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spk05: Good morning and welcome to the WW Granger second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to our host, Kyle Bland, Vice President of Investor Relations. Thank you. You may begin.
spk06: Good morning. Welcome to Grainger's second quarter 2023 earnings call. With me are D.J. McPherson, Chairman and CEO, and D. Maryweather, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements. Actual results may differ materially as a result of the various risks and uncertainties, including those detailed in our SEC filings. Reconciliations of any non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our Q2 earnings release, both of which are available on our IR website. This morning's call will focus on our second quarter 2023 results, which are consistent on both a reported and adjusted basis for all periods presented. We will also share results related to Monotauro Please remember that Monotaro is a public company and follows Japanese GAAP, which differs from U.S. GAAP and is reported in our results one month in arrears. As a result, the numbers disclosed will differ somewhat from Monotaro's public statements. Now I'll turn it over to DG.
spk07: Thanks, Kyle. Good morning and thank you for joining us. Today I'll provide an overview of our second quarter performance and then pass it to D to walk through the financials in detail. As we work our way through 2023, Grainger continues to stay focused on what matters most, providing our customers with the products and services they need through exceptional service. Everything we do is grounded in our Grainger Edge framework, which I'd like to highlight today in the context of our recently released ESG report. I would encourage you all to check out the full report at graingeresg.com. Grainger has long been a leader in ESG, both for our customers and in our own operations. Internally, we have laid out four near-term ESG focus areas that are important parts of both our culture and operations. Early indications show that we are making meaningful progress. I'll start with our customer sustainability solutions. In 2022, revenue in high-touch US business for environmentally preferred products was more than $1 billion and has increased steadily over the last few years. Customer conversations around their environmental footprint have become commonplace, and we are well-positioned to help customers in this space. On the right side, you'll see how we are helping our customers achieve their goals by tying sustainability to our product and service offerings. We recently worked with a large container terminal operator that was in search of an opportunity to offset fossil fuel-based energy use, enhance its grid resilience, and reduce cost. Through our sustainability services offering, the customer purchased and will install more than 300 solar panels. These panels will help them avoid approximately 4,000 tons of CO2 emissions over the next 20 years. the equivalent of 9 million miles driven by a car. This is just one example, but we partner with our customers like this every day, connecting them to our network of service provider partners and helping ensure we can be the go-to partner for everything they need to run safe, reliable, and sustainable operations. Second, supplier diversity. Grainger plays an important role in championing businesses owned by underrepresented groups, including women, minorities, LGBTQ+, and people with disabilities through this program. Last year, we spent more than $2 billion on products from our diverse supplier base and continue to make further progress as we expand partnerships in this space. Third, energy and emissions. Since 2018, we've reduced our global absolute scope one and scope two emissions by 26%, nearing our 2030 goal of a 30% reduction. And finally, diversity, equity, and inclusion. DEI is a continuous journey. We are proud to have been named one of Fortune's best places to work for women in addition to being recognized by other organizations for our work to celebrate and support all team members, no matter their ethnicity, orientation, age, disability, or veteran status. Each of these near-term priorities are an important part of our ESG focus and are helping us to scale our actions to make a greater impact for both Grainger and our customers. Our team will continue to follow the Grainger edge as we make progress toward our own near-term initiatives and partner with our customers as they work to achieve their ESG goals. together positively impacting the communities where we operate. Now to review highlights for the quarter. As you can see, we again delivered a strong quarter of performance as we continue to show up well in supporting our customers. As expected, year-over-year growth rates are decelerating, but demand remains reasonably steady. For the quarter, we finished with daily sales growth of 9% or 10.1% on a daily constant currency basis. Results again were driven by positive performance in both segments, most notably within the high-touch solution segment, which outpaced the broader MRO market by approximately 525 basis points in the U.S. Total company operating margin was 15.8%, an increase of 190 basis points over the prior year, as improved gross margin performance was driven primarily by continued supply chain efficiencies and lower freight and container costs. Combine this with our strong top-line growth, and we delivered substantial EPS growth, robust operating cash flow, and continued ROIC of over 40%. We also returned a combined $265 million to Grainger shareholders in the quarter through dividends and share repurchases. Alongside these great results, we continue to make progress against our strategic initiatives. In the high-touch model, we are advancing our proprietary product and customer information management systems that fuel our growth engines and allow us to advance marketing, merchandising, and seller investments in the U.S. The endless assortment business is seeing some macro-related demand softening in the U.S., But overall, the team continues to focus on providing reliable service while increasing repeat purchase rates with core B2B customers at Zorro and growing with enterprise customers at Monotaro. Lastly, a few weeks ago, we announced our plans to construct a new 500,000 square foot distribution center outside of Portland, Oregon, which will support our customers across the Pacific Northwest and is expected to open in 2025. In addition, we are implementing three smaller bulk style distribution centers in Pennsylvania, Texas, and North Carolina, which are each slated to open over the next few quarters. These investments enable us to keep up with strong customer demand and allow us to extend our industry-leading service capabilities, which deliver a best-in-class experience focused on next-day complete fulfillment across the United States. As we remain focused on what matters, I'm pleased with the progress we have made through the first half of 2023. With our strong execution and as market demand remains reasonably steady, we are raising the midpoint of our full year 2020 through revenue and DPS guidance. I'll now pass it over to Dee to go through the details.
