固安捷 (GWW) 2024 Q2 法說會逐字稿

Greetings. Welcome to W.W. Grainger second-quarter 2024 earnings conference call. (Operator Instructions) Please note this conference is being recorded.

問候。歡迎來到 W.W.固安捷 2024 年第二季財報電話會議。（操作員說明）請注意，本次會議正在錄製中。

I will now turn the conference over to Kyle Bland, Vice President of Investor Relations. Thank you. You may begin.

我現在將會議交給投資者關係副總裁凱爾布蘭德 (Kyle Bland)。謝謝。你可以開始了。

Good morning. Welcome to Grainger's second-quarter earnings call. With me are D.G. MacPherson, Chairman and CEO; and Dee Merriwether, Senior Vice President and CFO.

早安.歡迎參加固安捷第二季財報電話會議。和我一起的是 D.G.麥克弗森，董事長兼執行長；以及資深副總裁兼財務長 Dee Merriwether。

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-K and other periodic reports filed with the SEC.

提醒一下，我們今天的一些評論可能包括前瞻性陳述，這些陳述受到各種風險和不確定性的影響。有關可能導致實際結果出現重大差異的因素的更多資​​訊包含在公司向 SEC 提交的最新 8-K 表格和其他定期報告中。

This morning's call will focus on the adjusted results for the second quarter of 2024, which exclude $16 million of pretax restructuring costs incurred in the quarter. Please remember that we have also 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.

今天上午的電話會議將重點放在 2024 年第二季的調整後業績，其中不包括該季度產生的 1,600 萬美元稅前重組成本。請記住，我們還在這些材料中納入了每日有機固定貨幣銷售成長指標，以使我們於 2023 年底出售的 E&R 工業銷售子公司的剝離正常化。此簡報末尾的表格以及我們的收益報告中提供了此及任何其他非公認會計原則財務指標及其相應公認會計原則指標的定義和完整調節，這兩個指標均可在我們的投資者關係網站上找到。

We will also share results related to MonotaRO. Please remember that MonotaRO was a public company and followed Japanese GAAP, which differs from US GAAP, and is reported in our results one month in arrears. As a result, the numbers disclosed will differ from MonotaRO's public statements.

我們也將分享與 MonotaRO 相關的成果。請記住，MonotaRO 是一家上市公司，遵循日本公認會計原則，與美國公認會計原則不同，並在我們的業績中報告了一個月的欠款。因此，揭露的數字將與 MonotaRO 的公開聲明有所不同。

Now I'll turn it over to D.G.

現在我將把它交給 D.G.

Thanks, Kyle. Good morning, and thank you for joining the call. As we pass the midpoint of 2024, I'm proud of the way the team continues to show up for our customers, providing a flawless experience on each transaction. Our team members are consistently living the principles outlined by the Grainger Edge and in doing so, we become a trusted partner for our customers, creating tangible value each day.

謝謝，凱爾。早安，感謝您加入通話。2024 年已過中點，我對團隊繼續為客戶服務、為每筆交易提供完美體驗的方式感到自豪。我們的團隊成員始終遵循 Grainger Edge 概述的原則，透過這樣做，我們成為客戶值得信賴的合作夥伴，每天創造有形的價值。

One of the best examples of the value that we create for our customers is by simplifying their purchasing processes. Complicated and high-cost purchasing processes are common in our space, wasting our customers' time and money. Fortunately, we are well equipped to help customers solve this challenge by assisting them in choosing the right digital solution, setting up necessary workflows and approvals, and providing systems training to maximize the benefits.

我們為客戶創造價值的最佳例子之一就是簡化他們的採購流程。複雜且高成本的採購流程在我們的領域很常見，浪費了客戶的時間和金錢。幸運的是，我們有能力幫助客戶解決這項挑戰，幫助他們選擇正確的數位解決方案，建立必要的工作流程和批准，並提供系統培訓以最大限度地提高效益。

Recently, during negotiations on a multiyear agreement, one of our national account managers identified opportunities where our team could help the customer meet their process improvement goals, most notably in streamlining their procurement systems, engage our internal EDI ePro team who worked with the customer to connect their purchasing platform to Grainger. And together, through enterprise-wide integration and training, we were able to move nearly all of the customers' MRO transactions to a digital channel, helping them to consolidate orders, lower PO processing costs, and driving several hundred thousand dollars in annual savings.

最近，在一項多年協議的談判過程中，我們的一位全國客戶經理發現了我們的團隊可以幫助客戶實現流程改進目標的機會，特別是在簡化其採購系統方面，與與客戶合作的內部EDI ePro 團隊合作，將他們的採購平台連接到 Grainger。透過企業範圍內的整合和培訓，我們共同將客戶的幾乎所有 MRO 交易轉移到數位管道，幫助他們整合訂單、降低 PO 處理成本，並每年節省數十萬美元。

These process improvements are part of a broader engagement with this customer where we also help them reduce inventory levels and drive product standardization, further saving them time and money. This example is just one of many where our team works to understand the customers' operations, tailor our solutions to meet their needs, and drive lower cost.

