Atkore Inc.

Greetings and welcome to the Accord National Fourth Quarter Fiscal 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Keith Wisenand, Vice President of Investor Relations. Please go ahead.

Thank you, Rob, and good morning, everyone. With me today are Bill Waltz, President and CEO, David Johnson, Chief Financial Officer, and Jim Malek, Chief Accounting Officer. I'd like to remind everyone that during this call we may make projections or forward-looking statements regarding future events or future financial performance of the company. Such statements involve risk and uncertainties such that actual results may differ materially Please refer to our 10-K and today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. With that, I'll turn it over to Bill.

Thanks, Keith, and good morning, everyone. Let me start by saying that we're proud to report strong financial performance for the year that delivered double-digit growth in net sales, adjusted EBITDA, and earnings per share. Starting on our full year 2018 results on slide three, ACCOR outperformed on our guidance and delivered net sales of $1.8 billion, adjusted EBITDA of $272 million, and adjusted earnings per share of $2.78, up 22%. 19% and 69% versus last year. These results were due to several key factors. First, our electrical raceway segment delivered net sales of $1.4 billion and adjusted EBITDA of $255 million. This equates to a 25% increase and a 35% increase year-over-year based in part on our increased average product market prices and the pass-through impact of higher freight costs to the market. Second, the mechanical products and solutions segment delivered net sales of $470 million, a 14.5% increase year-over-year, due in part to higher volume of products sold and higher average selling prices. However, Segment adjusted EBITDA declined 19% versus prior year due to an increase in average input costs, which exceeded the average price that we sold through partially offset through higher volume. Third, our portfolio changes over the last two years have provided accretive margins, added $24 million of additional EBITDA versus 2017, and continue to drive synergies across the organization. Fourth, our pricing initiatives and active product mix management increase average selling prices $166 million, which more than offset commodity and freight inflation. Lastly, ACOR's overall strong financial performance also provides the ability to repurchase and subsequently retire approximately 19 million shares. As a result, Accor's ownership under Clayton, Duvalier, and Rice has transformed to a fully independent company with a board of directors that now reflects this new stature. Taken together, Accor delivered strong results for the year. Net sales adjusted EBITDA and EPS were all three up double-digit year-over-year, and exceeded the midpoint of our full-year guidance. We also delivered strong operating cash flow, continued to integrate our acquisitions, and deployed capital to repurchase shares in an efficient and accretive manner. We deployed additional capital shortly after 2018 closed to acquire VirgoCAN, a Belgium-based manufacturer of metal cable support, underfloor, and industrial trunking systems. will add approximately $48 million of net sales and $8 million of adjusted EBITDA for synergies. The team, the culture, and the business system continue to provide the discipline to deliver on our commitments to our customers as well as our shareholders. With that, I'll turn the call over to David, who will walk us through our financials in more detail and provide additional insights into the quarter.