spk00: Thanks, DG. Starting with slide eight, you can see the high-level results for the total company, including strong daily sales growth of 10.1% on a daily constant currency basis. Although year-over-year growth rates decelerated compared to Q1 as inflation cooled and as we lapped a tougher prior year comparison, daily sales dollars remained strong, and we are on track to deliver a great year. Total company operating margin was up 190 basis points as expanded growth margins in both segments were further aided by SG&A leverage and the high touch solutions North American segment. In total, we delivered diluted EPS in the quarter of $9.28, which was up 29% versus the second quarter of 2022. Diving into segment level details, For the second quarter, we continue to see strong results within our high-touch segment, with daily sales up 9.9%, fueled by revenue growth in all geographies. Although year-over-year growth rates have slowed as we lapped prior year price inflation, volume growth remains healthy and was generally in line with our expectations for the quarter. In the U.S., we continue to see positive growth in nearly all customer and segments, However, this does include pockets of softness, including decelerating growth in manufacturing and commercial services. However, given our diversified customer base, this is countered by strong growth in other areas such as government and health care. In Canada, the economy remains stable, and we are seeing strong results with Canadian daily sales up about 7% in local days and local currencies. For the segment, GP margins finished the quarter at 41.7% of 200 basis points versus the prior year. Product availability levels remain high, resulting in fewer packages and shorter distance shipments in the current year as service returned to near pre-pandemic levels. This one, coupled with lower fuel and container rates, is driving significant fuel and supply chain tailwinds in the quarter. Product mix was also favorable, primarily due to improved product availability and a higher mix of margin accretive products and services. Price-cost spread was slightly negative after adjusting for a non-recurring 40 basis point supplier rebate benefit recognized in the quarter. As expected, the favorability captured in 2022 began to unwind in the second quarter, and we expect this to continue for the remainder of the year as we trend towards our long-term neutrality target. At the operating margin line, we saw improvement of 230 basis points year over year as the GP favorability fell to the bottom and revenue growth more than offset continued demand generation investments and headcount in marketing. Overall, this was another strong quarter for the high-touch North American segment. Looking at market outgrowth on slide 10, we estimate the U.S. MRO market grew between 4.5% and 5%. indicating that we achieved roughly 525 basis points of outgrowth in the quarter. Although this is a sequential slowdown from Q1, we count a very strong prior year quarter, and performance remains above our annual target to outgrow the market by 400 to 500 basis points through economic cycles. We are well on our way towards achieving that target again in 2023. Moving to our Endless Assortment segment, Sales increased 4.5% or 10.1% on the daily constant currency basis, which is just for the impact of the depreciated Japanese yen. Zorro US was up 2.8%, while Monotaro achieved 12.6% growth in local days, local currency. At a business level, Monotaro continues to execute well and is driving solid year-over-year revenue growth as they increase registered users and grow the enterprise customers. At Zurl, while slower growth partially reflects a tougher prior year comparison, we're seeing slowing demand across their customer base. Similar to Q1, non-core B2C business remained a headwind in the quarter and was down in the mid-teens year over year. Further, we have seen a slowdown in Zurl's core B2B business, which makes up a majority of Zurl's revenue. While we are still growing in the high single digits with these core customers, Macro-related factors are impacting demand given Xero's in-market mix, as well as their tilt to smaller size businesses, which seem to be struggling more in this environment. We expect both of these headwinds to persist for the remainder of the year. Stepping back, Xero has delivered great results over the last few years as we've added SKUs to our assortment, increased registered users, and served both core and non-core customers well during the pandemic. As we plan for our next leg of growth, the new local leadership team is focusing their efforts to drive repeat