這些流程改善是與該客戶更廣泛接觸的一部分，我們還幫助他們降低庫存水準並推動產品標準化，進一步節省他們的時間和金錢。這個例子只是我們團隊致力於了解客戶營運、客製化我們的解決方案以滿足他們的需求並降低成本的眾多例子之一。

Moving on to our second-quarter performance, we delivered another solid quarter of results amidst the slow, yet generally stable demand environment. Total company reported sales were up 3.1% or 5.1% on a daily organic constant currency basis, with positive contributions from both segments.

談到第二季的業績，我們在緩慢但整體穩定的需求環境中又取得了穩健的季度業績。公司總銷售額以每日有機固定匯率計算成長 3.1% 或 5.1%，這兩個部門都做出了積極貢獻。

In the high-touch solutions segment, we remained focused on our growth engines and delivered tangible value for our customers, resulting in another quarter of solid performance. Within the endless assortment business, our focus on gaining new customers and increasing repeat purchase rates is paying off, and we continue to make progress with these initiatives.

在高接觸解決方案領域，我們仍然專注於我們的成長引擎，為客戶提供有形的價值，從而實現了另一個季度的穩健業績。在無盡的分類業務中，我們對贏得新客戶和提高重複購買率的關注正在得到回報，並且我們將繼續在這些舉措上取得進展。

From a profitability standpoint, total company operating margin of 15.4% remained strong, but as anticipated, was down 40 basis points versus prior year. EPS finished the quarter at $9.76, up 5.2% versus the prior year. Beyond the P&L, we achieved ROIC of 42.6% and operating cash flow remained healthy in the quarter, allowing us to return a total of $345 million to Grainger's shareholders through dividends and share repurchases.

從獲利能力的角度來看，公司總營業利潤率為 15.4%，仍然強勁，但正如預期的那樣，比去年下降了 40 個基點。本季每股收益為 9.76 美元，比去年同期成長 5.2%。除損益表外，本季我們的投資回報率為 42.6%，營運現金流保持健康，使我們能夠透過股息和股票回購向 Grainger 股東總共返還 3.45 億美元。

Overall, the business continues to perform well as we stay focused on the customer and the things that matter. While 2024 is playing out largely as expected, further yen devaluation and continued pockets of demand stops in the US remain as headwinds. With this, we've trimmed the top end of our earnings guidance range, which Dee will discuss in a bit. Now I'll turn it over to Dee.

總體而言，由於我們始終專注於客戶和重要的事情，因此業務繼續表現良好。儘管 2024 年的情況基本上符合預期，但日圓進一步貶值和美國持續的部分需求停止仍然是不利因素。這樣，我們就下調了獲利指導範圍的上限，迪伊將稍後對此進行討論。現在我把它交給迪伊。

Thank you, D.G. Turning to slide 7, you can see the high-level second quarter results for the total company, including 5.1% growth on a daily organic constant currency basis. The quarter played out largely as anticipated, despite the persistent demand softness D.G. mentioned.

謝謝你，D.G.翻到投影片 7，您可以看到整個公司第二季的高水準業績，其中以每日有機固定匯率計算成長 5.1%。儘管需求持續疲軟，但本季的表現基本上符合預期。提及。

Operating margins were down 40 basis points year over year, generally following normal seasonal trends. Gross margins were flat year over year as the number of items offset within the period and SG&A delevered 40 basis points as we ramp our demand generation investment. In total, we delivered diluted EPS for the quarter of $9.76, up 5.2% or $0.48 over the prior-year period.

營業利潤率較去年同期下降 40 個基點，整體遵循正常的季節性趨勢。毛利率同比持平，因為期內項目數量被抵消，而且隨著我們加大需求產生投資，SG&A 降低了 40 個基點。總的來說，本季稀釋後每股收益為 9.76 美元，比去年同期成長 5.2%，即 0.48 美元。

Moving on to segment level results, the high-touch solutions segment continues to perform well with sales up 3.1% on a reported basis or 3.7% on a daily organic constant currency basis. Results were driven by strong volume growth and moderate price contribution across all geographies in the period. In the US specifically, nearly all customer end markets were up year over year with warehousing, contractors, and healthcare customers having the largest gains.

轉向細分市場層面的業績，高接觸解決方案細分市場持續表現良好，報告銷售額成長 3.1%，以每日有機固定匯率計算成長 3.7%。業績的推動因素是該時期所有地區銷售的強勁成長和適度的價格貢獻。特別是在美國，幾乎所有客戶端市場都較去年同期成長，其中倉儲、承包商和醫療保健客戶漲幅最大。

For the segment, gross profit margin finished the quarter at 41.7%, flat versus the prior year. In the quarter, we expensed an unfavorable lap of roughly 40 basis points from the nonrecurring rebate benefit captured in Q2 of 2023, which was offset by several small tailwinds in the current year period. When excluding the unfavorable lap of nonrecurring rebate, price cost was roughly neutral in the quarter.

該部門本季毛利率為 41.7%，與去年持平。在本季度，我們從 2023 年第二季度獲得的非經常性回扣收益中扣除了約 40 個基點的不利影響，但這一損失被本年度的幾個小幅利好因素所抵消。當排除非經常性回扣的不利影響時，本季的價格成本大致呈現中性。

SG&A delevered 40 basis points in Q2 as DC capacity came online, and we continue to invest in demand-generating activities like marketing and seller head count. Annual merit increases that went live in April were offset by productivity actions and lower variable compensation expense within the period. Overall, it was a solid quarter of growth and profitability for the high-touch solutions business.