Thanks, Bill, and good morning to everyone. Moving to our consolidated fourth quarter results on slide four, net sales were $478 million, up 16% organically after normalizing for acquisitions and foreign exchange. In the quarter, this increase was driven by higher average selling prices as well as favorable mix. Net volume, excluding acquisitions, was flat, reflecting the continued strength in the industrial environment for the MP&S segment and a softening in our electrical raceway segment in the closing month of the year. Volume for MP&S was up 8% in the quarter and 11% for the year. Electrical raceway organic volume was off 3% in the quarter and was up 1% for the year. The softer Q4 appears to be timing of distributor stocking. To total Accor, acquisitions added 6% to the top line in the quarter and 7% year-to-date. During the quarter, we incurred input cost increases of $46 million year over year. Through pricing and mix initiatives, we successfully increased our average selling price to $63 million. We've broken out those items on the adjusted EBITDA bridge on slide five. As we've mentioned previously, when we pass these costs through to our customers in price, net sales and cost of goods sold increase in equal amounts. unfavorably impacting the resulting margin percentages. On a constant input cost basis, our adjusted EBITDA percent would have been up 150 basis points versus Q4 2017. Gross profit was $112 million for the fourth quarter, up 25% or $22 million compared to the same period in 2017, driven primarily by price and mix versus cost. Adjusted EBITDA was $71 million, up $11 million, or 19% versus last year. Our net M&A activity accounted for $5 million of the increase to adjusted EBITDA in the quarter. These increases were partially offset by a small decline in volume, growth investments we've made in the business, and variable compensation. Our net income on a GAAP basis was $33 million, of $12 million versus the fourth quarter of 2017. Adjusted EPS was 79 cents, up 98% from the fourth quarter of 2017. Moving to our electrical raceway segment on slide six, net sales increased by $62 million, or 21%, to $355 million. Our recent acquisitions, all of which are reported in electrical raceway, increased segment net sales in the quarter by $26 million, or 9%. Organic volumes were down approximately $10 million, or 3% in the quarter. When combined with our strong first half, full-year volumes were up approximately 1%. The fourth quarter ended lighter due to what looks like inventory adjustments in the quarter, or in the channel, sorry. Higher average selling prices in the mix of product had a favorable impact revenue of about $47 million, or 16%. Adjusted EBITDA was $68 million, up $17 million, or 34%, compared to last year. The acquisitions account for $6 million of the adjusted EBITDA increase. Adjusted EBITDA margin increased by 180 basis points, with pricing execution accretive acquisition margins, and favorable mix driving the improvement. Moving on to our mechanical and product solution segment on slide seven, net sales in the quarter were up $20 million, or 20%, to $123 million. Volumes increased by 8%. As industrial markets continued to show strength, price increases accelerated in the quarter and added almost 16% to revenue. and the divestiture to flexible sprinkler business reduced net sales by 4%. Adjusted EBITDA of $12 million decreased by $3 million compared to last year. The reduction was primarily due to the divestiture to flexible sprinkler business. Cost headwinds versus our pricing traction partially offset by stronger volumes. Adjusted EBITDA margin is below the fourth quarter 2017 by 500 basis points, impacted by the price versus cost headwinds, which is in part due to timing of passing through the latest commodity increases to our OEM customers. However, we did see continued acceleration in our pricing traction in the quarter, with more than 70% of our 2018 price increases being delivered in the fourth quarter. We expect our pricing actions to catch up to the cost curve in early 2019. Turning to our balance sheet and cash flow on slide 8, the balance of cash and cash equivalents at the end of the curve was $127 million. Net cash flow from operating activities for the year was $146 million. Please keep in mind our working capital increased by about $45 million, most of that driven by higher commodity costs. the conversion will be higher when commodities flatten out or decline. Finally, our net debt of $778 million in leverage ratio, which we define as net debt to the trailing 12 months adjusted EBITDA, was 2.9 times. As we've communicated in the past, our long-term goal is to move this metric back to the low two times range, and we are moving in that direction. Now I'll turn the call to Bill for our guidance updates.

