Welcome to the WESCO International, Inc. first quarter 2015 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Dan Brailer, Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Good morning, ladies and gentlemen. Thank you for joining us for WESCO International's Conference Call Review our First Quarter 2015 Financial Results. Participating in today's conference call are the following officers, Mr. John Engel, Chairman, President, Chief Executive Officer; and Mr. Ken Parks, Senior Vice President and Chief Financial Officer. This conference call includes forward-looking statements, and therefore, actual results may differ materially from expectations. For additional information on WESCO International, please refer to the company's SEC filings, including the risk factors described therein. Finally, the following presentation includes a discussion of certain non-GAAP financial measures. Information required by Regulation G with respect to such non-GAAP financial measures can be obtained via WESCO's website at wesco.com. Means to access this conference call via webcast was disclosed in the press release and was posted on our corporate website. Replays of this conference call will be archived and available through April 30. I would now like to turn the call over to John Engel

Thank you, Dan. Good morning, everyone. We had a challenging start to the year reduced demand in the industrial market, weather impacts and foreign exchange headwinds weighed heavily on our results. Our organic sales for workday grew 3% sales momentum decelerated through the quarter. Solid sales growth in construction, utility in CIG offset decline in industrial. As a result profitability was negatively impacted and was down versus the prior year. Free cash flow generation was strong and we further improved our financial leverage in the quarter. Our capital structure's in good shape and our acquisition pipeline remains robust with an excellent list of opportunity to strengthen our electrical core and further expand our portfolio products and services this year. We expect reduced demand in commodity driven industrial and market and foreign exchange headwind to continue. The decline in global oil, gas and other commodity prices present uncertainty for the global economy but they optimize broader GDP expansion opportunities across our diversified customer base. So far that here our customers have been reacting to these challenging macroeconomic conditions by reviewing projects in their pipeline also slowing down capital and discretionary spending and cutting costs. We are supporting our customers' request for additional cost savings by providing our full set of One WESCO supply chain solutions. Our second quarter is off to a slow start as a result we are taking additional actions to accelerate our One WESCO sales initiative and simplifying streamline of business. These additional litigating actions include consolidating a series of branches and reducing structural costs, while also adding to our sales force to address underserved territories and customer accounts. Ken will outline a financial impact of these actions in his commentary. Our One WESCO strategy continues to drive our long term value proposition particularly for customers looking to…

Thanks John and good morning. Our outlook was for first quarter consolidated sales growth in the range of 5% to 7% over the prior year. First quarter sales were $1.82 billion and that set the slight increase over the prior year. Workday adjusted organic growth of 3.2% and growth from acquisitions up 1.2% were partially offset by 2.5 points of unfavorable foreign exchange impact as well as the impact of 1 less workday. The U.S. and Canadian businesses each grew approximately 4% organically compared to last year's first quarter. Pricing for the first quarter was neutral. Organic sales growth for workday accelerated as we move to the quarter with January up 10%, February was flat and March declined 2% organically. Sequentially, organic sales per workday declined 7% due to decelerating demand. We continue to closely monitor our oil and gas customers which represent approximately 10% of our total sales. Approximately 55% to 60% of our oil and gas sales are upstream approximately, 5% to 10% on midstream and approximately 30% to 35% are downstream. We estimate that direct oil and gas sales were down approximately 10% than the first quarter compared to last year with upstream the most impacted. We've begun to see some project cancellations and deferrals however oil and gas projects make up only about 5% of our total backlog. We expect direct oil and gas sales to be down approximately 20% for the full year or an overall impact on 2015 sales growth of approximately 2%. Overall backlog remain healthy and is up approximately 5% versus year-end 2014. U.S. backlog expended 5%, while backlog in Canada increased 12% on a local currency basis. Backlog versus the end of the first quarter last year was down 1% in the U.S. and up 12% in Canada again on a…

[Operator Instructions] Our first question comes from Deane Dray at RBC Capital Markets.