隨著 DC 產能上線，SG&A 在第二季降低了 40 個基點，我們繼續投資於行銷和賣家人數等需求產生活動。4月份開始的年度績效成長被該期間的生產力行動和較低的可變薪酬費用所抵消。整體而言，這是高接觸解決方案業務成長和獲利穩健的一個季度。

Looking at market outgrowth on slide 9, we estimate that the US MRO market, including volume and price, grew in the quarter between 2.5% and 3%, with price contributing nearly all of the growth. Within our high-touch solutions US business growing at 3.6% organically, our mathematical market outgrowth in the quarter was roughly 100 basis points in total. This includes approximately 300 basis points of volume outgrowth contribution netted against the continued price tailwinds when comparing our price contribution to PPI.

從幻燈片 9 上的市場成長來看，我們估計美國 MRO 市場（包括數量和價格）在本季成長 2.5% 至 3% 之間，其中價格幾乎貢獻了全部成長。我們的高接觸解決方案美國業務有機成長 3.6%，本季我們的數學市場總成長約為 100 個基點。在將我們的價格貢獻與 PPI 進行比較時，這包括約 300 個基點的成交量成長貢獻，以抵消持續的價格順風。

As we said before, there is no perfect way to measure the MRO market, and we're currently in a cycle where the headline PPI and IP metrics don't completely reflect what we're seeing in the MRO specific space. With the differences in product and customer mix, these disconnects happen from time to time and cause short-term noise within our external market share gain calculation.

正如我們之前所說，沒有完美的方法來衡量 MRO 市場，而且我們目前正處於一個週期，其中標題 PPI 和 IP 指標不能完全反映我們在 MRO 特定領域所看到的情況。由於產品和客戶組合的差異，這些脫節時常發生，並在我們的外部市場份額增益計算中造成短期雜訊。

Given the current dislocation we're seeing this year, it's unlikely we will mathematically achieve our market outlook target in 2024. However, we have several different ways, including both internal and external data points, to understand our relative performance and know we're performing quite well in the current environment.

鑑於今年我們所看到的當前混亂局面，我們不太可能在 2024 年實現我們的市場前景目標。然而，我們有幾種不同的方法，包括內部和外部數據點，來了解我們的相對錶現並知道我們在當前環境中表現得很好。

History would suggest that this dislocation will normalize over a multiyear period, and we believe this metric remains useful in tracking our relative performance over time. We're still generating strong returns on our demand-generating investments, which gives us confidence that over the long term, we will continue to outload the market by 400 to 500 basis points annually on average.

歷史表明，這種錯位將在多年的時間內正常化，我們相信這一指標對於追蹤我們隨時間的相對錶現仍然有用。我們的需求創造投資仍在產生強勁的回報，這讓我們有信心，從長遠來看，我們將繼續平均每年超出市場 400 至 500 個基點。

Now turning to the endless assortment segment. Sales increased 3.3% or 11.7% on a daily constant currency basis, which adjusts for the impact of the depreciated Japanese yen. Zoro US was up 8.7%, with MonotaRO achieving 13.2% in local days local currency.

現在轉向無盡的分類部分。銷售額成長 3.3%，以每日固定匯率計算成長 11.7%，並考慮了日圓貶值的影響。Zoro US 上漲 8.7%，MonotaRO 以當地貨幣計算上漲 13.2%。

At a business level, Zoro saw improved growth from core B2B customers who were up mid-teens in the quarter. Performance was driven by B2B customer acquisition and improved repeat purchase rates, which were aided by service enhancements to increase same-day shipping and better communicate delivery date.

在業務層面，Zoro 看到核心 B2B 客戶的成長有所改善，該客戶在本季成長了 15%。績效的推動因素包括 B2B 客戶獲取和重複購買率的提高，而服務增強則有助於增加當日發貨和更好地傳達交貨日期。

Headlines from the continued unwind of noncore business, including B2C and B2C like volumes started to dissipate in the quarter but remained down low double digits year over year. We expect these B2C headwinds to continue to subside as the year progresses.

有關非核心業務（包括 B2C 和 B2C 類業務量）持續縮減的頭條新聞在本季度開始消散，但同比仍保持較低的兩位數下降。我們預計，隨著時間的推移，這些 B2C 逆風將繼續消退。

At MonotaRO, sales were strong from continued growth with enterprise customers, coupled with solid acquisition and repeat purchase rates with small and midsized businesses. On a reported basis, these results were all offset by continued foreign exchange rate pressures as the yen continues to show incremental weakness against the dollar.

在MonotaRO，由於企業客戶的持續成長，加上中小型企業的穩固收購和重複購買率，銷售強勁。據報道，這些結果全部被持續的匯率壓力所抵消，因為日圓兌美元繼續顯示疲軟。

On profitability, operating margins for the segment declined 70 basis points to 7.9%. This decline was driven by lower gross margins at MonotaRO from product and customer mix headwinds, combined with SG&A deleverage at Zoro, as the business ramps marketing investments and re-baselines on lower B2C and B2C like volume. As these volumes normalize, this should create a better baseline to relever the business going forward. Overall, for endless assortment, we're encouraged by the strong progress in the quarter and are on track to finish the year at or above our original expectations.