Thanks, David. Before I move to our future guidance, I want to recognize an important piece of our past. This is Jim Malek's last earning call with Accor, and I want to publicly thank Jim for being a strong advocate at Accor for the past seven years. With his guidance, the company started its evolution as a leader in the industry with strong fundamentals that will now enable our continued success. The entire leadership team at ACOR wish him well on his retirement in a warmer climate and as he improves upon his golf game. Jim, thank you for everything. Moving on to market expectations for 2019 on slide nine. My team and I spend a lot of time in the field with our customers and end users. The contractors and distributor partners are very positive about the project funnels and the activity they see in the market. They do call out Availability as labor is one headwind, though. With their input, as well as the latest forecast from Dodge and Architectural Building Index, we expect the construction markets to be up 2 to 4 percent in 2019, and we expect volumes in our industrial markets will be up 4 to 5 percent. Taking into consideration these factors, our 2019 guidance on slide 10 is as follows. For the electrical raceway segment, we expect volume to be up 2% to 4% and adjusted EBITDA to be between $265 and $285 million. For our MP&S segment, we expect volume to be up 4% to 5% and adjusted EBITDA to be between $55 and $58 million. For total ACOR, we are expecting 2019 adjusted EBITDA to be between $285 and $305 million. A simple bridge for the midpoint of that range, with our $272 million of adjusted EBITDA for 2018 as the jumping off point, add $8 million for the acquisition of VirgoCAN, then add net productivity savings of $6 to $10 million, and adjusted EBITDA generated by volume at 20% to 25% contribution margin, then subtract $2 million for the loss of EBITDA from the sale of FlexEd, and a net headwind from price versus cost of about $5 to $10 million, which offset some of the timing favorability that we saw in the back half of 2018. We estimate our adjusted EPS to be between $3 and $3.30. Interest expense will be approximately $50 million, and our fully diluted share count will also be around 50 million shares. Our tax rate will be about 25% for the full year. CapEx is expected to be between $35 and $40 million. Turning to the first quarter of 2019 adjusted EBITDA, our guidance range is between $67 and $72 million. The year has started out strong for our markets, and we expect that to continue as we go forward. To help ensure we deliver on our commitments not only now but well into the future, our teams will continue to focus on three key themes. First, we will provide profitable growth organically through product, service, and geographical expansion in addition to accretive and synergistic acquisitions. We will make it easier to do business with Accor and drive improved customer experience so that we become the customer's first and only choice. This means we need to drive strong execution of the voice of customer to deliver meaningful solutions. Third, we need to ensure we continue to recruit, develop, and retain the best talent in the industry. We are proud of the organization that we've built here at Accor and with engaged and aligned employees dedicating making business better every day for everyone. With that operator, please open up the line for questions.

Thank you. At this time, we'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question will be coming from the line of Andrew Kaplowitz with Citi. Please receive their questions.

Hi, this is Eitan Bookbinder on for Andy. Good morning. Good morning. Last quarter electrical raceway volume was marginally down and now you have inventory destocking. It seems like there is some volume degradation and that volume has gotten a little choppy as the year went on. Can you talk about the volume decline in electrical raceway and what is the risk that destocking continues longer than you think given that interest rates are coming up and there is some uncertainty over the U.S. economic situation?

Yeah, great question. From what we see, we don't see it in the market itself. In other words, back to interest rates and so forth, as we give guidance into next year. What we do see is some slight decrease in commodity costs. And therefore, if you just do a simple math on it, and there isn't a lot of inventory out there just because of the size of some of our products, but between Distributors and contractors, if you just take one week of inventory out of a 13-week period, that's 7%. So it's a slight decrease as distributors and so forth work down their inventory. And then the other thing that we have done really well and I want to emphasize, complement to all of our leadership, is work our mix management. So we are talking about volume, but if you actually look at our pricing, our revenue, We've gone, obviously, up significantly in those areas, and it's because instead of selling some of the basic commodity products that don't have quite the margin, there's a lot more focus on higher margin products. But when you measure in feet, which we do to give that indication, it works against us. So, you know, we're still very comfortable with our guidance as we talk to 2% to 4% raceway growth going into 2019. And I think most Other competitors would probably be talking the same type of ranges.

Thank you. And just as a follow-up, within industrial, you're still predicting 4% to 5% market growth. The industrial market seems pretty strong, and we know you're mostly U.S.-based. You have solid expectations for industrial in 2019. Are all markets growing in that range, or are there any industrial markets that concern you? Thank you.

We have such a wide, diverse thing. The one great thing with our group where there's still lots of opportunities, if I would start listing everything from racking systems that you put your Home Depot shopping cart in to roll cages to greenhouses and just walk through, that we have such a diverse set of segments. that there's nothing where one segment concerns us, and we are also optimistic about 2019. Thank you. Thank you.

Our next question comes from the line of Steven Winokur with UBS. Please proceed with your question.

Thanks, and good morning, guys. Hey, good morning. I just wanted to maybe dig in a little bit to, first of all, what you think goes on in terms of your ability to hold on to these price increases in the face of what looks like, certainly since October anyway, deflationary commodity price environment, obviously steel, et cetera. And also, will there be any differential impact between Raceway and MP&S in terms of the answer to that?