profitable growth with core B2B customers. This should help propel our results through the cycle as we continue to provide a one-stop endless aisle with easy-to-find products and a no-hassle delivery experience for smaller, less complex businesses in the U.S. From a profitability perspective, Gross margin for the segment expanded 50 basis points versus the prior year due to continued freight efficiencies and strong price realization at Montana and Toronto, which offset unfavorable product mix at Zorro. Operating margins declined slightly year-over-year to 8.6% as gross margin favorability was offset by continued investments in marketing and slower-than-expected top-line growth at Zorro. On slide 12, we continue to see positive results with our key Endless Assortment operating metrics. On the left-hand side, in line with prior quarter growth, total registered users grew nicely with Zorro and Monotarl combined up 16% over the prior year. On the right, we also continue to see growth of the Zorro SKU portfolio, which grew by 200,000 SKUs in the second quarter and stands at over 12.2 million in total. Now looking forward to the rest of the year. Given our strong share gain today and the continued support of demand environment, we are raising the midpoint of our full year 2023 outlook by increasing the lower end of our revenue and earnings ranges. Our revised outlook includes daily sales growth of 8.5% to 11% for total company, which is roughly a 75 basis points increase at the midpoint compared to the prior range. High-touch growth continues to trend slightly higher than expected as we continue to gain share amidst a reasonably steady demand environment. The strength in high-touch is offsetting lower-than-expected top-line performance with endless assortment, primarily due to the softness at Zorro, as previously mentioned. Altogether, at the total company level, we are confident in our ability to derive growth in the second half and achieve our updated estimates. Looking specifically at July, we've started the third quarter strong and reported month-to-date sales up over 8%, which is roughly 50 basis points higher on a daily constant currency basis. From a margin perspective, both gross profit margin and operating margin rate expectations remain unchanged from our previous update. From a seasonality perspective, we expect Q3 margin rates to decline sequentially quarter over quarter, as the one-time supplier rebate recaptured this quarter falls off and its price-cost favorability continues to unwind. Couple this with the continued rapid demand generation investments, and we expect total company operating margins to be lower in the back half of the year. However, we're still on track to finish 2023 with full-year operating margins at an all-time high. All in, the resulting revised EPS raise range has been raised and stands between $35 and $36.75. Supplemental guidance covering cash flow and share repurchase, which have also been raised, can be found in the appendix of the deck. In summary, I look forward to the remainder of 2023 feeling confident in our team's ability to continue to serve our customers well, achieve profitable growth, and drive strong results for our shareholders. With that, I'll turn it back to DG for some closing remarks.
spk07: Thank you, Dee. I am very proud of the ways our team continues to show up and support our customers. Our capabilities and deep understanding of our customers' operation positions us well in the back half of the year and into the future. When we stay focused on the things that matter, helping our customers find the right products and solutions, providing exceptional service, and investing in our supply chain and digital capabilities, we will continue to grow and gain share through any cycle. With that, we will open the lineup for questions.
spk05: Thank you. And ladies and gentlemen, at this time, we will conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. We will allow one question and one follow-up question. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from Tommy Mull with Stevens. Please state your question.
spk04: Good morning, and thank you for taking my questions. Good morning. Dee, I appreciate the insight you gave on Zorro's top-line trends through the quarter on the B2C versus the B2B side, and you highlighted that Even on the B2B side, there was some weakening, though it was still up. I think you said high singles in the quarter. So my question is, is there anything more you can tell us about that B2B deceleration in terms of end market or customer type or anything else you could provide there would be helpful? Thanks.