Hey, was hoping to start on the conditions that you saw throughout the quarter, the fact that monthly sequence was decelerating and the exit rate -- and has continued into April. So, you are very short cycle here -- not a lot of backlog, but just take us through what visibility you have into the second quarter, the degree of confidence in the sales forecast, in light of that deceleration?

So as we move through the first quarter as you saw and you quoted what we said the deceleration January, February to March. What we really -- what we saw if we think about it from an end market is truly be industrial portion of our business took the significant step down as we move through the quarter and in the month of March was the part of the business that took the most significant step down, so they accelerated the trend. Partially offset by some more solid or I should say consistent performance in the other end markets. The point you made fits within that industrial stage, which is into the shorter cycle part of our business and they do move more quickly than some of the others because of the backlog. So as we look out to on the second quarter, where we sit today which is at about organic growth flat in the month of April month to date, it's categorized pretty much the same way if we think about end markets, the software in the industrial space and some stronger growth rates in the other spaces. Comfort level with the second quarter outlook I would say that will be driven significantly by how we see industrial start to move, we think the backlog is there to support the construction side of our business, we know the utility programs that are rowing in to place. You know, how the utility part of our business works. But the comfort level will be driven by what that projection looks like and what the actual results look like out of our industrial end market. We have size the range for the second quarter anticipating that they continue approximately how they are today. And the only thing I'd add Deane is other factors that will drive Q2 is will be entering obviously the construction season. And so, if you look at our results last year, which is typical seasonality, let me say. We have a step up in growth or sales in from April to May to June. Our backlog is obtain as the chances we entered into second quarter book-to bill is above 1.

On construction -- where do you stand in expectations regarding some of the industry indicators? We've heard and seen that it is pointing to up high single digits growth ABI and another uptake and so how you calibrating your construction exposure into the what should be looks to be a favorable construction season?

We're pleased Deane with construction as part to you, when you think about it. I'm not going to say this Q [indiscernible] worse than last year in some locations as we've much worked like in the North East and other locations that were nowhere in here that is last year. So, we're particularly pleased with our construction resulting Q1 with 8% growth in the U.S. and 8% growth organically in Canada and I said the backlog built up nicely and that momentum is starting as far in April. So I think, we're seeing kind of some nice momentum building in construction, it is what we expected. Our view is that the leading market indicators which you’ve cited excited, set up for continued positive vector to growth in the construction market throughout the balance of this year-end and the other thing that gives us some conform is we do think we're in the recovery portion of the cycle, we stated that previously. Clearly see that continuing in current construction and [at best], oil and gas clearly being down. So, for that particular construction projects and then non resi total market is still some 20% of the prior peak that was reached back in the first quarter 2008. And overall electrical shipment, I don't think we sight this data frequently is still of the prior peak that was reached in the third quarter of 2008. And obviously that as heavily tied to non-resi peaking as a big driver and where industrial production was. So, I would say that we share the view with the favorable leading indicators in our business is as started off nicely in construction.

Thank you.

Next question comes from Robert Barry, Susquehanna Group.

Good morning. So my first question is on gross margin, want you that gross margin was down 50 basis points. What is in flight in your guidance for the full year in terms of gross margin? Is there a similar decline?