在獲利能力方面，該部門的營業利潤率下降 70 個基點至 7.9%。這一下降的原因是MonotaRO因產品和客戶組合逆風而導致毛利率下降，再加上Zoro的SG&A去槓桿化，因為該公司加大了行銷投資，並重新設定了較低的B2C和B2C銷量基準。隨著這些數量的正常化，這應該會創建一個更好的基準來重新調整未來的業務。總體而言，對於無盡的品種，我們對本季的強勁進展感到鼓舞，並有望在今年結束時達到或高於我們最初的預期。

Now moving to the updated outlook for the remainder of 2024. As D.G. mentioned at the beginning of the call, we are trimming the top end of most estimates to reflect continued market softness as macroeconomic uncertainties persist in the US. With this, we are now expecting total company daily organic constant currency sales to grow between 4% and 6% for the full year of 2024.

現在轉向 2024 年剩餘時間的更新展望。正如 D.G.在電話會議開始時提到，我們正在削減大多數預測的上限，以反映由於美國宏觀經濟不確定性持續存在而導致市場持續疲軟。據此，我們預計 2024 年全年公司每日有機銷售額將成長 4% 至 6%。

When including the continued deterioration of the Japanese yen, this translates to an updated reported sales range between $17 billion and $17.3 billion and an EPS range between $38 and $39.50. As you can see on this slide, we flowed these changes through and have also made slight tweaks to the margin outlook based upon how we're performing in the first half.

如果考慮日圓的持續貶值，這意味著更新後的報告銷售額範圍在 170 億美元至 173 億美元之間，每股收益範圍在 38 美元至 39.50 美元之間。正如您在這張投影片中所看到的，我們對這些變化進行了落實，並根據我們上半年的表現對利潤率前景進行了輕微調整。

I want to note, while we continue to remain diligent on managing expenses and measuring returns, given the softer top line, our ability to generate leverage is challenged this year as we invest in our growth engines to power long-term share gain. Setting that aside, we remain strongly committed to growing SG&A slower than sales over time and have a track record of doing so. Supplemental guidance ranges, including increased operating cash flow and share repurchase expectations, can be found in the appendix of this presentation.

我想指出的是，雖然我們繼續努力管理費用和衡量回報，但鑑於營收疲軟，我們產生槓桿的能力今年受到了挑戰，因為我們投資於成長引擎以推動長期份額收益。拋開這一點，我們仍然堅定地致力於隨著時間的推移，SG&A 的成長速度慢於銷售額的成長，並且有這樣做的記錄。補充指導範圍，包括增加的營運現金流量和股票回購預期，可以在本簡報的附錄中找到。

On seasonality, as we move to the second half of the year, we expect relatively normal sequential growth from Q2 to Q3 and into the fourth quarter. There are some puts and takes from a profitability perspective, but we anticipate operating margins and earnings to remain healthy and relatively consistent in the third quarter when compared to the second.

就季節性而言，隨著進入下半年，我們預計從第二季到第三季以及第四季將相對正常的環比成長。從獲利角度來看，有一些看跌和看跌，但我們預計第三季的營業利潤和收益將保持健康，且與第二季相比相對穩定。

As we start the third quarter, a number of external factors have impacted our results in July. The sales started to ramp in the final few days of the month. This led preliminary July sales results to finish up roughly 2% on the total company daily organic constant currency basis. Of note, this number will be approximately 100 basis points higher if you normalize for the tough comp caused by an elevated level of project-related service engagement in July of last year. Altogether, at the total company level, we're performing well and are confident in our ability to drive solid growth and strong profitability in the second half of the year.

隨著第三季的開始，許多外部因素影響了我們 7 月的業績。本月最後幾天銷量開始上升。這使得 7 月的初步銷售結果在公司每日有機固定貨幣基礎上增加了約 2%。值得注意的是，如果您將去年 7 月專案相關服務參與度提高導致的艱難薪資正常化，那麼這個數字將高出約 100 個基點。總而言之，在公司整體層面上，我們表現良好，並對下半年推動穩健成長和強勁獲利能力的能力充滿信心。

With that, I'll pass it back to D.G.

這樣，我會將其傳回給 D.G.

Thanks, Dee. As we head into the second half of 2024, a number of macroeconomic uncertainties remain ahead, but our teams are committed to focusing on what matters most: meeting our customers' needs and creating value for their businesses. We know that our ability to serve our customers better than our competitors relies on having a strong culture where team members can have a meaningful and fulfilling career.

謝謝，迪伊。進入 2024 年下半年，許多宏觀經濟不確定性仍然存在，但我們的團隊致力於專注於最重要的事情：滿足客戶的需求並為他們的業務創造價值。我們知道，我們比競爭對手更好地服務客戶的能力依賴於擁有強大的文化，讓團隊成員能夠擁有有意義和充實的職業生涯。

Among several other recognitions this year, Grainger was recently named the Best Workplace for Millennials. These awards are a testament to the well-rounded culture we've built to help us fulfill our purpose. I'm confident that Grainger will continue to be recognized as an employer of choice because of the emphasis we put on living our principles.

在今年的其他多項認可中，Grainger 最近被評為「千禧世代最佳工作場所」。這些獎項證明了我們為幫助我們實現目標而建立的全面文化。我相信 Grainger 將繼續被公認為首選雇主，因為我們強調實踐我們的原則。

One of those principles, starting with the customer, it's key to achieving great results for all stakeholders. And I'm confident that we will continue to do that in 2024 and for years to come. And with that, we will open the line for questions.