spk07: Yeah, Tommy, I'll take that. Yeah, so if you think about the vertical industry mix that Zorro serves, some of the fastest-growing segments in the Grainger segment The high-touch model would be government healthcare, some manufacturing like aerospace. Zorro does not participate in those really at all. And then the other trend we're seeing is Zorro is sort of small businesses a lot more than Grainger does, and those customers appear to be a little softer than the larger customers that we serve. So those two factors have a significant impact. Zorro did. increase the repeat rate in the quarter, but they have some work to do to continue to increase the repeat rate, so we're working hard to do that. But the segment mix is a pretty big impact on Zorro right now.
spk04: Thank you. That's helpful, DG. And then I also wanted to ask about the distribution center you announced for Oregon. I guess it's a two-part question. One, just anything you can give us in terms of timeline to break ground, cut the ribbon when most of the capex hits, and then Second part, just a higher-level question. Should we view this as any shift in a competitive strategy or emphasis in that part of the country, or it's more you just outgrew the existing roofline you had and needed to expand? Thanks.
spk07: Yeah, so, you know, we break ground in a couple weeks, and like we said, 2025 is when the building will be fully up, and so that's the timeframe on it. What I would say is that we have been surveying the Northwest out of our branches and out of a very small distribution center in Seattle. And we have outgrown that pretty substantially. And we've also been serving it out of Patterson, California. So putting the building up in the Northwest allows us to have more SKUs in market, better service. It also allows us to lower transportation costs because we have much shorter routes from that building to our customers in Seattle, Portland, throughout the Northwest. So it's basically just a normal course of action where we evaluate our footprint and continue to expand where it makes sense.
spk05: Thank you. Our next question comes from Ryan Merkle with William Blair. Please state your question.
spk03: Hey, good morning. Thanks for taking the questions. A couple questions on gross margin. So how should we think about gross margins in the second half? Is it around 39? Is that the right metric? And then does it dip a little bit in 3Q and then increase sequentially a little bit in 4Q?
spk00: So thanks for the question. I think if you kind of focus on the guide and then kind of look at what that implies for us, you know, we're expecting GP to decline slightly, mostly due to the high touch impact and what we have been stating pretty much all year that we started beginning of the year related to the unwind of price costs. If you recall last year, we took price. As we continue to say, price and cost continues to be somewhat lumpy. We can't time those things exactly right. And so we're going to see higher costs sequentially as we go through the year and a little slightly lower price. So we expect GP to decline a bit in the second half.
spk03: Got it. Okay. That's helpful. And then just a higher level question on gross margin. The guidance you put out there for 25 was high-touch gross margin, about 40%. We're a good bit above that here in 23. Are you planning on updating that outlook anytime soon, or how should we think about any new thoughts you might have there?
spk00: You're exactly right. What I would say is we've done really well through this process. period of cost inflation and our ability to price to the market and price well. As I stated last quarter, things still remain to be fluid, and while we're gaining some supply chain efficiencies, as we would expect, as well as diesel fuel and things like that coming down from some highs, I'm still looking to have a couple more quarters here, and we will definitely take a look at our outlook here in the future and provide an update.
spk05: Thank you. Our next question comes from David Mancy with Baird. Please state your question.
spk10: Thank you. Good morning. Also on the sustainability of gross margin, in high touch, you cited freight and supply chain and mix. And then there are various factors on the endless assortment as well. Are these factors, are any of those really prone to reversion? Or should we expect gross margin, at least within a band, to be reasonably sustainable until we get that shift between high touch and endless assortment back? It seems like that trend is going counter to what the usual trend would have been, which would be EA to outgrow high touch. Do you need to talk about that a bit?
spk00: Yeah, I do think that's the right way to think about it. So, you know, we are getting some tailwinds, or we have this year specifically related to supply chain and freight efficiencies, which, you know, are somewhat significant. And those can flip on us at any time. But right now we feel like we're in line. with where diesel fuel is, as well as we've gotten some benefits from those friction costs that we talked about. Didi just mentioned this, talking about transportation costs and extra legs of transportation that we had over the prior years. We're fairly normalized in those areas, getting close to pre-pandemic levels as it relates to that. We did have in the quarter some one-time favorability, about 40 basis points related to that one-time rebate. And, you know, we are seeing, as we kind of talked about, price costs in the quarter turn slightly negative, which we expect to continue. So those are some of the puts and takes as it relates. But, again, our target 40-ish, you know, 2025, we're not changing at this point in time. But I do feel very good about the stability of high-touch margins
spk07: in that range the other thing i'd add to that dave is that you know the transportation costs can fluctuate the supply chain efficiencies we are for all intents and purposes at this point back to where we were before the pandemic those should stay right we that we want those won't reverse that that was all pandemic driven uh in terms of all the inefficiencies we had in the system so they should say should that those pieces of it should stay stable okay thank you and then um
spk10: You mentioned price as a driver for high touch, but then you've been saying you're in this negative price-cost position. Dee, you had mentioned that it's a little tricky to line things up exactly from a timing standpoint. What opportunities do you have to take actions over the next six months, say, to reestablish price-cost neutrality, if you plan to do that at all?