If you look at the trend, I'll give you little bit background and then answer to question for you look at last year gross margins declined as we moved through the year primarily due to the mix of business and the -- as we're impact our supply volume rebase impact due to growing business was softer volumes and we had planned as we started 2014. So if you rolled that for to this year and say why do we thinking about? While first of all we have -- we don't gives specific gross margin outlook for any of the future quarters of the year but we do obviously talk about operating margin, there is two things for you, first think following to that, which is we've size some incremental cost reduction actions for the second half of the year, which we are obviously provide some operating margin with as those savings go through, those benefits will be more second half loaded than they are first and if you kind of put those in an kind of back into a gross margin what you’ll see is that the gross margin rate doesn’t have expected continuing downtrend but the rate of variance year-over-year would not be the declining like it was in the first quarter because we had tougher comparers on gross margin in the first quarter. We do think that in the first quarter much of the decline is due to mix of business as well as the resizing of the year for growth and related to prior volume rebates. You can pretty much think about that 50 basis points as half due to business mix and half due to re-estimates of volume rebates in light of a softer demand outlook or softer sales outlook I should say. And that mix of business is truly where we’re not seeing declines in any of our individual businesses in gross margin, but it is the mix of how our businesses are coming together as different pieces grow. As a matter of prospective I’ll give you one little data point on that which is if you think about it now with the softer Canada and the impact if FX on Canada that portion of our business has now come down from 25%, 26% down a few points into the low 20s. And that’s we’ve been pretty clear about that a more profitable part of our business relatively than the WESCO average overall from a gross margin. The utility business which has grown, we talked about 16 quarters of growth combine with our WIS business those tend to be on the lower side of our gross margin average rate. The WIS and the utility business is now bigger than our Canadian business. So that gives you some prospective on how mix is impacting the overall gross margin rates, while the individual rates within those businesses are not declining.

My second question regards oil and gas. On Investor Day, you guys mentioned that increasing MRO would partially offset weaker project spend. Is there still something you believe is true and how is it tracking after day? Thank you.

I think we still believe that that is true and we’ll see that dynamic, I mean with that said, there is no doubt that our customers are taking significant actions and in the oil and gas portion of our business in particular they are taking some pretty significant actions around reducing CapEx and discretionary spending, as well as cost cutting in the form of significant layoffs and I think you’ve seen many of these announcements that have been made publicly. So, we still believe that dynamic is the case, but some of these customers are pulling the range back on discretionary spending as well which does sweep MRO under that category. And you can’t pull that back and not spend there forever. So the dynamic that we believe will occur we'll move through this is playing out and we think that will continue.

And when we made that statement at Investor Day, I think it's important to think about the timing of this as well. What we said was that in the short-term MRO spend will continue at a stronger rate. We expect MRO related expenses to continue at stronger rate. And then the project impact softens up. You can see that in what we just said about the quarter versus our full year outlook for oil and gas and direct sales. The first quarter we said was down about 10%, which reflects the flat fact that MRO spending has been tighter but it's continuing and what we expect to that we’ll drive the 20% full year reduction is as the price of a barrel of oil stays down, that MRO spending may soften in the second half as well as the project spend.

The next question comes from Josh Pokrzywinski at Buckingham Research.

First on the free cash flow guidance or I guess the conversion guidance of 80%. Can you help us dimension that a little bit? Because at 80%, we're talking low $4 in free cash flow per share, so almost $1 below where you guys have been in the last couple years. And over the last couple of years, obviously had a year and there were you didn't get the benefit of the equal amortization. So I guess I'm just surprised, given some of the top-line headwinds that the working capital wouldn't be coming down more and that 80% wouldn't move up.

Fair question because you look at the history and you can see that I think over the last five years we’ve run on average north of 100% free cash flow to net income. Implied in our sales guidance with a flattish first-half where we want to pick those numbers on the up end of our full year outlook is 3% top-line sales growth range and which would imply a second half pickup in sales above that. I’ll tell you what you can expect from us is what we always deliver which is strong solid cash flow, keep the 80% guidance out there that’s what we have done consistently, but we consistently try to over deliver that and we will do the same thing this year as we move through the year.

I guess on the implied second half here for the top-line, it looks like there is maybe 150 basis point, 200 basis point acceleration on an organic basis versus first-half. You mentioned maybe MRO didn't stay down forever. Maybe CapEx on the more industrial basis has some mean reversion or some of these plus come out. Obviously non-resi is getting better. But I guess when you guys rolled out guidance, what was the primary driver of that second half increase?

