W.W. Grainger, Inc. (NYSE:GWW) Q1 2024 Earnings Call Transcript

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Deidra Merriwether: Yes. No one-time items to call out in nature. I think as we provide color and provide the guide, we have been pretty consistent in noting that as we move through the year, we expect to continue to invest in demand-generating growth engines. And so a lot of the step-up in the quarter was investing in the areas that D.G. kind of called out a couple of questions ago, sorry if you missed that, like marketing and our investments and capacity, those – that kind of fall into the expense line versus the marketing line. I will say that we are very diligent in our spending if it is what we classify as non-core, which is things that are not demand-generating. And those costs were fairly flat in the quarter. And we intend to – we help those teams invest why they grow, they have to continue to focus on growing much lower than sales.

Chris Dankert: Understood. Thanks for the color there. And then just any kind of update on the development and deployment of that customer information tool and kind of how that’s been impacting things.

Donald Macpherson: Yes. I mean – so, we have been on a several year journey to improve our customer information. What I would say is customer information in our market is really messy. So, there isn’t clean data sources that tell you who customers are and what they do and how many team members they have and that type of thing. So, we have been building our own. What I would say is it’s been super helpful with some of the seller coverage changes we have made. We are now building in some of our marketing processes. So, it has a lot of tentacles in the business, and we are excited about the ability for the tool has been built to be leveraged to improve our ability to serve customers.

Operator: Our next question is from Patrick Baumann with JPMorgan. Please proceed.

Patrick Baumann: Hi. Good morning. Dee, maybe a quick follow-up on April, the 5.7, just wanted to make sure I understood, that excludes divestitures and FX, right? And then was – so you said $10 million impact from holiday timing in March. I guess that’s like 1% of sales maybe, I don’t know. Was there something like that also benefiting April in terms of timing?

Deidra Merriwether: Well, you would expect it to flow into April to the extent that we could pick that up, yes. And the answer is yes to your first question because I think you noted it excludes FX.

Patrick Baumann: Okay. Yes, so that’s organic. Yes. Okay. Sorry, I missed that comment.

Deidra Merriwether: Organic.

Patrick Baumann: Okay. Great. And then my follow-up is on SG&A again. So, if we get later in the year and the top line isn’t picking up from where we started the year, what’s like the ability or desire to kind of toggle that SG&A growth back? I know you mentioned that you are diligent on spending if it’s non-core. But what’s your willingness to toggle back on some of the investment spending if growth doesn’t pick up as the guidance expects?

Donald Macpherson: Yes. Thanks. What I would say is that we are very focused on productivity improvements throughout the business. I think we are seeing productivity improve. The last few years have been a bit odd, to say the least, in terms of some of the challenges that everybody has had to deal with. And we have really sort of refocused our attention on getting better, getting more productive in every part of the operation. We are going to continue to do that. In terms of demand generation spending, I think you are asking specifically if it’s worth spending in good times, it’s probably worth spending in bad times too. So, we wouldn’t typically pull back those things. We think that we exist for the long-term and we are trying to win over the cycle, not just in the down cycle. So, we would expect to not have dramatic changes in what we spend, but we do expect to continue to drive productivity.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to D.G. for closing remarks.

Donald Macpherson: Alright. Thanks for joining everybody. Really appreciate it. I would just highlight that in general, I would say everything in the quarter was as we expected, and we feel very confident in the path we are on. There is not a lot of new news in this quarter, but we do feel good about the path. We do feel good about our ability to gain share, to become more productive and to make sure we remain price/cost neutral over the long-term. So, all things point to really good results for the year. So, appreciate the time. Thank you.

Operator: Thank you. This will conclude our conference. You may disconnect your lines at this time and thank you for your participation.

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