shopping experience. We have optimized functionality and display for touchscreen devices to support a better mobile experience, improve product content recommendations, refine search algorithms, improve click-to-chat capabilities and optimized our assortment, informed by digital line reviews. And we have releveraged our MyLowe's platform to drive brand loyalty and…

Thanks, Richard, and good morning, everyone. Let me start by reminding you that last year's results included an extra week, which contributed approximately $950 million in sales. That extra week also caused the calendar shift this year, which had no impact on comp sales, but negatively impacted fourth quarter total sales growth by approximately $1 billion or 7%. Sales for the fourth quarter were $15.5 billion, a decrease of 1.8% compared to last year's fourth quarter. Total transaction count decreased 7%, while total average ticket increased 5.2% to $73.44. Maintenance Supply Headquarters contributed 40 basis points of growth in the quarter, while new stores contributed 60 basis points. Comp sales were 4.1%, driven by an average ticket increase of 4.9%, partially offset by a transaction decline of 0.8%. Looking at our monthly trends. Comps were 1.1% in November, 7.7% in December and 3.4% in January. Hurricane recovery efforts in Texas and Florida aided fourth quarter comps, which offset the impact of cold temperatures and winter storms across the country in the latter part of the quarter as well as the comparison to Hurricane Matthew and Louisiana flooding last year. We estimate that the net benefit of weather in the quarter was approximately 65 basis points. For 2017, total sales were $68.6 billion and comp sales were 4%. Gross margin for the quarter was 33.73% of sales, a decrease of 68 basis points from the fourth quarter of last year. 2/3 of the decline was attributable to rate, while the balance was mix and shrink. As we've grown the market share in appliances, gross margin has been impacted from both a mix and rate perspective. We also continue to take competitive actions, which were partially offset by the benefits from Value Improvement as well as early results from pricing optimization efforts.…

[Operator Instructions] Our first question will come from the line of Brian Nagel with Oppenheimer.

So a couple of questions. First-off, with respect to the investment plan or the strategic plan you laid out on the call, how should we think about, as we go through 2018, the sort of, say, the investment -- the cadence of investments along those lines and the potential benefits in terms of sales and other metrics? How should those line up?

Yes, I'll take the top line first. This is Marshall. Basically, as we think about our sales progression and comps, we would slightly expect sales to be higher in the first half of the year. As you recall, first quarter was our easiest comparison as we head into '18. So first half sales will be slightly higher than second half. As far as capital expenditures and expenses throughout the year, we'll be leaning that throughout the year. But we do expect, as we've managed to stabilize gross margin, that not only the capital investments but the expense associated with some of these initiatives will put pressure on SG&A.

And Brian, as noted during my comments, this is Richard, a few of the nationwide rollouts that we have such as the paint service experience as well as some enhancements to the digital tools in the hands of our associates are backloaded.

Got it. And then the second question, more of just a follow-up. If you look at the cadence of the comps in the quarter, so clearly it was weak to start, weak to end, stronger in the middle. Is there something that explains that, basically that what we saw through the quarter?

Yes, it's largely a function of the holiday sales that we experienced. So as we mentioned, we were pleased with appliance sales growth. A majority of our appliance sales are scheduled to be delivered, they're not take with. As a result, a lot of those sales over Black Friday and that holiday period were delivered in December, and it's not until they're delivered or customer takes possession that we recognize that revenue. So that created some lumpiness of the 1.1% comp in November to the 7.7% in December.

Is there a way just to -- just that one piece, can we quantify the shift between those 2 months?

Yes, Brian, there's another way to think about it. If you look at the comp progression, not including the impact of deferred sales, it was roughly kind of mid-3% comp in November and January and roughly mid-4% comp in December.

Your next question comes from the line of Eric Bosshard with Cleveland Research.

Two questions for you. First of all, the 4Q margin I think was below the guidance you had given 90 days ago. So just curious if you could summarize again the moving pieces with the math. And then secondly, excited to hear about the incremental investments to grow the business in '18 and you talked about taking advantage of the tax savings, the $750 million. But wonder if you could just quantify the amount of incremental investment that you're making in 2018.

