W.W. Grainger, Inc.

Greetings and welcome to the WW Granger first quarter 2025 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Kyle Blant, Vice President, Investor Relations. Thank you. You may begin.

Good morning. Welcome to Grainger's first quarter 2025 earnings call. With me are DJ 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 8K and other periodic reports filed with the SEC. This morning's call will focus on results for the first quarter of 2025, which are consistent on both a reported and adjusted basis. Definitions and full reconciliations of our 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 discussed will differ from Monotaro's public statements. Now I will turn it over to DG.

Thanks, Kyle. Good morning, and we appreciate everyone joining the call. Despite the unpredictable environment, the first few months of 2025 have panned out much like we expected. The business continues to perform well as our team stays focused on serving our customers and delivering value to our stakeholders. While tariffs are certainly a topic of conversation, customers remain acutely focused on running their businesses safely and efficiently. I recently had the chance to visit a large corporate campus where we work alongside a facilities maintenance organization to support this customer. Our team shows up as a trusted partner, helping the customer solve the challenges they face on the ground each day, including ordering, organizing, and managing their MRO inventory. It was again apparent that local on-site execution is critical to creating value for our customers. This visit was a good reminder that no matter what the external environment, it is important to stay focused on what we can control to ensure that we capitalize on a significant opportunity in the market. Although it's largely business as usual on the ground, the external environment remains highly fluid. We're working closely with our supplier partners to understand the full impact that announced tariffs will have on our business. Fortunately, the investments we've made in our product information and pricing capabilities, our scale, and the depth of our sourcing know-how positioned Grainger to effectively navigate this situation. As we move forward, we remain committed to ensuring transparency with our customers and adhering to our core pricing tenets, offering market-relevant pricing while targeting price-cost neutrality over time. Distributors generally benefit from modest inflationary environments, and depending on the depth and duration of the tariff uncertainty, it may play out that way, but the situation remains highly unpredictable. In any case, we expect to play a key role in helping our customers navigate this current challenge, and I'm confident in the team's ability to remain agile in this dynamic environment. Moving to Q1 results, while the demand environment remained muted, we delivered another quarter of solid growth and profitability in line with the quarterly financial targets we communicated for the company in January. We continue to leverage technology, our product and customer information advantage, and analytical capabilities to drive differentiated value for our customers in both segments. Total company reported sales for the quarter were up 1.7% or 4.4% on a daily, constant currency basis. Operating margins for the company remain healthy at 15.6%, and diluted EPS finished the quarter up 24 cents to $9.86. Operating cash flow came in at 646 million, which allowed us to return a total of 380 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 54th consecutive year of expected dividend increases. This reflects our continued commitment to returning cash to shareholders through a balanced and return-focused approach. Overall, the quarter finished largely in line with expectations, and we remain on track to deliver our 2025 guidance. I will now turn it over to Dee.