So I think it's tied back to Deane’s question earlier, Josh so you're thinking about the construction momentum that's being built we're in the recovery portion of the non-residential phase. I didn’t address this yet, but in particular we’re still seeing nice growth in utility, nice growth in our communication and security category. so our communication and security category grew low double-digits in the quarter with growth in both data communications, broadband communications and IP security, lighting remains a category that we’re seeing growth in. And so when you begin to look at construction and different product categories that I think will set up for some improvements if we move through the year. We expect utility to continue to perform strongly above market as we move through the year, industrial I think is the wild card. And so, those customers and that’s where we have it's the biggest end market we serve. We have more end user direct relationships and they can move much faster in terms of addressing reductions in small projects and discretionary spending which is what we thought and are feeling. On the -- for the CIG end market, I’ll make note that we thought that was solid results in the first quarter and government after being flat last year, government grew mid-single-digits in the first quarter and we think that we can maintain some relatively solid growth in that as we move through the year.

So I guess just to paraphrase, maybe the stuff that's bad doesn't get a lot worse, and those areas where you're seeing momentum, CIG, utility and construction, continue with this pace?

Yes and you guys -- you ask the question and talked about guidance and obviously we think about that with all the best information that we have as we’re putting it together, but you can see that as we range the year you take the midpoint of our guidance and really the midpoint is a flat year on the top-line. We do believe there is still a 3% upside scenario we wouldn’t have that out there, 3% growth scenario and John pointed out all the reasons why the industrials move negatively on as quickly it could be down a couple of points. But what we do think is that the midpoint of the guidance looks like more of the flattish year as we move through the second half.

Next question comes from Christopher Glynn with Oppenheimer.

Hey Kenneth, I was wondering how much of the decline in the Canada gross margin that you described is based on the FX impact on some of your U.S. sourced product?

No so much on U.S. source product, it's based purely on the translation impact of their results to our P&L. Canada primarily sources Canada product for Canadian sales, we don’t have a lot of cross border transactions. So it is primarily the translation impact of their results and you know what those rates have done over the last 18 months or so.

And Chris think about our major supplier partnership. So Eaton, Schneider Electric, now with EECOL, Philips, ABB Thomas & Betts and the like, they all have Canadian based operations, factories in Canada. So when you look at them, if you were to look at the distribution of our product categories in the supply base it provides them, it's overwhelmingly a Canadian supply chain that serves the Canadian market.

And so as this might be a wider revenue guidance range then I've seen you have in the past, and is that mainly reflecting just that at this particular juncture in time, there is a binary kind of industrial MRO outlook?

I mean quite frankly this thing moves on us extraordinarily quickly. I mean we started the year with really good strength, having January up 10% building off the momentum we have built from Q2, to Q3 to Q4 last year, then February flattened out to no growth, but as we looked at that we had some particular and acute weather issues. For example in our Eastern part of our U.S. business, we had 75 branches close at least a day and so we had some issues in February and that West Coast ports strike impacted not so much in our supply chain minimally, but some of our customers operations. And so we felt the effects in February. We fully expected a spring back in March particularly because of the way the weather season started to improve and it was different than last year because out west it was in U.S and Canada it was unseasonably warm versus last year and in the East it was seasonably cold and got lot more precipitation. And March surprised us I guess I don’t how to say it but absolutely surprised as we moved to middle of the month and later part of the month we expected the acceleration we didn’t get it which we typically yet March and thus far in April as Ken mentioned in his commentary it's a bit better than March but it hasn’t really sprung back yet. So I think that’s really the bases of we're factoring in what we felt thus far through three and half months in that outlook.

Okay. Thank you for that color. Lastly, the guidance does imply an unusually steep second half margin ramp. Clearly a more second half weighted earnings than usual. I think the past couple years, you have been pretty active on cost initiatives. Are we simply to read here that the magnitude and scope of the cost initiatives right now -- apologize if I forget -- if you quantified it literally, but it's just a different scale?

Yes it's a different scale and it's a different level of actions we're always cost focus. We called out last year discretionary cost controls and that bucket of expenses there is a lot of things we can make decisions on pretty quickly and drive some reduction there. Those have continued into this year as we have had the soft start to the year. What's really going to drive the operating margin lift in the second half which you noted is indicated to the stronger obviously than the first. What John mentioned and I outlined is cost actions around structural cost take out branch consolidations and we size that at about $0.30 per share EPS impact on the year and that will be more second half weighted those savings because it takes more action to get those into place.