Eric, this is Mike McDermott. I'll touch on the gross margin question. In the fourth quarter, we meaningfully exceeded our expectations in the appliance category, growing significant market share. As a result of that, that had an impact on both our mix and our rate from a margin perspective. The other thing we did, as you recall, in the second quarter of 2017, we focused on getting more competitive and improving our value perception to make sure that we could take advantage of the available market opportunity. Those actions continued in the fourth quarter, and yet were only partially offset by our Value Improvement initiatives working closely with our vendors on first cost and some early price optimization benefits as we're in early innings of rolling out analytics tools and capabilities to drive that optimization. As we look into the new year, I think we're in a solid competitive position. We continue to offset the impact of any competitive pricing actions through the rollout of those tools that I mentioned a moment ago. And we'll continue to work on Value Improvement with our vendors, ultimately delivering flat gross margin in 2018.

Eric, this is Marshall. Just one other factor for fourth quarter gross margins. As we were going through our integration process with RONA, we did have some accounting harmonization that impacted gross margin in the quarter. So that was just another small factor for the pressure we experienced there. To your second question on the incremental capital that we plan to spend in 2018 as a result of tax reform, about 85% of that we will be investing in 2018. So we recognize this is an opportunity. And largely, where we're spending that, as you think about our capital expenditures going from roughly $1.1 billion in '17, $1.7 billion in '18, 45% of that $1.7 billion will be on the strategic initiatives. That's almost triple of what we spent in 2017. So again, the opportunity to lean into the omnichannel capabilities that we need to build to expand customer reach and relevancy and to further drive the 6 planks that Richard spoke to earlier.

Great. And then just one last question, if I could circle back with Mike McDermott. How do you think about the balance between the incremental promotional spending getting a bit more aggressive on price and effective and then the market share performance? And I know that looking at it relative to Home Depot is just one way to look at it, but how do you look at the incremental spend and then the market share performance?

Eric, look, when I take a look at incremental spend, I look at both price as well as traffic. And we had some incredible performance as it relates to our efforts to improve our customer awareness as well as drive traffic and engagement through that awareness through optimizing our marketing spend and better balancing our digital and mass media approach, make sure we're engaging customers at the right time with the right content. As it relates to both promotional and pricing spend, we simply have to be competitive and that is our focus. The opportunity to continue to drive optimization is what we see ahead of us in 2018.

Eric, this is Robert. I would just add on that. I think we're pleased with the work that Mike and his team have done from a promotion standpoint, the additional traffic it's driven, the consumer awareness, those types of things. As Richard and I both outlined, opportunity is to take that traffic and drive greater conversion. That's what Richard and his team were working on in some of the strategic investments that he talked about was for focusing on investing in our associates to make sure that they have all the tools, the training, the capability, we have the right coverage for daypart hours, those type of things to ensure that we're then converting that traffic into sales. So that's a big focus area that we're -- that Richard and his team are focused on as we head into 2018.

Your next question comes from the line of Christopher Horvers with JPMorgan.

Can you talk about the appliance category? It sounds like you did extremely well in that category. Any further quantification of what double-digit growth is? Is that close to the 20 than to 10? And somewhat related to that, traffic was down in the fourth quarter. What do you think the drivers of the down traffic were?

I'll just reinforce that we had double-digit comps in appliances and feel good that the combination of our messaging, our assortment, our brand partnerships and our product offering continue to resonate very, very well with customer. We are the leader in that space and continuing to drive leverage as a result of that leadership position with fantastic displays and great, engaged associates. So I continue to see runway in the appliance space as we lean into that market opportunity that exists.

Chris, this is Robert. Just to clarify, it was not traffic that was down. It was transactions that were down. As I just indicated in my follow-up with Eric on earlier question, we're driving the traffic, it's the conversion of that into transactions. And as we mentioned, as Richard said in his comments, we put the labor there. We realized we've got to put more than just the labor there. So we've made the labor investments, now we need to make the incremental investments to ensure that we convert that traffic into transactions.

Understood. That's a great segue. So as you think about the labor model and the change that you've made, are you thinking about structurally changing sort of how you allocate labor, whether it's full-time versus part-time? The algorithms that you put in place with the new system last year, how is the overall labor strategy shift going forward?

This is Richard. The reality is over the last couple of weeks, I've had the opportunity to go into stores across 5 different states, speak directly with our associates, understand some of the challenges that are happening in our aisles every day. And the emphasis I would put on are a few areas. First and foremost, it's really the mix of our selling and tasking hours. How do we go about getting the work done in our stores every day to enable our Red Vest associates to be in front of the customer when it's time to serve? Second focus we have on, as Robert noted, is having the labor hours in the stores necessary, having associates ready through our training and our knowledge programs to be ready to serve is just as necessary. So reinvestments and actions that we are taking right now during spring hiring to bolster that area. Third, reengineering some of our key processes. As noted in my comments and Robert's, our pick-up-in-store experience, as an example, we have an upgraded experience both in the physical layout as well as in the staffing and training model going out in Q1 as well as to Robert's comment on centralized quoting, an opportunity to speed up our process by centralization and greater support for our in-store associates to allow them more time to serve the customers that are with them every day. And then finally, upgrading our digital management tools, giving a chance for our associates to get more productive with the hours that we invest in the tasking. So when you look across those investments, from the mix of tasking to selling, to our associate readiness, to reengineering key processes, to better empowering our associates with the right tools, those are some of the initial focus areas as we move into the year.