其中一項原則是從客戶開始，這是為所有利害關係人取得巨大成果的關鍵。我相信我們將在 2024 年以及未來幾年繼續這樣做。接下來，我們將開通提問專線。

(Operator Instructions) Tommy Moll, Stephens Inc.

（操作員說明）Tommy Moll，Stephens Inc.

I wanted to start on the high-touch business, where once again, the midsized customers outgrew the large. And my question is really how much do you think this is a function of share gain versus some other factor? How important to the midsized customers is the digital capability versus that level of importance for the larger customers? And what do you think the runway is ahead on these favorable trends for the midsize? Thank you.

我想從高接觸性業務開始，在該業務中，中型客戶的數量再次超過了大型客戶。我的問題實際上是，您認為這在多大程度上是份額收益與其他因素的函數？與大型客戶相比，數位能力對中型客戶有多重要？您認為在這些對中型飛機有利的趨勢中，跑道的前景如何？謝謝。

Yeah. Thanks, Tommy. I think most -- almost all of the growth in midsized customer and the outgrowth would be share gain. The reality is that -- and I think most people know the story. We, at one point, were close to $2 billion in revenue. We got down to $800 million. We're back up to where we were.

是的。謝謝，湯米。我認為大多數—幾乎所有中型客戶的成長和副產品都將是份額收益。事實是——我想大多數人都知道這個故事。我們的收入一度接近 20 億美元。我們的資金減少到了 8 億美元。我們又回到原來的位置了

We think there's a long runway ahead. We believe that the digital capabilities we've built and the customer and product information assets we built help us with midsized customers significantly. And so really, we think it's what we're doing to build relationships with them through digital capabilities. And a lot of those customers when you look at how they buy, start digital and that's their main channel.

我們認為前面還有很長的跑道。我們相信，我們建立的數位能力以及我們建立的客戶和產品資訊資產對我們與中型客戶的關係有很大幫助。事實上，我們認為我們正在做的就是透過數位能力與他們建立關係。當你觀察很多客戶的購買方式時，他們開始數位化，這就是他們的主要管道。

Shifting gears. D.G., last quarter, you referenced inflation being stickier than expected and talked about some corrective price actions slated for early May. I'm just curious for an update there. How is realization? And do you still think you'll land in price cost neutrality by the end of this year? Thanks.

換檔。D.G.，上個季度，您提到通膨高於預期，並談到了定於 5 月初採取的一些價格調整行動。我只是好奇那裡的更新。實現得如何？您仍然認為到今年年底您會實現價格成本中立嗎？謝謝。

Yeah. Yeah, we do believe we'll land in price cost neutrality by the end of the year, the price realization -- the realization of the pricing actions on May 1 have been basically as expected. We talked about at the beginning of the year, we were a little bit behind on price increases. We are making some of that up as the year progresses. And notably, gross profit remains strong. So we are not concerned about ending the year as we expect.

是的。是的，我們確實相信，到今年年底，我們將實現價格成本中性，價格實現——5 月 1 日定價行動的實現基本上符合預期。我們在年初談到，我們在價格上漲方面有點落後。隨著時間的推移，我們正在彌補其中的一些。值得注意的是，毛利仍然強勁。因此，我們並不擔心今年會如我們所預期的那樣結束。

Dave Manthey, Baird.

戴夫·曼西，貝爾德。

You may have mentioned this, but June average daily sales running up [7% after sort of 4% to 5%] all year. Is there anything we can read into that? And again, I apologize if you mentioned it, but did you make any comments on the trends in July so far?

您可能已經提到過這一點，但 6 月份的日均銷售額全年都在上漲 [7%，在 4% 到 5% 之間]。有什麼我們可以解讀的嗎？再次，如果您提到這一點，我深表歉意，但您對 7 月迄今為止的趨勢有何評論？

Yeah. On the reported remarks, we noted that preliminarily, July is rolling up around 2%. However, if you recall, we believe if you normalize for some project-related service revenue -- outsized project-related service revenue we had last year, that would put us north of 3% for July.

是的。關於報道的言論，我們注意到，初步預計 7 月的漲幅約為 2%。然而，如果你還記得的話，我們相信，如果你將一些與專案相關的服務收入標準化——去年我們與專案相關的服務收入規模過大，那麼我們 7 月份的成長率將超過 3%。

I would just say that, Dave, that I think that June, July, the differences are probably noise. We actually don't think there's -- we look at daily run rates. We aren't concerned about anything, and there's nothing that I would say that would necessarily cause us other than noise.

我只想說，戴夫，我認為六月、七月的差異可能是噪音。我們實際上認為不存在——我們關注的是每日運行率。我們不關心任何事情，我想說除了噪音之外，沒有什麼必然會導致我們這樣做。

Yeah, makes sense. Thank you for that. And then I know other international is small, but we're talking $300 million drag on overall profitability. Maybe a distraction, I don't know. Could you update us on the other international operations and what you're targeting there medium term?

是的，有道理。謝謝你。然後我知道其他國際公司規模很小，但我們談論的是 3 億美元對整體獲利能力的拖累。也許是分散注意力，我不知道。您能否向我們介紹其他國際業務的最新情況以及您的中期目標是什麼？

Yeah. The majority of that is Cromwell plus some other charges in other. But the Cromwell business has been working towards profitability. And if you recall, our results last year, they exited the year profitable and they continue to see profitability this year.