Our next question comes from Ryan Merkel from William Blair.

Thank you. First question on April, something you could clarify for me. Did you say April sales are flat on a total basis? And then, what are the components?

They are flat organically on a total basis and we didn’t break it down by end market that information obviously clarifies as we move through the quarter. But what we said the trends that we saw towards the end of the first quarter seem to be continuing into April. Now on a geographic basis we say that the U.S is performing a little bit better in April versus where they were in March and Canada is a little bit softer than where it was in March.

Okay. Am I right to think that the construction market really picked up in the second half of March and into April? Could you provide any kind of numbers to help us there?

I would say that nothing that is of value of pointing out construction as John pointed out moved fairly consistently through the quarter.

Lastly, are you seeing any impact in the key energy states, as it relates to construction yet?

Let's say it this way there are customers in the U.S that serve the energy market that are also taking significant action similar to customers in Canada out in the Western provinces. And so those actions were asking those suppliers and those in their supply chain for other cost savings pulling back on CapEx, deferring in delaying projects, reducing discretionary spending and executing layoffs and I'm sure you've seen some of the headlines in the energy states in the U.S where we [flew] the public announcement that occurred thus far. We're talking in the double digits of tens of thousands of layoffs that already been announced in a number of a different energy station aggregate. So those actions are clearly occurring. But keep in mind that and I think I mentioned in the last call and maybe the last two calls when you think about in general give you a rough order of magnitude when you think about investment related wells and mines, so oil, gas and then metals mining that's roughly 20% of the total non-residential spend and that’s going to be down significantly this year there is no doubt it and we've given you the outlook for our business because our business and factors in projects versus MRO the discussion we had earlier. Our business model and when you look at the true spend all in in that portion of the non-resi market there are estimates out there that range 20% 25% 30% down for the year, these are forecast. The remaining 80% of the non-resi spend includes some segments that are growing, commercial and healthcare and education. And so I think you've got a very broad and diverse non-residential construction base, commercial constructions improving and net to net all integrate all that and you'll at our results in the first quarter and this is what I commented in response to Deane's question sure we had solid results in the U.S. in construction.

But just to be clear, you're not seeing that shift in non-resi yet?

So, we have seen with many of our oil and gas and metals and mining customers irrespective of geography we have seen reduced spending is impacting our sales momentum so again we've seen in Canada we've seen in Europe we've seen in our U.S. and Canada.

Our next question comes from David Manthey at Robert W. Baird.

Thanks a lot. I guess just thinking about the gross margin. I know you said you don't give guidance, but with the industrial segment, assuming it's going to continue to decline as a percentage of the mix, given the strength you're seeing in Construction, Utility. Even if it does recover slightly, is there any reason to believe that gross margin shouldn't be flattish or maybe even lower as you move through the year because of that mix, or are there other countervailing forces?

I think that's a fair assumption and we've talked about over the last couple of years a lot of the initiatives that were doing internally and that's a highest level you can kind of assume that those initiatives are guiding driving improvement and the mix of business is offsetting that.

Okay. And then when if I run through the GPM, say 20% even going forward, the guidance for the second quarter seems to imply about $290 million in SG&A, including D&A, and something like $280 million in each of the next two quarters. I guess would jive with what you said, regarding the $20 million or $0.30 after tax of benefit you expect to see from those actions. The question I have on that is, assuming that $20 million or $0.30 is just repeating 2015, not a run rate, it seems like a big number. If you're looking at $40 million, isn't that 3% or something of your OpEx? It just seems like a sizable number. Just wondered if you could give us an idea of how sweeping these actions are actually.