Your next question comes from the line of Seth Basham with Wedbush Securities.

My question is a follow-up on the conversion issue. If you could just give us a sense of how conversion trended through 2017 and how much of improvement you expect in 2018 and what the biggest driver of that is going to be, is it the training and knowledge programs or something else?

Absolutely. As I just noted, the challenges we've had for conversion have steadily been a challenge as we moved throughout the year. In fact, it really is an opportunity. As we have grown the traffic, we know that the customer is interested in our offer. There is the demand for what we're bringing to the marketplace. Really, the conversion challenge has grown as the traffic has grown. We have begun to address it in the steps that we had to take necessarily in the payroll action in the back half of the year. And now it is simply a matter of ensuring that our associates are more ready to field that traffic.

And a follow-up on that. In terms of the readiness, is the fact that you had a lot of employees that weren't quite qualified for their jobs, weren't trained for their jobs or in the wrong places?

The biggest focus that has come from my conversations with our teams in the field right now is greater role clarity and greater understanding of who's going to field, what particular aspects of the project cycle and being able to improve the execution of that.

Your next question comes from the line of Matt Fassler with Goldman Sachs.

I want to follow up on gross margin. So gross margin I think was down all 4 quarters of this year. And I know there's been some mix issues and Canada coming into the mix earlier on probably impacted that as well. But given the commitment to deliver a comp that's level with what you've been putting up in a pretty strong backdrop, and given the fact that Value Improvement has been part of the agenda for quite some time, why the confidence that with mix moving against you and with the desire to continue to hold or gain market share, at this moment the gross margin is -- can stabilize while you achieve everything else you're trying to get done here?

Matt, this is Mike McDermott. Obviously, we have seen gross margin decline throughout 2017. Most of the actions we put in place started in the second quarter of '17. So we're going to have the ability to lap those activities. We've been working to optimize throughout the year to improve our promotional effectiveness and reduce our spend while continuing to drive traffic. We've seen pretty good results in the third and the fourth quarter there. And then we've got some new tools really focused on price and promotional optimization that give us the ability to offset any inflation impacts that we're experiencing, primarily in the lumber and building materials space, while at the same time, making sure that we remain competitive and minimize the spend to do so. Value Improvement is an ongoing initiative of us working closely with our vendor partners, make sure that we've got the most efficient and effective way to deliver value to our customers, moving from -- all the way through our supply chain to the prices and promotions that we offer to close the sale. So I think the combination of all of those activities give me confidence that we'll deliver flat gross margin in 2018.

And just a quick follow-up on that. Obviously, inventory has the potential to be a factor here. And inventory growing faster than a fairly healthy sales rate, I know it doesn't make it any easier to drive gross margin improvement. So can you talk about your expectations for inventory growth relative to sales growth over the course of the year and whether working that down will require any measures that would impact gross margin as well?

Absolutely, Matt. This is Richard. I'll talk about some of the actions we're taking to manage inventory and then allow Mike if he wants to weigh in further with any estimated impact. But as noted in our guidance, right, we are going to focus on the improvement of our inventory management. We believe we've made the investments in the inventory, in our system to support the strong sales growth we're seeing in categories such as appliances and tools, right? Now the onus is on me as I get into the role to continue working with our teams to understand what changes in the flow of our supply chain, what changes in the interactions between our supply chain and our stores and what changes in specifically having inventory in a shop-able position for customers when they come in to demand the purchase are necessary to continue to manage at roughly a flat to slightly up inventory that is less than our rate of sales growth during 2018.

Your next question comes from the line of Mike Baker with Deutsche Bank.

Wondering if you could tell us how you measure traffic and conversion and share some trends on that metric over the year?

Yes, absolutely. Mike, this is Richard. We leverage video analytics in the tracking of movement of customers into our stores and measure that up against the transactions that we are able to execute through our registers and the rest of our activities with customers.

So can you share some metrics on that? So you're saying traffic was up. Frankly, we don't see it in the data that you provide in terms of the number of transactions. So again, if you could help give us confidence in that metric and then also what that would imply for conversion, how that has changed throughout the year?