Yeah, I'll do them in reverse order. One of the things that we have that works for us really well with Raceway is it's literally everyday pricing that, I mean, every hour, quite frankly, that we do given market situation. So commodity costs are a factor in there, but just what supply, demand, or competitors doing, that we can react very quickly to pricing. And that's why you've seen us execute, I think, so well in 2018 and continue to expect to execute well going into 2019. MP&S is similar, but you have two challenges. One, there is 20% to 40% of the volume that is somehow tied to longer pricing. Either there's a contract term involved in it or you may bid a purchase order that's two or three months long. that just creates a price lag, and therefore we haven't seen quite the pricing strength that we have in Raceway. Now, that said, as we go forward, obviously we're going to continue to focus on what we do really well at Ackworth Pricing Discipline, and I know our whole mechanical products and solution on what best practices they can continue to learn and drive through our own self-help as we go into 2019.

Okay, so the deflationary side of that, given that what you're describing is a little bit of ability in MP&S, but Raceway is going to pass that on the way down just as quickly as what I'm hearing?

Yeah, I think. I mean, we gave our guidance here, and, you know, there may be, as we gave guidance, I mentioned I think it was $5 million to $10 million year over year, you know, because we did such a great job. And we also called out at the end of Q1 of last year the hurricane, right, you know, in PVC products where we had a bunch of resin and reacted quicker. So we're just trying to be very objective, conservative on our numbers. But at the end of the day, we've shown in the past, whether it's a deflationary period or inflationary, that we're able to keep and hold and drive our margins. And if anything... there's a little bit during deflationary periods that we're able to hold on to our prices up to 90 days more on the way down. So it could actually work to our advantage slightly as pricing goes down.

Okay. And, you know, another question in terms of capital allocation, obviously the market right now has been penalizing companies for you know, above a certain leverage level. And we're sort of seeing that in several cases. You guys have been delevering. We can see that. But, you know, you've certainly been allocating in a balanced way, too. How are you thinking about the pace of the deleverage from here? All right.

David, do you want to?

Yes, I'll take that. Steve, as we put in our presentation, you know, in Q2 alone, we were at 3.4, and we worked our way down to 2.9, to 3.4 after the large buyback. I think we continue to be balanced between two main priorities, that being accretive acquisitions where we feel we can add, you know, a turn or two of synergies. I think if you look at the Virgo CAN acquisition, I think it very much fits right into that you know, our disciplined approach as to what our priorities are in acquisitions. And then second, clearly, is going to be reducing our leverage ratio. With our cash generation, we have the ability to move this number down quite quickly. So I would say that, you know, it's all going to depend on, you know, the appetite or the availability of different acquisitions. But we do intend to move this down into the long-term range into the lower twos.

Okay, great. If I could just take one last in on your seasonality that you've laid out. I guess EBITDA looks pretty similar. Are you selecting normal seasonality through the shape of the year?

Yeah, at this stage. The only thing I would call out at all is just as you get into the details, if anyone recalls Q1 of 2018, we had higher volume distributors who were buying up probably even more so that we did call out. So we had a good – a tough comp on revenue and a little bit of profit in Q1. But, no, we're expecting normal seasonality and overall EBITDA up 8%, and you'll actually see probably even higher year over year, you know, for the first quarter. Okay, great. I'll pass it on. Thanks. Thank you. Thank you.

The next question is from the line of Dean Dre with RBC. Please proceed with your question.

Thank you. Good morning, everyone. And I'll add our congrats to Jim and wish him all the best.

Yeah, thanks. Appreciate it, Dean.

Absolutely. You earned it. Hey, maybe we can start with price-cost for 2019. You gave a helpful data point about the headwind, but how does that play out, at least what's baked in your assumptions on the quarterly progression for the year on price-cost? And I know you need a crystal ball for that, but just what's your best estimate at this point?

