BJ's Wholesale Club Holdings, Inc.

Good morning. My name is Sharon, and I will be your conference operator today. At this time, I would like to welcome everyone to the BJ's Wholesale Club Fourth Quarter Fiscal 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. We ask that you please limit your questions to one per participant and to re-queue for any follow-up questions. I would now like to turn the call over to Fatin Freja, Vice President, Investor Relations. You may begin your conference.

Thank you. Good morning, everyone. We appreciate you joining BJ's Wholesale Club's fourth quarter and fiscal 2018 earnings conference call. Chris Baldwin, Chairman and CEO, Bob Eddy, Chief Financial and Administrative Officer, and Bill Werner, Senior Vice President, Strategic Planning and Investor Relations are on the call. Chris and Bob will provide you with an overview of our results, followed by a Q&A session. Before we begin, please remember that during this call, we may make forward-looking statements within the meaning of the federal securities laws. These statements are based on our current expectations and involve risks and uncertainties that may cause actual results to differ materially from our expectations described on this call and in today's press release. Please see the Risk Factors section of our prospectus filed with the SEC on February 21, 2019, for a description of those risks and uncertainties. Finally, please note that on today's call, we will refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's policy and supplemental document posted on the Investors section of our website for a reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. With that, I'll turn the call over to Chris.

Good morning and thank you for joining us. We're pleased with our fourth quarter and full year 2018 performance. We continue to make progress across our business as we transform BJ's Wholesale Club. For the fourth quarter and for the full year, we exceeded our expectations for sales, earnings, and for cash flows. In the fourth quarter, we saw merchandise comp sales of 2.9%. Our sixth straight quarter of positive merchandise comps and an acceleration of our two-year stack. Notably, during the quarter, we grew comp sales in every business and in every geography in our company. For the quarter, adjusted EBITDA is $165 million, which is up 16% compared to 13 weeks last year. We continue to drive strong cash flows in the quarter, supporting the reduction of our debt well ahead of our previously communicated debt reduction schedule. Our results show the investments we started to make as we began our transformation in 2016 and 2017 are continuing to pay off. As an example, last year marked the first time that BJ's members were able to take advantage of our full omni-channel offering for their holiday shopping. Members could clip coupons on our app, use our buy online pickup and club offering, and take advantage of same-day delivery for fresh food. While we're pleased with our progress, we're much more encouraged by the opportunities ahead of us as our transformation is still in the very early stages. Our investments are focused on building the capabilities necessary to deliver long-term growth across our strategic priorities, which are acquiring and retaining members, delivering value to get them shopping, making it more convenient to shop at BJ's Wholesale Club, and expanding our strategic footprint. First, I'll give you an update on acquiring and retaining members. We ended the year with all-time highs for paid members and record highs for renewal rates and membership fee income. We also achieved record enrollment in Easy Renewal and in our highest tier memberships. More than half of our members are enrolled in Easy Renewal and over 23% are enrolled in our premium memberships. We continue to acquire members through digital channels. This is key to attracting younger families who are just discovering the Club channel. For the full year, we more than doubled the number of members acquired digitally. Our second strategic priority is to deliver value to get them shopping. I mentioned before that our current performance is the result of investments we began making several years ago. Nowhere is this more true than in our general merchandise business, where we started our assortment transformation. GM comp sales were up 5% in the quarter, a continuation of our strong third quarter performance. TVs are a good example of how our transformation is delivering results. Last year we invested to improve the high definition TV signals in all of our clubs, allowing us to better showcase our improved assortment, as well as sales in the quarter that were well above our expectations. We also saw strong growth in apparel as we reallocated space to our highest sales producing categories like outerwear, kids apparel, and women's activewear. We see room for continued growth in apparel as we continue to build our assortment capabilities and deliver an even stronger value over time. More recently, we started to revamp our kitchen assortment. For the quarter, we saw a strong growth driven by execution on Black Friday and better assortment. We still have plenty of room to go in this category, but we're encouraged by our progress. A key foundation of our transformation is to deliver unbeatable prices and improved execution in our grocery and perishable business. In the quarter, we delivered growth across these categories, driven by strong marketing programs and a sharp focus on value during the holiday season. During the holidays, our fresh food quality and low prices make us a destination for smart saving families. We saw perishable comp sales of 2% in Q4 with growth in produce, meat, and seafood. We also saw solid growth in our entertaining business, which includes deli and bakery platters. This performance was also driven by investments in improved in-club execution. Our own brands are key to delivering outstanding value and quality to our members. These products are also important to the success of our ongoing category profit improvement initiatives. We ended the quarter with 20% owned brands penetration. We see significant opportunities as we've developed more robust processes to build a strong pipeline of high quality products. As a result of our efforts, we've reduced our cost while maintaining strong member satisfaction. We've also adopted a sourcing approach that lets us get products to show faster while maintaining a consistent look and feel for our members. A recent Wellesley Farms wine launch with items priced under $10 shows how we can source multiple products from different suppliers and countries and deliver them to our members with consistent branding and market-leading value. In late Q4, we started the transformation of our services business by bringing our optical business in-house from our third-party supplier. This change will dramatically improve the value, service, and selection we offer our members, and we see Optical as a growth driver in the future. We are actively looking at our entire services portfolio with the goal of changing and adding services that will deliver value to our members and drive growth for our company over time. Our next strategic priority is making it more convenient to shop at BJ's. We made significant progress across our digital properties in 2018. Over the past year, we have launched and improved our app, buy online pickup and club, digital coupons, and, of course, same-day delivery. Members love these added digital features that make our clubs and online. We had more than 100 million visits to our digital properties in the year. In Q4, we surpassed 1.5 million app downloads, reaching this milestone in just over one year. We also achieved a 4.7 star rating in the Apple App Store. For the year, we had well over 100 million digital coupons downloaded by our members. Our BOPIC and same-day delivery programs, while still quite small, continue to grow rapidly. BOPIC was particularly popular during the holiday season as members were able to make purchases and pick them up within a couple of hours. We also launched ship-from-club capabilities in Q4, which gives additional flexibility as our omni-channel business continues to grow. Finally, we plan to expand our strategic footprint. We are set to open our new club in Clearwater, Florida in just a few weeks, and we're very pleased with our membership acquisition work so far. Clearwater is an infill club for us. Clubs like this play an important role in attracting both new and lapsed members. We've improved our ability to target previous members who respond well as we highlight the transformed BJ's Wholesale Club. We're also making progress in eastern Michigan and are on track to open two clubs there later this year. We see this region as a great fit for us, given that our target is the smart saving family, and we continue to actively look for additional growth opportunities in this region. Our gas stations are key to delivering value to members. We opened two gas stations in the fourth quarter, and by the end of the new fiscal year, we expect to have gas stations in about two-thirds of our clubs. Overall, our real estate pipeline is stronger than it has been in years, and we were on track to open four to five clubs and eight to ten gas stations in fiscal year 2019. Looking ahead to fiscal year 2019, we expect another strong year. Bob will have more details on our outlook. This year, we will continue to invest in advanced analytics to improve member acquisition, and we expect to launch point-of-sale technology that will drive co-brand credit card signups. We will also invest in our personalization, assortment, and pricing capability that will continue to drive our growth and will continue to improve the convenient services we launched over the past year. With that, I'll turn the call over to Bob, who will review our results and outlook for the year in more detail. Bob?