Not at this time, Mike.

Okay. Then I'll ask just one more quick follow-up. Marshall, you talked about CapEx going from $1.1 billion to $1.7 billion. Then you said 45% of that is on initiatives. Is that 45% of the incremental $600 million or 45% of the total $1.7 billion?

Yes, it's 45% of the total $1.5 billion (sic) [ 1.7 billion ]. The 85% was referenced to kind of the proportion of the tax reform benefits that we're going to see in 2018.

Understood. So if it's 45% of the total, and then that's up 3x versus last year, and so the incremental CapEx accounts for most of that 85% of the tax reform, I guess, then my question is, is there an SG&A component? Why would SG&A be down 30 basis points on a 3.5% to 4% comp or sales growth number where you'd otherwise expect that to be up with the typical leverage that you get?

Yes, with a lot of these programs and our initiatives, there are expense components to deliver some of the strategic initiatives that we do have going on in 2018. So that's just noted pressure that we would expect in SG&A.

Above and beyond the investment in CapEx from the tax reform?

CapEx component and in expense component.

Your next question comes from the line of Scot Ciccarelli with RBC Capital Markets.

Are you -- have you made any changes in your terms with any of your vendors? I guess, I'm trying to understand the payable of the inventory ratio a little bit better.

There is no significant change as part of this was just due to timing. Kind of comparing this year to last year, we're still looking at terms and where it makes sense to extend terms where we can. But it's all part of the balance that we have. With our Value Improvement process and ongoing vendor negotiations, we do expect to improve that in '18. But it was just really a matter of timing of some of the seasonal build and buy towards the end of the year.

So one of the things that I know that kind of gets negotiated between vendors and retailers is kind of pricing or gross margin targets, if you will, coupled with kind of payment terms. Is there any change in thought process regarding what is a more important aspect or metric to Lowe's?

Not at this point in time. We'll always kind of factor in that net-net what we think is beneficial for us and beneficial for our ongoing relationships with the vendors.

Your next question comes from the line of Gregory Melich with MoffettNathanson.

I just had 2 questions. One was on the reinvestment of the tax savings, just to make sure I got that right. It sounds like there maybe 30 bps on the income statement, which would be about $200 million. And then a portion of the CapEx of that increase from $1.1 billion to $1.7 billion is because the tax reform has given you more money. But probably -- CapEx probably would have gone up at least several hundred million anyway. Is that a fair way to think about it?

Yes. First and foremost, as we think about our capital allocation philosophy is to first invest strategically in the business to maintain RONA and improve and enhance the business. So that is always going to be the first pillar. So one is we're reflecting on where we were in the marketplace, the initiatives we need to get underway, this provided a good backdrop to be able to enhance and ramp and accelerate our capital investment as we lean into 2018.

So it sounds like of that $600 million increase in CapEx this year, a portion of it, maybe half of it, was related to the tax reform, and you would have been doing a lot of these things anyway, you're just accelerating things that were coming. Is that fair?

Correct. Accelerating, actually it was about 85% of the tax reform benefit that we're going to see in '18 that is helping fuel the incremental CapEx. But yes, we would have accelerated the CapEx spend to get after our strategic initiatives.

Regardless. Perfect. So then the second question is on RONA. I think, Robert, you mentioned at the beginning that the integration is going well and doubling the profitability goal over the next 4 or 5 years is still there. Could you help us understand how much RONA improved or helped corporate margin last year in '17 and what is in your guidance for this year in '18 in terms of RONA improvement?

Yes, like I said, things are going well at RONA. We're pleased with the performance from how it blends in from a margin standpoint, Marshall?

Yes, we should be cycling from a gross margin standpoint as we anniversary the acquisition. We did have some -- just again some minor cleanup that put some pressure in the fourth quarter. But we are in a good trajectory to doubling the profitability of RONA -- or Canada by 2021.

Got it. And then last, just to make sure I understand...

Greg, this is Richard. Not being too far removed from the old job yet. RONA was not a significant improvement operating margin in 2017 nor was it planned to be. However, 2018 is when we begin to see more significant movement on the operating margin.

That's great to hear. And then last, is gross margins flat this year? And on the sales standpoint, you guys think the first half stronger, it sounds like the SG&A investments won't really build until the second or third quarter.

It was just slightly higher in the first half. But from a capital expense standpoint, again, we are trying to accelerate our investments throughout the year.

And part of the sales is because if you think about -- we didn't have a strong spring last year or. So being in cycling year, slightly weaker numbers.

