Dollar Tree, Inc.

Good day, and welcome to the Dollar Tree Incorporated First Fourth Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Randy Geiler, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Brittany. Good morning, and welcome to our call to discuss Dollar Tree's performance for the fourth fiscal quarter and fiscal year 2019. On today's call will be CEO Gary Philbin, Enterprise President Mike Witinski, and CFO Kevin Wampler. Before we begin, I would like to remind everyone that various remarks that we will make about future expectations, plans, and prospects for the company constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors included in our most recent press release, most recent 8K, 10Q, and annual report, which are on file with the SEC. We have no obligation to update our forward-looking statements, and you should not expect us to do so. In the fourth quarter, the company incurred several discrete charges as described below. a $313 million non-cash charge for goodwill impairment, a $24.6 million reduction in tax expense for the reversal of evaluation allowance related to the company's foreign net operating loss carry-forwards, an $18 million charge to the litigation reserve, and a $0.3 million acceleration in non-cash deferred financing costs associated with the debt prepayment. These items are detailed in the reconciliation of non-GAAP financial measures in today's press release. Unless otherwise noted, all margin, net income, and earnings comparisons presented today exclude the impact of these discrete charges from the fourth quarter and fiscal year. At the end of our prepared remarks, we will open the call to your questions. Please limit your questions to one and one follow-up if necessary. Now I will turn the call over to Gary Philbin, Dollar Tree's Chief Executive Officer.

Thank you, Randy. Good morning, everyone. I'm proud of our team's accomplishments in fiscal 2019, including the successful consolidation of our store support centers, the material acceleration of the Family Dollar Store Optimization Program, and the initial launch of our Dollar Tree Plus initiative. For Q4, despite the compressed holiday shopping season with six fewer days between Thanksgiving and Christmas, we delivered positive same-store sales for the enterprise while managing margins and costs effectively to deliver adjusted EPS of $1.79 near the top end of our guidance range. Fiscal 2019 was an important year for our organization as we further developed the foundation and fundamentals to grow and improve our business. Accomplishments for 2019 include the following. First, consolidation of our stores. Support Center brought the Family Dollar and Dollar Tree teams together in one building. This was a major project and announced in September of 2018 and completed this past July. Our working in one space has increased the energy, benefited our culture, and driven collaboration, efficiency, and teamwork that will enable us to provide even better support to our stores as we move through 2020. Our store support consolidation allowed us to organize our management around the key processes within the company and flatten our organization to accomplish the speed and focus we need to have on key initiatives this year. We made significant progress on the family dollar store optimization program, including closing more than 400 stores, rebannering 200 family dollar stores to dollar trees, in renovating more than 1,100 mature stores of Family Dollar into the H2 format. Third, the Dollar Tree Plus was introduced around mid-year. Mike will provide an update on the initiative, including the details of our Dollar Tree Plus 2.0 that is being implemented into our test stores this month. Fourth, we repurchased $200 million in shares during 2019. In recent years, we have made significant process of paying down debt. We have a scheduled debt payment for $250 million in April 2020, and we currently have an $800 million authorization remaining on our board repurchase plan. Our merchant teams traveled overseas for their annual post-holiday buying trip in January. This trip was led by our enterprise chief merchant. The teams continue to work directly with a diverse group of qualified factories. In fact, we had vendors from eight other Asian countries attend our qualifying open buying day. We consider this to be one of our most successful buying trips. We were pleased with the continued support we were receiving from our extended vendor group, and we were able to buy the value in key items and departments for both banners for the 2020 holiday season. Importantly, all return from China healthy and safe, just prior to the news regarding the outbreak of the coronavirus. Let me give you a bit of an update on the coronavirus as it affects our supply chain as we see it today. Our global sourcing group and merchants, along with our logistics team, are meeting daily and updating our progress on visibility to individual purchase orders. Generally, we are seeing production pick up and factory attendance is increasing each week. Our global sourcing team in China and third parties that provide quality assurance inspections are nearly at normal levels. All ports and third party freight consolidators are open and operating at near normal levels. And we are gaining all needed space on vessels for our freight. At this point, all of our Easter merchandise and lawn and garden seasonal product is in our domestic supply chain, either in distribution centers or flowing to stores. At this point, we see a very small percentage of product canceled, and some moving on to later delivery, usually by a few weeks. And our teams are working to mitigate with sources elsewhere, including domestic sources, to mitigate any effect there. More to come. In December, we announced enterprise-level organizational leadership changes to enhance the company's execution of our strategy. and to improve performance across the Dollar Tree and Family Dollar business segments. Among the management changes were the promotions of Mike Witinski to Enterprise President, Rick McNeely to Enterprise Chief Merchandising Officer, and Tom O'Boyle to Enterprise Chief Operating Officer. These and other actions are designed to increase enterprise-wide focus, efficiencies, and accountability. With Mike, Rick, and Tom, We now have our senior leadership working together across the company with increased urgency to move the needle on initiatives that will help us deliver bottom line results that will drive value to our shareholders and customers. Since joining Dollar Tree in 2010, Mike Witinski has been a key executive and partner in driving performance across the organization. In particular, Mike has led the store excellence operational initiatives and merchandising programs to drive sales and margin. It has been hands-on in managing our tariff mitigation efforts the past 18 months. Mike's promotion to enterprise president will continue our progression of elevating customer-facing initiatives in merchandising and store operations. I'll now turn the call over to Mike.