Let me now take a minute to reference the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This call contains forward-looking statements within the meaning of the U.S. securities laws, including guidance about expected future results, expectations regarding the Company's ability to gain market share, and expected benefits from the Company's investment and strategic plans. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements.Information about these risks is noted in the earnings press release and the risk factors in the MD&A sections of the Company's latest Annual Report on Form 10-K filed with the SEC as well as in the Company's other SEC filings. These forward-looking statements are based on the Company's current expectations and the Company assumes no obligation to update these statements. Investors are cautioned not to place undue reliance on these forward-looking statements. I would like now to introduce MSC Industrial Direct's Chief Executive Officer, David Sandler. David, please go ahead. David Sandler Thanks, Alex. Good morning and thanks for joining us today. With me are our President and Chief Operating Officer, Erik Gershwind; Jeff Kaczka, our Executive Vice President and Chief Financial Officer; and Shelley Boxer, Vice President, Finance and Accounting. I'll provide some perspective on our strategy. Erik will add details about our investments in the current landscape environment and Jeff will provide details on Q3 financial performance and Q4 guidance. Let me take you back a bit in time, when we experienced the downturn in ’09 I talked about it as the biggest land grab opportunity in my many years in distribution. At that time, I saw that we had a long runway to take share from weekend small regional competitors due to their inability to fund investment spending and lack of a balance sheet to support working capital on the rebound. As it proved out, we will correct and did capitalize on that opportunity. Unlike slowdowns and rebounds where share was gained and then the market return to normalcy we believe this time it is different.
I have had so many conversations with you over the years about the reason for the slow, but inexorable shift of market share to larger well capitalized distributors from the locals. We’ve talked about the stickiness of relationships and the quality of the technical abilities of these companies.The top 50 companies in 1995 represented about 14% of the MRO market. The top 50 now control 30% of the MRO market. Rapid share gains usually occur during the slowdown and recovery and then moderated through the in-between years. We believe that this is no longer the case. We think that the land grab continues and it is actually increasing in speed. The difference is technology and value added solutions. The combination of digital information e-commerce, vending and supportive technology is finally tilting the value equation towards those with the ability to invest. This period is one during which winners will widen the gap and lock in barriers of entry and competitive advantage and take major market share. To capitalize on this quickly changing environment and be one of the winners. It requires us to make significant investments in the business. Our enhanced investments program was initiated during the great recession of few years ago and has grown due to our need for new infrastructure builds such as our new CSC in North Carolina, our fifth CSC and to fund the increasing demand for vending and world class e-commerce solutions. We now face the challenge caused by the conflict between a slowing growth environment with our investment needs. We could cut back significantly and make adjustments in the business that could endanger our future success. As CEO, I have chosen a more balanced position, while we will moderate spending in many areas of the business in response to moderating growth. We will none the less push ahead with several of our investment programs that are so critical to our future. So, what does that mean? It means that if we are right and the results set this foundation for tremendously accretive growth over the long term. Then the short term moderation in earnings growth rates will be well worth it. At reduced sales growth rate similar to Q4 we can expect earnings growth rates will be slower than historical levels and incremental margins will still producing earnings growth will also decrease from previous levels. Read the rest of this transcript for free on seekingalpha.com