W.W. Grainger, Inc.

Greetings. Welcome to WW Grainger first quarter 2024 earnings 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 Kyle Bland, Vice President, Investor Relations. Thank you. You may begin.

Good morning. Welcome to Grainger's first quarter earnings call. With me are D.J. McPherson, Chairman and CEO, and Dean Merriweather, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements that are subject to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially is included in the company's most recent form, AK, and other periodic reports filed with the SEC. This morning's call will focus on results for the first quarter of 2024, which are consistent on both a reported and adjusted basis. As a reminder, we have included a daily organic constant currency sales growth metric within these materials to normalize for the divestiture of our E&R industrial sales subsidiary, which was sold at the end of 2023. Definitions and full reconciliations of this and any other non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our earnings release, both of which are available on our IR website. We will also share results related to Monotaro. 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 from Monotaro's public statements. With that, I'll turn it over to DG.

Thanks, Kyle. Good morning and thanks for joining the call. 2024 started well. As we remain grounded in the Grainger Edge, we are focused on starting with the customer and staying focused on what matters most. I've seen this play out in several ways throughout the quarter. In February, we hosted the Grainger Show in Orlando, where over 10,000 of our customers, suppliers, and team members came together to showcase the products and solutions that Grainger offers. It remains a great opportunity to work together with our partners to solve customer problems. We've received great feedback on progress since the event. I've also had the opportunity to meet with a diverse set of customers from many industries. It has been great to see how the Grainger team continues to deliver value and further embed into our customers' operations. During a recent visit to a musical instrument manufacturer, I had the chance to see how our team partnered with the customer to help them standardize their product portfolio to lower cost and improve efficiency. This included leveraging our strong supply relationships and expanding our keep stock solution to ensure they have the right products in the right locations. I also spent time with a large public health system, which was in the process of building a new hospital. Throughout the project, we supported their operations as they transitioned to the new facility, ensuring products remain readily accessible across the campus. By supporting this customer throughout the significant change, we deepened their trust in Grainger and allowed them to focus on their area of expertise, patient care, while we took care of their MRO needs. Across all my visits, it's clear that we continue to show up well for our customers. Based on what I've seen, while each industry dynamic is different, overall demand for MRO products has remained soft, but generally steady to start the year. Inflation remains a talking point with customers and suppliers and is turning out to be stickier than we originally anticipated heading into 2024. Dee will provide details in a bit. Moving on to our first quarter performance, you can see we started the year largely as expected, delivering another quarter of solid results. Total company sales were up 3.5% or 4.9% on a daily organic constant currency basis with positive contributions from both segments. In high-touch solutions, we continue to advance our five key growth engines as we leverage our technology and data assets to unlock further value for customers. Within the endless assortment business, we remain focused on acquiring new customers and improving repeat purchase rates across the segment, and we made solid progress here in the quarter. From a profitability standpoint, total company operating margin was down as anticipated to 15.8%, a decrease of 80 basis points over the prior year. EPS finished the quarter roughly flat versus prior year at $9.62. Beyond the P&L, ROIC remained strong at 42.9%, and operating cash flow finished at record levels, which allowed us to return a total of $360 million to Grainger shareholders through dividends and share repurchases. Lastly, I want to mention that yesterday we announced a 10% increase to our quarterly dividend, marking the 53rd consecutive year of expected dividend increases, something we are very proud of. In addition, the Board refreshed our repurchase authorization, enabling the buyback of up to 5 million shares of common stock. These combined actions reflect our continued commitment to returning cash to shareholders through a balanced and return-focused approach. Overall, 2024 started off largely as expected, and the business continues to perform well. With this, we are reiterating our full-year 2024 guidance. We are set up to have a strong year of results for all stakeholders. I'll now pass it to Dee to go through the details.