是的。其中大部分是克倫威爾以及其他一些其他指控。但克倫威爾公司一直在努力獲利。如果你還記得的話，我們去年的業績是獲利的，今年他們將繼續獲利。

Now in this quarter, they had a little bit of a challenge with some gross margin related to customer mix, but we expect them to end this year profitable as well. And we feel like the UK is an important market for us. And we just -- with Brexit and some other challenges over the last couple of years has kind of delayed some of our strategic plans in that business. But that -- we feel that business is doing really well and have outgrown the market the last six quarters.

在本季度，他們在與客戶組合相關的毛利率方面遇到了一些挑戰，但我們預計他們今年也能獲利。我們覺得英國對我們來說是一個重要的市場。我們只是 - 由於英國脫歐和過去幾年的其他一些挑戰，我們在該業務中的一些戰略計劃有所推遲。但我們認為業務表現非常好，並且在過去六個季度中的成長速度超過了市場的成長速度。

Ryan Merkel, William Blair.

瑞恩·梅克爾、威廉·布萊爾。

Hey, everyone. I wanted to go back to pricing. What do you expect for '24 now? And any more color you can provide on the May and September increases? Was that on specific products? Or was that across the board?

嘿，大家。我想回到定價。您現在對 24 歲有何期待？對於 5 月和 9 月的上漲，您還能提供更多的顏色嗎？是在特定產品上嗎？或是全面的嗎？

So I guess what I'd say is we follow two tenets. We want to make sure that we are priced competitively, and we want to make sure that over time, we're shooting for price/cost neutrality. I think we will do that this year. Our price increases this year will be modest overall. Our cost increases will be modest overall on product cost. But we are making adjustments both at May 1 and September 1, and those adjustments aren't meaningful. In aggregate, we would expect to be in that 1% range that we talked about roughly at the beginning of the year, 1% to 2%.

所以我想我想說的是我們遵循兩個原則。我們希望確保我們的定價具有競爭力，並且我們希望確保隨著時間的推移，我們會努力實現價格/成本中立。我想我們今年會這麼做。總體而言，我們今年的價格上漲將是溫和的。整體而言，我們的成本成長在產品成本方面將是適度的。但我們在5月1日和9月1日都在進行調整，這些調整沒有意義。總的來說，我們預計會處於我們年初大致討論過的 1% 範圍內，即 1% 到 2%。

1% to 2%, yeah.

1%到2%，是的。

Okay. Got it. That's helpful. And then just back to the macro, D.G., any factors you would point out that caused you to lower the second half or maybe just rank the things that drove that? And generally, what are you hearing from customers about the outlook?

好的。知道了。這很有幫助。然後回到宏觀，D.G.，您會指出導致您降低下半年業績的任何因素，或者只是對推動這一趨勢的因素進行排名？一般來說，您從客戶那裡聽到的關於前景的看法是什麼？

Yeah. I think that what we're seeing is what everybody is seeing. If you look at sort of the general demand environment, it's pretty slow. It's consistent, though. There's not a lot of panic. There are certain industries that have had significant challenges this year, pockets of automotive, pockets of other. I won't get into too many details about those, but certainly, there are pockets of weakness that have been significant and some pockets of strength. And I think that just continues to be the case.

是的。我認為我們所看到的也是每個人都看到的。如果你看看一般的需求環境，你會發現它的速度相當慢。但它是一致的。沒有太多恐慌。今年，某些行業面臨重大挑戰，包括汽車行業和其他行業。我不會透露太多關於這些的細節，但當然，有一些明顯的弱點和一些優勢。我認為情況仍然如此。

We expect -- I think we came in thinking that volume this year would be flat in our market, roughly something like that, and it's probably going to be down [1] now. So that's probably -- given what we've seen, that's probably the biggest change we have in our projections.

我們預期－我想我們一開始就認為今年我們市場的銷售量將持平，大致如此，而且現在可能會下降[1]。因此，鑑於我們所看到的情況，這可能是我們預測中最大的變化。

Jacob Levinson, Melius Research.

雅各布·萊文森，Melius 研究中心。

On the marketing investment, I know you guys have a tight feedback loop there and understanding where to push the accelerator or not. But is that spend something that you would look to actually flex up in sort of a swappier macro environment? Or is it really not demand dependent, if you will?

在行銷投資方面，我知道你們有一個緊密的回饋循環，並且了解應該在哪裡加速或不加速。但這是否是您希望在交換宏觀環境中真正發揮作用的支出？或者如果你願意的話，它真的不依賴需求嗎？

So the way we measure marketing, we look at -- we run tests all the time. And that guides us on how much to spend. So you could argue that in certain macro environment, those tests might show different results. But in general, that's not going to change how we think about spending. We're spending to levels that give us a margin return that we expect. And none of that's changed, and I wouldn't expect that to change through time.