spk00: Well, again, the U.S. team – you know, works really hard to remain price competitive. That's our other tenet that, you know, gets us to price cost neutrality and are always looking for opportunities to price and optimize price with our customers over time. So I would say that's the biggest opportunity we have related to price in the future is ensuring that we're optimizing and each of our customer segments have the appropriate price for the goods and services that we are providing them, but remaining price-cost competitive is the key tenet here that really buoys our growth, our volume growth over the cycle.
spk05: Thank you. Our next question comes from Chris Snyder with UBS. Please state your question.
spk09: Thank you. I also wanted to ask on price cost. And the prepared remarks, you know, said that price cost was negative in the quarter, at least in the year-on-year basis. But then you also said that price cost favorability will unwind in the back half of the year, if I heard that right. So they kind of sound like conflicting a little bit. I don't know if it's a year-on-year or sequential thing, but could you just maybe help me think through that? Thank you.
spk00: Yeah, so price costs in this quarter, when you adjust for the one-time supplier rebate, was slightly negative. And as we started the year, we provided an outlook that as the year continued to flow, that we would become price cost negative because we had favorable price last year. and cost did not come in as we had expected because we had the opportunity to continue to work with our supply base on the cost inflation, which is now coming this year. So that is why price costs will become more negative as we go into the second half of this year.
spk09: Okay. I appreciate that. Thank you. And then I guess Maybe just kind of following up on the gross margin topic, is there any way to think about, you know, maybe that level of price cost unwind into the back half of the year? And then also on the 40 basis points supplier rebate, any just more color on that? You know, usually that's something that we think of coming in the fourth quarter. Thank you.
spk00: Yeah, so I wouldn't over-pivot on the one-time adjustment. It was related to a prior period. It's not something that we would expect to continue. And I would say the other thing I'd add, if you look at our price cost over a longer period, maybe a two-year period, we do not expect it to be negative. That's how we end up hitting our target of price cost neutrality over time. So I would not read into that some of the impact that we're going to have in the second half of this year are expected to continue any longer than that period.
spk05: Our next question comes from Christopher Glenn with Oppenheimer. Please state your question.
spk02: Thanks. Thanks for taking the question. I had a question on endless assortment. Curious how you consider the thought that perhaps the fundamental kind of algorithm for 16% to 18% growth to 25%, you know, temporary lull or maybe more practical to reconsider long-term, perhaps high single digits, low double digits. I know, you know, Zorro's rationalizing some of the customer mix and Monotaro has some different strategies around customer demographics that have been a bit in flux as well. So curious what might be a practical update on that metric.
spk07: Yeah, so I appreciate the question, Chris. I think similar to sort of gross margin outlook, we want to see probably a few more quarters of performance to understand how this plays out. The monetary business in Japan has continued to perform pretty well and not obvious that they're going to be in a different place than they have historically going forward at this point. And we do think that some of Zorro's issues are fairly temporary as they unwind some consumer business and some other B2B business changes that are going on. So not really ready to talk about sort of changing the outlook in the future, but certainly we will consider that as the year goes on.
spk02: Okay, great. And then I was just curious on the SGA spend rate in the second quarter, is that a kind of good benchmark. Think about stability in that kind of dollar rate range for the second half.
spk00: Yeah, I think that, you know, that's a good thing to consider.
spk05: Thank you. Our next question comes from Jacob Levinson with Mellius Research. Please state your question.
spk01: Good morning, DG.
spk09: Good morning.
spk01: If you'll humor one more price-related question and then we can And then we can move on just high level, trying to get a sense of whether your suppliers are talking about or have already put through mid-year price increases or if they're talking about further price increases in the latter half of the year or whether with inflation coming down, we're really just past that cycle, if you will.