So, we kind of defined and across if you want to caught two or three items structural cost take out and cost consolidation of branches those who obviously have an ongoing impact as we move into later years because we're looking at locations you followed the business for a while at the beginning of 2014 we structured the U.S. under a common leader and in doing so we took some of our legacy industrial and construction footprint and it's commonly owned by leaders that also [producer an data comp] foot print. We are now a year plus pass out we have the opportunity to look at that foot print where it might overlap and consolidate some branches it's not the majority of our branches we are not talking about that level of restructuring but what we're looking at is in certain jurisdictions where we have the multiple footprint communizing that will have carry over impact, that's a piece of that, that's a piece of the cost reduction actions that we talked about structural cost take out we always take the opportunity and we're doing it right now again to look at across the business and all functions and all places are at their positions that we need to take a look out and say do they exist, do they exist in other allocation do we need to more they are. Those will have carryover impacts. The third part what I add on for you was variable cost or variable compensation adjustments related to full year results, those won't necessarily carry over and have benefits to next because the result should anticipate to be at a higher level as we see the economic cycle and the benefits of some of the cost reduction that we've implemented this year carry over so a lot of words to say you described it exactly right which is the lift in the second half and the rate that you are estimating for OpEx is driven significantly by the savings from the cost reduction actions will define those and those take a while to define more allocated implemented some will be implemented earlier some will be implemented later in the year as we get closer to 2016 and start to talk about 2016 will give you guidance around the carry over impact of those benefits but it is clear that some of those will have carry over benefit.

Our next question comes from Matt Duncan of Stephens Inc.

Is the Ken cost sticking on the same topic, are there going to be some one-time expenses in the second quarter, tied to some of the branch closures and other things? It looks like the SG&A cost would have to be down in the back half of the year for the Q2 level, which marries up with what you're saying, but are there any one-time expenses flowing through the Q2 here?

There might be a little bit but I wouldn’t think of that as a really large number we are lot of locations outside around a lot of geographic footprint we don’t have big heavily capitalize investments that we have to look at as we move things around there could be a little bit of the negative product cost in the second quarter but it's not going to be sizeable.

Okay. And then a couple questions on the guidance. The first one, just on the revenue side, are you guys starting to factor in some negative effect from this sort of secondhand energy exposure? You have your customers’ energy exposure and the resulting decline in their businesses that flows through to you. Have you encapsulated that in this new revenue guide? And then secondly, on the sales force additions, is there anything in the guidance for their potential impact to help sales growth this year? How should we think about the addition of those folks, helping out next year?

Let me hit your first question first. Let me give a little insight underneath industrial for Q1 and so I will tell you we have seen impact in other industrial verticals beyond oil and gas and metals and mining in the first quarter. I think you will recall that we’ve shown you before we take -- if you just global accounts we have 14 different segments we cluster all our global account into. Over half of those global account segments declined in the first quarter. One of them is oil and gas. A second one is metals and mining. So over half decline that just gives you a sense that I think what we’re seeing again with industrial is somewhat similar to what we even do with our business where we’re rationing down discretionary spending. They can move very quickly. We’re seeing it happen fast. It’s impacting not just the discretionary in MRO but its impacting small capital projects as well. So we’re seeing that and we’ve factored that in. The big wildcard is as Ken mentioned how does industrial really perform as move through the balance of Q2 and through the middle parts the year and later part of the year. Relative to the sales force additions, make a few comments on this. First of all we don’t have any of the benefits expressly factored to our outlook for the full year. None, to the extent we get traction that represents upside. Okay, first point. Second point is and I will because again it’s an earnings call so I won’t take too much time with this. But we are in year two of this major organization redesign. We never had a global sales and marketing leader until January of 2014. In our Investor Day in early March, David Bemoras…

Okay. Thanks

Now, let me give you one data point on guidance piece of this I think your first question that may help you think about how we’re thinking about it. So we had set our top line growth guidance at Investor Day with 0% to 3% for the year. And within that direct oil and gas we said would be down 10% to 15% let`s just call it 15%. So let`s moved. Our outlook for FX hasn’t moved a lot. It’s still kind of running around the same rate for Canadian FX. We did take up our impact for direct oil and gas a little bit not significantly but to the 20% range that’s about another 0.5 point negative impact on sales growth. I am giving you that background so you can kind of size our thinking about indirect impact.

Ken, the widening of the range is essentially allowing for that indirect impact.