因此，我們衡量行銷的方式是——我們一直在進行測試。這指導我們花多少錢。所以你可能會說，在某些宏觀環境下，這些測試可能會顯示不同的結果。但總的來說，這不會改變我們對支出的看法。我們的支出水準能夠為我們帶來預期的利潤回報。這些都沒有改變，我也不希望隨著時間的推移而改變。

Okay. That makes sense. And then just on the distribution investments that you're making, I know that's been pretty well telegraphed back at your Analyst Day a few years ago. Can you just help us understand where you are in that cycle and maybe just give us a sense of maybe what the utilization rates look like today in your network?

好的。這是有道理的。然後就您正在進行的分銷投資而言，我知道這在幾年前的分析師日上已經得到了很好的傳達。您能否幫助我們了解您在該週期中的位置，或讓我們了解您的網路目前的使用率？

Yeah. We're -- the network is pretty busy, I'd say. We probably -- I think we talked about this in 2022. We were probably a bit behind. It was difficult to actually build anything during the pandemic to get materials and finish things. We have -- we have remedied some of that situation, we've put in three new bulk warehouses, the building in the Northwest. The shell of the building is up and we will start receiving by the end of this year and start shipping next year. We have a building in Houston that is just land now, but that's going to go up as well. So we've talked about those two and announced those two buildings.

是的。我想說，我們的網路非常繁忙。我想我們可能在 2022 年討論過這個問題。我們可能有點落後了。在大流行期間，很難真正建造任何東西來獲取材料和完成東西。我們已經糾正了一些這種情況，我們建立了三個新的散裝倉庫，即位於西北方的大樓。大樓外殼已建好，今年底開始收貨，明年開始出貨。我們在休士頓有一棟大樓，現在只是土地，但它也會上升。我們已經討論了這兩座建築並宣布了這兩座建築。

I would say that the biggest bulge in capital right now, we would project would be probably next year as we finish those two buildings out. And then we expect to be in probably more normal times after that and being a little bit better shape from capacity perspective. But the plan has just been executed exactly as we expected and timing that we haven't changed on any of that.

我想說，我們預計，目前最大的資本膨脹可能是在明年，當我們完成這兩棟建築時。然後我們預計此後可能會處於更正常的時期，並且從容量的角度來看，情況會更好一些。但該計劃剛剛完全按照我們的預期執行，我們沒有改變任何時間表。

Deane Dray, RBC Capital Markets.

迪恩德雷 (Deane Dray)，加拿大皇家銀行資本市場。

Good morning. This is Jeff Reive on for Deane. My first question is on the endless assortment segment; pretty nice organic growth this quarter. I know one of your peers had some e-commerce stumbles recently. Curious if you're winning share there or if that may be created an opportunity to do so?

早安.我是迪恩的傑夫·雷夫。我的第一個問題是關於無盡的分類部分；本季的有機成長相當不錯。我知道您的一位同行最近在電子商務方面遇到了一些麻煩。好奇您是否在那裡贏得了份額，或者是否可以創造這樣做的機會？

I wouldn't necessarily tag what happens to us -- to any specific competitor. The market is quite big that Zoro in the US plays in. I think what's happened with us is we've gotten much better at getting better repeat rates, and we've been able to get better acquisition also this year. So the two things we focus on have gone better, but I wouldn't tag it to any competitor.

我不一定會將發生在我們身上的事情標記為任何特定的競爭對手。美國Zoro所涉足的市場相當大。我認為我們發生的事情是我們在獲得更好的重複率方面做得更好，而且今年我們也能夠獲得更好的收購。因此，我們關注的兩件事做得更好，但我不會將其標記給任何競爭對手。

Got it. And then just on guidance, the kind of turning the high end. I think you called out kind of the weaker macro and yen devaluation. If you had to kind of peg a percentage to each of those buckets, kind of how should we think about it?

知道了。然後只是在指導下，那種轉向高端。我認為您提到了宏觀疲軟和日圓貶值。如果你必須將每個桶的百分比掛鉤，我們應該如何考慮它？

Can you repeat that? I'm trying to make sure I'm following your question around guide.

你能再說一次嗎？我正在努力確保我在指南中遵循您的問題。

Yeah. Yeah. So you trimmed guidance and basically called out, it's a combination of a weaker macro and then also the yen devaluation. I was curious if you could just kind of point to -- kind of give a percentage to each one into the kind of the reasons behind the trimming of the guidance. Is it more macro or more yen?

是的。是的。因此，您調整了指引，並基本上指出，這是宏觀疲軟和日圓貶值的結合。我很好奇你是否可以指出——給每個人一個百分比來說明修改指南背後的原因。是更宏觀還是更日元？

Okay. So more macro, so probably two-thirds macro and probably a third yen.

好的。所以更多的是宏觀，所以可能是三分之二的宏觀，可能還有三分之一的日圓。

Christopher Glynn, Oppenheimer.

克里斯托弗·格林，奧本海默。

Thanks. Just slide 19 show the verticals for HTS and really pretty remarkable balance across there with just a couple of flat, everything else up. Was curious about the double-digit categories, warehousing, and other -- and then contract are up high single digits. I think other is a bit of a grab bag, but those numbers for those sectors seem a little incongruous with general macro. So curious if you could opine there.