spk00: We're working with our supply base to get back to some of our normal inflation cadence that was not so normal during the pandemic. So as it relates to this year, I think we have a good handle on what we believe our cost inflation will be, and we've embedded that in our guide. And of course, later in the year, we will start working with them on what 2024 looks like.
spk07: Yeah, we talked about this at the beginning of the year, Jake. I think that almost all of the inflation we're going to see this year is wrapped from last year. And so we're seeing puts and takes, ups and downs with suppliers. But in general, there's just not a lot of additional inflation coming in from our suppliers.
spk01: Okay, that makes sense. Just switching gears to inventories for a second. I know your inventories, at least in dollar terms, seem to have stabilized here. I'm sure that there's inflation there. uh, math in there, but how are you thinking about stocking levels going forward? Uh, or maybe said differently, is there, you know, is there a new normal post the sort of supply chain disruptions and COVID issues that we've seen the last couple of years that that's, um, that that's maybe higher than it was back in 2019 or so.
spk07: Yeah. I mean, you know, so what I would say is we generally, uh, have two premises when we think about inventory levels. The first one is to stock to service levels. So based on the velocity of items, we set targets for the service we want to provide on those items that is competitively advantaged, and we basically stock to that. The other is we look at wasteful inventory, inventory that isn't productive, and make sure to manage that down. I don't think we're necessarily in a new world. We still have some elongated supplier lead times now. Those have mostly come down, and as those continue to come down, I suspect we can be mostly back to where we were historically from an inventory perspective to revenue.
spk05: Thank you. Our next question comes from Patrick Bauman with J.P. Morgan. Please state your question.
spk08: Oh, hi. Good morning. I got one more on price. Sorry about that. Is there an update to how you think you're going to finish the year on price at high touch? And just curious if you're seeing any changes in demand elasticity with respect to, I think you make changes with your web pricing ahead of making changes in the CRP. Just curious if you're seeing any changes to elasticity related to moves you're making there. And then on Zorro within the price discussion, has that been holding up as well as it has in the high touch segment?
spk00: So I'll start. We made some pricing changes earlier in the year. We don't see in the US a need to make any significant pricing adjustments for the balance of the year, but the pricing team is always in the market looking at price and making sure that we are competitively priced. The Zorro business, I would say from a gross margin perspective, operates a little bit differently and are targeting a different customer segment, as DG alluded to. They also have their own pricing algorithm and pricing team that is focused on remaining competitive with the customers that they are serving and have taken action to price their products in line with the inflation that they've that's been passed on to them.
spk08: And then the price for the year there at high touch? Price at high touch for the year. Do you have an update on that? That was part of the question.
spk00: Oh, sorry. I missed that. So, you know, it still remains around a 4% to 5%. That hasn't changed.
spk08: Okay. My follow-up is on inventory. Again, I guess I'm just curious what drove the better-than-expected cash guide, you know, the upgrade to the guidance. Was it you're planning to hold a little bit less inventory than you previously planned, or is there something else?
spk00: No, really the operating cash outlook is really due to the top-line improvement at high-touch that really flowed through. And as a result of that, we took the opportunity to update the cash operating cash flow guide about $75 million at the midpoint.
spk08: Okay, thank you.
spk05: Thank you. Our next question comes from D'Andre with RBC Capital Markets. Please state your question. D'Andre, your line is open. Please unmute yourself.
spk07: We think it's probably Dean Dre, since we know who that is.
spk05: Sorry, Dean Dre. Your line is open. Please go ahead, RBC Capital Markets. Okay, we will move on. And that's the final question for today, so I'll now turn the floor over to D.G. McPherson for closing remarks. Thank you.
spk07: All right, thanks for joining the call today. You know, what I would say is, The year is playing out pretty much as we expected. We talked a lot about price-cost. It's actually played out almost exactly like we expected at the beginning of the year. So there are really no surprises generally in the market at this point. We continue to feel good about our performance, our share gain, our profitability, and feel like we're well-positioned to have a really strong second half relative to the market. And so we're going to continue to work on that. And just appreciate you being on the call, and I look forward to seeing you and talking to you down the line. Thanks so much.
spk05: This concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.
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