Yeah, great question, Dean. It's probably spread out throughout the year. I mean, every quarter, last year was an amazing quarter, or last year, excuse me, overall, again, where we were up 19%. We did have some one-time things in every quarter that you look and say, hey, PBC, we got extra spread in the first quarter, as we called out in previous quarters. Because of the U.S. President's tweets, we get our steel price up even higher in costs in Q3 and Q4. So I think in conservatism, we just want to make sure that there could be that $5 million plus as we give guidance and probably evenly spread across the quarters because of that, Dean.

Got it. And then on the adjustments to EBITDA this quarter, A little bit of noise there, at least versus what we were looking for. What were some of the larger items? Was there a non-recurring legal matter and some transaction costs? Can you just give us some color there, please?

Give us just one sec there, Dean, on specifics.

And as you're looking, maybe, David, give us some comments on tax came in.

lighter than what we were looking for what were the dynamics there and so we'll start with the tax first and basically i just said cool things when we had our stock comp excess benefits was higher than we expected so that definitely reduced the rate and then we did have a reserve tax precision indemnity that we reversed its It goes back to the Tyco pre-spin. So it was a FIN 48 release for, again, the tax indemnity. So those were the couple two one-timers for the quarter.

And then also it's, maybe it's looking, one of the biggest things for the one-time adjustments were we had, I'll give general numbers here versus precise, but slightly over $7 million of the reversal of an anti-dumping duty with the government. And then we also released a reserve with, I won't call out the company, but we had a legal reserve for $1.1 million if I can release the company. So they were the two big ones.

Got it. Thank you.

Our next question. Thank you. Excuse me, I'm sorry. Our next question comes from the line of Rich Kwan with Wells Fargo. Please proceed with your questions.

Good morning. This is Deepa for Rich Kwan. How are you doing today?

Very well, Deepa. How about yourself?

Pretty good. Thank you so much. I had a few questions. I'll start with the electrical raceway volume assumptions. Within your 2% to 4% volume assumption, which are some of the non-res verticals? that you think will grow at the higher end or slightly above and which probably will be more towards lower end? For example, institutional, do you have infrastructure in there, commercial in there? Any color there would be appreciated.

Yeah, so the two, obviously I'm focused on the positive. The two that we think are growing the most and that really help us because of what we call the density, and that's where we sell more electrical products per square foot. are education and um hotels both seem to be going up significantly some of the other ones that are just a little bit less are things i mean but they're so minor to us or things like parking structures public buildings seemed at least for 2019 be down but um education hotels and again if you think through that and even manufacturing are um line up to be in a great position as we go into 2019, our fiscal year.

Got it. So any color on your free cash flow expectations for fiscal 19? I mean, I think last year we got some guidance from Jim on that. Just curious if you have any to provide us this year.

Yeah, Deepa, this is Jim. I think on that one, you know, we've never really given guidance on cash flow per se in You see the tax rate and the capex and the interest expense that is expected. So we would leave that, and everyone knows where we flow from EBITDA, so we're going to leave that out there with the main components known.

Okay. But how do we think about, you know, as you're working capital converts for better, I mean, should we expect conversion to be better than fiscal 18 at least?

Yeah, I'm going to talk in days, and I think that we're going to be probably flat, maybe 2% or 3% improvement in days. And a lot's going to depend on what are we going to see on inflation, because that's going to impact inflation. the dollars and not necessarily the days.

Got it. So now that you are below three on leverage, I know your target is to be below two, closer to two. So that sets you up well for better capital deployment prospects, at least on the acquisition side and maybe some on care buybacks. It's not in your guidance, obviously. We see your $50 million share count probably just has some dilution factor in there. But how should we plan? How should we model for share buybacks, if at all, any color there? And if you can also help us think through what are you thinking in terms of capital allocation, in terms of acquisition, how's your pipeline? I think last year you had $150 million spent that you were targeting. Anything there would be appreciated. Thank you.