Our final question will come from the line of Michael Lasser with UBS.

So arguably, you made some investments over the last several quarters in areas like labor and promotions. And they produced somewhat mixed results. Now you're accelerating investments in different areas. But how do you ensure that you produce a suitable return that will be attractive to your P&L as you accelerate those investments?

See, I'll start, Michael. Certainly, you mentioned a couple of things, labor and promotions. I think if you look from the promotional aspect, I think we've been pleased with the investments we've made. As I said, driving the traffic, the brand awareness, those type of things. Certainly, as we mentioned, we have challenges from a conversion standpoint that we're working on. As Richard mentioned and he can further elaborate, we've made the investments in labor. Now it is going in and supplementing those investments that we've made with -- make sure we have the training, the tools, the other components that are necessary so that we have the associates in front of the customer when they are ready to buy. And Richard, I'll let you...

Michael, all I'd add to that is several of the things that we talked about, investing further into the back half of the year for nationwide rollouts. So we've had under test over the past several months or weeks to be able to get the early signs of success. And that really is the approach that we're going to take. A great example is the pickup in the store experience that's currently rolling out in Q1. We've actually had that and a team dedicated to that since last August, testing in a handful of stores, slowly going to a greater level of investment and iterating along the way to ensure that we're getting the maximum value out of the investment we're going to make prior to going to a nationwide rollout. In fact, the iteration that is going to currently rollout is the fourth iteration of that test already in the past 6 months in order to make sure that we're maximizing the return from all components, the physical space change, the training of the associates, the shift in the processes, the reengineering of how we do that and the dedicated labor before we decided to take it to a nationwide rollout during the latter part of March and April.

And my follow-up -- yes, please.

I'm going to pile on for more comment. I just want to make it clear that the leadership team is aligned and focused on areas that we highlighted on the call. You think about stabilizing gross margin, improving conversion, improving inventory management, along with getting after from the 6 strategic planks. So I think that's just something that I do want to reemphasize and that we are working with a sense of urgency along all of those fronts.

My follow-up question is that I think we all appreciate your commentary you made around the longer-term guidance, and it was helpful. So if we assume kind of sales remain where they are, flattish gross margin, can you give us a little sense of the operating leverage in the business now with all the different changes that are going on and all the different changes that have taken place over the last few years? It's become harder to understand where the leverage point of the business is or in a normal run rate environment, how fast your expenses grow relative to the rate of your sales growth?

Yes, at this point in time, we're giving the high level of sales growing at least 4% of the total shareholder distributions, sticking to the $14 billion there and then just really the improvement of operating margin from 2018 levels, we expect those to improve from where we're setting that target in '18. That being said, we do plan on updating longer-term guidance when we get to our December investor and analyst conference.

And Michael, I would just add on to this. If you think about, one, the investments that we're making in the business. Two, some of the investments we made last year, as Richard has spoken, him and Mike are working together, diving into the investments we've made, trying to figure out how can we get better performance out of those and then ensuring as we're doing the test and learn before rollout, that they're working on as we head into 2018. Before we go out and commit to additional targets like that, when we get time for them to be able to continue to dive into the business, understand the opportunities for improvement and be in a position to really be prepared as we get to December to provide you guidance -- longer-term guidance that we think we'll have great confidence in. And so at this point, we just don't want to get ahead of ourselves.

That makes sense. And if I could add ask maybe more qualitatively. Robert, are you looking at all these investments and then changes in the 6 pillars with a lens that you're looking to take the business to be more efficient and maybe produce more leverage over time as you do grow sales?

Absolutely, yes. We know that certainly, we've got some investments we've got to make in this. We talked about the supply chain investments we're making. We know that as the business has continued to move, consumer expectations have had moved. And so we've got investments for making in our supply chain, some of those will pay dividends in 2018. Some of them will be further into the future. But yes, absolutely, that's what we want to do is making sure that as we're investing in the business, have the right people in front of the customer at the right time, supporting that with supply chain, supporting it with technology that we're getting greater leverage points to be able to drive improved operating margin in the future. That's what we're after, focused on diving into that in '18 so that we can be in a good point to provide you exactly how we're going to get after and how -- where it's going to be delivered when we get to our analyst conference in December. Great. Thanks, Michael. As always, thanks for your continued interest in Lowe's. We look forward to speaking with you again when we report our first quarter 2018 results on Wednesday, May 23. Have a great day.

Ladies and gentlemen, this concludes today's conference. Thank you all for joining, and you may now disconnect.