W.W. Grainger, Inc.

Greetings and welcome to the WW Grainger third quarter 2025 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kyle Bland, Vice President, Investor Relations. Please go ahead.

Good morning. Welcome to Grainger's third quarter 2025 earnings call. With me are D.J. McPherson, Chairman and CEO, and D. 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 8 and other periodic reports filed with the SEC. This morning's call will focus on our non-GAAP adjusted results for the third quarter of 2025. which exclude the $196 million loss recognized from the pending sale of our UK-based Cromwell business and the proposed closure of our Zorro UK business. 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. With that, I'll turn it over to DG.

Thanks, Kyle. Good morning, everyone, and thank you for joining today's call. As headlined in the release, our third quarter results were fueled by consistently strong execution from our team. Despite the continued external uncertainty, our customers remain focused on improving their operations through increased efficiency and productivity. They value the fundamentals of having inventory where and when they need it, an apartment who understands their business and can bring the right solutions. As I spent time in the market with large customers this past month, these themes rang true. I was proud to see Grainger deliver the critical fundamentals that help our customers every day. I recently had great discussions with an aerospace customer and a municipality about how Grainger's deep-rooted inventory management expertise can save them time and reduce costs. I saw that when we deliver a great service experience, customers take notice and it leads to more opportunities and deeper relationships. I also had the opportunity to speak with several experts focused on technology. Tech and AI will continue to be an ongoing focus for Grainger, enabling us to provide great solutions for customers and drive productivity in our operations. The promise of these new transformation technologies has never been greater, but the key will be leveraging our proprietary data and know-how to build solutions that connect to business processes and create a more seamless user experience. I'm excited about the work we're doing to bring more digital capabilities to both our customers and team members to make things better with every interaction. Making things better and staying focused on what matters is core to how Grainger operates, and we take that responsibility to heart in our communities as well. Last month at our annual bucket build in Lake Forest, more than 500 Grainger team members came out to pack over 4,000 disaster relief kits. This included filling five-gallon buckets with essential cleaning supplies and hand tools that will help families and individuals begin the process of recovery after a natural disaster. Grainger has a longstanding commitment to emergency preparedness and response efforts, and this is another reason I'm proud of how the Grainger team lives our principles every day. Now moving to our third quarter results, we delivered a solid performance that in total outpaced our August formal guide, particularly on the gross margin line. Total company reported sales for the quarter were nearly $4.7 billion, up 6.1% on a reported basis, or 5.4% on a daily constant currency basis. Gross margins for the company were 38.6%, operating margins were 15.2%, and diluted EPS finished the quarter up $0.34 to $10.21. Operating cash flow came in at $597 million, which allowed us to return a total of $399 million to greater shareholders through dividends and share repurchases. Our results continue to reflect tariff-related LIFO inventory valuation headwinds, consistent with what we discussed last quarter, but which came in lighter than expected in the period. As Dee will discuss, without this LIFO impact, our operating margin would have increased year over year in the period. Looking ahead, while we're continuing to see more costs in the market, these LIFO headwinds will eventually dissipate as inflation cools, and our gross margin will recover to our run rate expectation. As you likely saw, we recently announced that we've entered into an agreement to sell our UK-based Cromwell business and plan to fully exit the UK market. Given the economic dynamics post-Brexit, we had to alter our assumptions around the go-forward potential in the region. With this planned divestiture, we are now focused entirely on growing up North America and Japanese businesses where we can deliver the greatest long-term impact. Overall, while it has been an eventful few months, the business continues to perform well and in line with expectations. With this, we are narrowing our earnings outlook, which Dee will outline in a few minutes. It's important to note we factored in the October headwinds from last year's active hurricane season and an estimated impact from the government shutdown. As we wrap up 2025, I'm confident that we will continue to serve our customers well, deliver on our financial commitments, and drive solid results for all stakeholders. I will now turn it over to Dee to go through the details.