Yeah. So, Deep, I'll start here. David can add color. We've always stated, I'll just give slightly different numbers, to look at $100 to $150 million of acquisitions a year. And I think that's still the targeted number. But I really want to emphasize for everybody, if it hits all the criteria of being creative and synergistic and part of our strategy and the management bandwidth and the debt responsibility you bring up. So, some years you know we'll do three or four there may be a year we just close virgo pan that if there's not one that fits that we will wait patiently and we have such great use of our capital to continue to pay down i think you mentioned getting below two i would say our objective is to get to the low twos on um debt diva dot ratio and then from stock buyback You know, the only thing I would say is these are general numbers, but the board had authorized $75 million. We have used to date approximately 50, and we have approximately $25 million left. And we'll, you know, obviously consider what's best we perceive for our shareholders on what is the exact use of that capital between continue to drive synergistic acquisitions, continue to pay down our debt, and then obviously stock buyback.

Okay. So are you, like, not thinking in terms of, you know, as percentage of free cash flow, how you want to deploy capital, I mean, anything? I mean, now that your leverage ratio is well within, you know, favorable range, I mean, I would have thought you probably have some targets that you want to provide us with.

No, at least nothing, not externally, Deepa.

Got it, got it. That's all I had. Thank you very much. Thank you.

Thank you for the questions.

Thank you. As a reminder, to ask a question today, you may press star 1. The next question comes from the line of Taylor Finch with Century Management. Please proceed with your questions.

Hey, guys. Good morning. Good morning. Jim, congrats on the retirement and heading out on the high note. I wish you all the best.

Okay. Thank you very much.

Yeah, great. So I wanted to ask about your guidance in the $50 million shares. We're ending the quarter with a weighted average of $48 million, and I know that there was maybe a half million repurchase in the quarter. So I guess what's the disconnect there?

Basically, the only thing that we've really guided so far, we haven't guided anything stock buybacks or what have you. We did say we have some capacity up to 25 million. It's essentially our stock compensation dilution that we basically see every year.

Okay. That would be 2 million shares or... Roughly. Okay. Okay. Then... I wanted to revisit the capital allocation priorities. You mentioned a certain amount that's remaining on the repurchase authorization. But I guess given that your share price is at such attractive levels and next year should be a strong year of free cash flow, I guess how do you weight your appetite for share repurchases, I guess, given the market conditions right now?

Obviously, we feel our stock is undervalued and we do think that, you know, our stock we should be training much harder than we are. I think right now we're looking at our opportunities around acquisitions, like we've mentioned, reduction of our debt, and then we do still have capacity on our buybacks. I think we'll look at those in similar manners, the best way to deploy that capital, giving our opportunities with acquisitions at this point in time.

Gotcha, gotcha.

Okay, so then I wanted to ask about MP&S. So in terms of price cost catching up, it looks like your guidance might imply maybe an 11.5% margin at the midpoint on that segment. I guess as price cost catches up, can that margin do better than that in time? I think there's some prior comps that were a bit higher than that, or is that sort of maybe the launching off point from there?

Yeah, so the answer is, can it be higher? Absolutely, it can be higher. I mean, we gave guidance that we feel is the best, most accurate information to give, you know, to you, the shareholders and analysts out there. But obviously, over time, we aspire to continue to drive that adjustity up higher. And as we go out through the year and into future years, we aspire to get it back to the 13%, 15%. But I would still give our guidance that we just provided is the most accurate information for 2019. Great.

Yeah, so I guess just to rephrase it, for 2019, just on a price-cost basis, that will be fully caught up by year-end in terms of a price-cost basis.

Yeah, as accurate as yes.

Gotcha. That's it for me. Thanks, guys. Great. Thank you. Thanks, Taylor.

Thank you. The next question is from the line of Tafar Sidman with Walthausen. Please proceed with your question.

Hi. Good morning. I wanted to just get a better understanding of the volume performance, and you've talked about your you know, a metric like revenue per foot in the past and not on this call, but I think on some other calls, you know, thinking about, you know, where's the most profitability on some business and if there's even instances where there's some products that don't make sense to sell or we step away from those where maybe it's not even bad to lose some volume. So at a high level, Can you help us understand whether or not you think you're losing market share? And if you are losing share on a volume basis, can you just give us a little bit more color on either revenue per foot, revenue per pound, and how has that been trending?