Absolutely, so pulling those pieces together I think if you kind of model it out and think about it we’re obviously indicating that we’re pulling in some more of the potential indirect impacts into the broader range.

The next question comes from Noelle Dilts with Stifel.

Good morning. Just wanted to go back to the rest of world segment. I know it’s not huge, but I was hoping you could maybe just give us a little bit more detail on a country level and some of the drivers of the softness that you saw in the quarter.

We haven’t talked about this probably in some time when you think about our international business it is outside U.S and Canada. So it's Mexico its South America because we're equal South America acquisition it's kind of Middle east as also Asia. And so we don’t really disclosed at a country level but I will give some sense. Business internationally is driven by global accounts ingredient supply and capital projects fundamentally. And so that’s where we see the challenges in global mining which specifically impacts South America were in Chile and Peru and [indiscernible] as a result of equal South American acquisition. Global mining global oil and gas and obviously we have foreign exchange impacts there as well which we laid out in the webcast presentation. We are feeling no challenges upstream project activity is being negatively impacted funded project seemed to be continuing so far. But there is slowdown early on in kind of the engineering and feed play of the process. Some new projects are being delayed and cancel. So it's not a large party or businesses have you said. But clearly we're feeling the impacts of these global commodity base markets that are slowing down. And with some of our integrated supply business we are getting some growth because that’s a little bit more diverse. So we do have the integrated supply business that extends at certain customers and certain countries. So buying by and large international business is driven by mining oil gas, capital projects and global accounts. Does that help?

It does. Thank you.

And one I want to point out I give me opportunity to point out one thing we've added to the webcast which runs to your question. In the back up we're showing you the pieces of the calculation of organic sales growth. The international business what we showed on the chart the organic piece keep in mind that we are and you can see it disclosed we talk a lot about Canadian exchange rate and this part of the business rests of world is a lot smaller. But it does with the strengthening U.S dollar globally it does pull in significant FX impact into our overall number relative to its own business. And so just getting maybe opportunity to point that were making one more discloser back there for you.

Thank you, Ken. My second question is -- I don't want to beat a dead horse here, with the cost reductions -- but in my view, there's no question you've done a very good job of just containing cost really over the past year. So these moves into more footprint consolidation seem to be like a little bit more of a shift toward structural takeout and permanent cost takeout. Is there any way you could talk about maybe the actions you've taken over the past year and discuss how much of that you think is a little bit more temporary in nature versus permanent?

Very good question. It will run to a lot of the comments we've made already on switches over the last year I think that collectively the organization has done a very good and discipline effort at managing cost probably more in the discretionary control space. But we have done selective work force type action not large numbers that are driven out of what we talk about the lot lean initiative as we look in the functional group and the operational group. As we embed lean activities more and more in the business it gives us the opportunity to kind of look at positions in number of people and groups kind of manage to that. So it's been a mix of both structural things as well as short term things. But to your point I would say some of the things in the last year or so is probably more weighted to the discretionary control as opposed to structural. You are exactly right, you hear the commentary exactly the way that we mean it which is we're moving into a phase now where we're having the opportunity because of the re-organization that we did at the beginning of 2014 to look at our footprint and make some decisions around these groups of locations can be managed, operated, co-located housed together and it's not about under performance of those branches. We may be looking at things where we're optimizing performance, or improving performance of already well run businesses just because we're going to take the benefit of geographic proximity. Shift from the past some more they are discretionary now we're taking some more structural cost that will carry to the future. We'll size that more as we move through the plans but that’s exactly what's happening the way you described it.

Okay and sorry if I missed this, but did you mention how much this incremental $0.30 of savings is going to cost?

No we did not but I would anticipate we did say that it doesn’t have a big upfront cost to it. I think it will have some cost to it but think about the $0.30 itself as close to being that.

I think we've running out of time. Thank you for those questions Noelle. I think we may have few more folks in the queue Dan is obviously available I know that schedule is filling up. So let's bring the call to a close I would like to thank you for your time today and your continued support. Have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.