Yeah, great question. I'll try to provide as much as I can with... We do feel we're either holding to losing possibly in the last quarter, you know, 50, 100 basis points a share. So, again, the markets are up in the low single digits. We were up in 2018 around 1%. So if you just assume 2% and we were up 1%, you know, we probably have lost a little bit. But I will tell you most of it's been very conscious where – We have done things to go we're going to push pricing up, hold pricing. Can you always have a competitor willing to lock pricing for a month? But we're making very conscious decisions to drive our earnings, our EBITDA, higher and also focus, as you just mentioned and we mentioned in our prepared comments, about the mix of products. In that area, I'll give you examples of things where we're selling – more specified products, larger diameter products that have a higher revenue and a higher gross margin. But I don't want to call out specific products down to saying here's the one that we're consciously moving away from or the customer. But I think it is that active management that really our employees have done so well that quite frankly delivers 19% increase in EBITDA in 2018, and it provides us the capability to give an 8% increase in EBITDA for 2019.

That's helpful, but I'm just thinking as a shareholder, thinking out loud a little bit, and I'm just thinking out loud, but I don't know very many industrial companies that maybe nearly year over year doubled their earnings and I will give it to you that your leverage ratio increased but your stock is down and you doubled earnings. Is there maybe more thought needed in terms of how we're explaining our business? And I'm saying this, there's some metal processing businesses and I'm not saying you're a metal processing business but is there any way that you could help shareholders with that understanding either Revenue per pound, and I know some of the products are plastic, some are made of metal, but it seems like the execution has been very, very good, and the story is just not being understood. Do we need to disclose that metric, or is it something for competitive reasons that doesn't make sense to talk about?

Yeah, I think a couple of thoughts. One, it probably does not make sense because, again, your thoughts are good. Realize that, as you even mentioned, steel. We're selling copper products, PVC-based products, and there's products beyond just those. So there's not a metric here. Some of it gets to just the sophistication, specific ability of different products. I do agree with you that one of the things that David and I and Keith and Investor Relations need to do is to get out and continue to tell the story better just because, as you mentioned some of the numbers, we've had a great year and we look forward to communicating why we think it's an attractive company for people to own. Okay.

And then maybe beating dead horse a little bit, but on the capital allocation with the stock repurchases, If you're looking at whatever metric you're using for looking at acquisitions, and I think in many cases you're using EBITDA and then maybe some post-synergy EBITDA metrics. If you have your stock down here, maybe it's sub-7 EBITDA. I don't know what adjustments you're using. How do we balance... buying our own stock, the easiest acquisition to integrate because there's no integration versus potentially paying more for deals and subjecting ourselves to integration risk.

Yeah, great. We are philosophically overall aligned. One of the things that we talk about is, so you said no integration costs. And if there was confidence in a management team in our future, as you look at something, yes, we would consider buying ourselves, i.e., stock buyback. On the same hand, by each deal, we have to look case by case. It depends on the synergies, you know, what does it bring to the profile, specifiable products, our future strategy. Over time, I personally believe the stock price will take care of itself as we continue to perform and communicate. So... That is one of our levers there. So with that, I was going to say just to wrap up, I was going to – operator, is there any other questions? Or if not, I was going to look to close the call.

There are no additional questions at this time.

Okay. So if I can wrap up then, you know, it's a great year in my mind. You know, I'm proud of what we've achieved. You know, we walked through some of the numbers, but, you know, You know, it's a great year. As we look forward to fiscal 2019, I think we're also excited on what we see out in the markets and our ability to prioritize and drive our success. The key thing to make that happen for us is our employees. So for them, I want to thank them for their hard work this year and everything I know they will continue to do and deliver to truly make us the customer's first choice. I want to thank our shareholders for their interest in Accor. And with that, everybody, I hope you have happy holidays. Thank you, everyone. Operator, you can finish the call.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.