謝謝。第 19 張幻燈片顯示了 HTS 的垂直方向，並且那裡的平衡非常出色，只有幾個平面，其他一切都向上。對兩位數的類別、倉儲和其他類別感到好奇——然後合約成長了高個位數。我認為其他行業有點搶手，但這些行業的數字似乎與一般宏觀有點不一致。很好奇你是否能在那裡發表意見。

Yeah. I mean, so for contractors, in particular, I'd also make a point that we're pretty small. So we start with a pretty small base. So I'm not sure that you can compare that to what's going on in the broader market. Warehousing, there's some comparisons to last year with some customers that are positive right now that's driving that.

是的。我的意思是，特別是對於承包商來說，我還要指出我們的規模很小。所以我們從一個很小的基礎開始。所以我不確定你是否可以將其與更廣泛市場的情況進行比較。倉儲方面，與去年相比，一些客戶現在的態度是積極的，這推動了這一趨勢。

I wouldn't read too much into those just to be fair. I think that we're performing fairly consistently across the segments and then you have sort of in-year impacts that are a little unusual into some of them.

為了公平起見，我不會對這些內容進行太多解讀。我認為我們在各個細分市場的表現相當一致，然後你會產生一些年內的影響，這對其中一些細分市場來說有點不尋常。

Okay. And then second question is on Zoro. Could we get an update on the path to margins? Clearly, demand gen is going very well there back to mid-teens for the B2B, but kind of low single-digit margins. How should we -- maybe just want to revisit the path there to get to target margins.

好的。第二個問題是關於索隆的。我們能否獲得有關利潤率之路的最新資訊？顯然，B2B 的需求成長非常順利，已回升至十幾歲左右，但利潤率較低，僅為個位數。我們應該如何——也許只是想重新審視實現目標利潤率的路徑。

Yeah. What I would say is that probably low point, it was probably fourth quarter was last -- end of last year. We think from now on, we're going to get better consistently, and we'll be able to get SG&A leverage as we move forward given the growth rates we're seeing. So it will start to get better through the back half of this year and we think into next year as well. And so we're pretty confident that we'll start the rise. It's not going to be fast. It's going to be very consistent in terms of getting improved margins into the business.

是的。我想說的是，這可能是最低點，可能是去年第四季。我們認為，從現在開始，我們將持續變得更好，並考慮到我們所看到的成長率，隨著我們的前進，我們將能夠獲得 SG&A 槓桿。因此，今年下半年情況將開始好轉，我們也會考慮明年。因此，我們非常有信心我們將開始崛起。它不會很快。在提高業務利潤方面，這將非常一致。

Patrick Baumann, JPMorgan.

派崔克鮑曼，摩根大通。

Good morning. Quick one maybe for Dee. Can you talk about the external factors that you mentioned impacting the July growth rate? And you mentioned a ramp back toward the end of the month and something about sequential growth from second quarter to the third quarter, but my line cut out. So just wondering if you could rehash what you were saying on that.

早安.迪伊也許快點吧。您能談談您提到的影響7月增速的外部因素嗎？您提到了月底時的回升以及從第二季度到第三季度的連續增長，但我的台詞被切斷了。所以只是想知道你是否可以重述一下你剛才所說的內容。

Yeah. Well, if you look at just July, you're talking about July now and not the prior quarter, right? When we started this month, the month started a little slow. There were a number of things that happened. There was some weather-related impacts that didn't go in our favor. There was also a well-known IT outage that impacted a number of our customers since we cover a lot of people in the US. And then there was just some general holiday softness. This is really unique because a lot of it happened around the same time. So really, really hard to measure.

是的。好吧，如果你只看七月，你現在談論的是七月而不是上一季度，對嗎？當我們開始這個月時，這個月開始得有點慢。發生了很多事情。有一些與天氣相關的影響對我們不利。還有一次眾所周知的 IT 中斷影響了我們的許多客戶，因為我們涵蓋了美國的許多人。然後就是一些普通假期的疲軟。這確實很獨特，因為很多事情都發生在同一時間。所以真的很難衡量。

I'll say the good news is the last week of the month has been -- was really strong for us. And so that is a good sign. So those were some of the impacts that we noted on a go-forward basis.

我想說的好消息是這個月的最後一周對我們來說真的很強大。這是一個好兆頭。這些是我們在未來的基礎上註意到的一些影響。

I think you're asking the next question sequentially. Sequential sales, am I correct, from like this quarter to the next. If you look at that from a top-line perspective, we expect that to be reasonably consistent Q2 to Q3 and then through the fourth quarter. And then as it relates to some of our other metrics from a sequential perspective, we're expecting profitability -- sequential growth from the revenue number that I just talked about, we expect profitability. There's going to be some puts and takes there, but we anticipate operating margins and EPS to also remain relatively consistent through the balance of the year.

我認為您正在按順序問下一個問題。我說得對嗎，從本季到下季的連續銷售。如果從營收角度來看，我們預計第二季到第三季以及第四季的情況將相當一致。然後，由於它與我們從連續角度來看的其他一些指標相關，我們預計盈利能力——我剛才談到的收入數字的連續增長，我們預計盈利能力。將會有一些看跌期權和賣出期權，但我們預計營業利潤率和每股收益在今年剩餘時間內也將保持相對穩定。

Okay. And then I may have missed, but did you talk about the restructuring you did in the quarter? Was it -- just kind of what was it? And what is the expected benefit from it? Is there more to come in terms of the restructuring? Or was it kind of isolated just to the second quarter?

好的。然後我可能錯過了，但是您有沒有談論您在本季度進行的重組？是不是——就是這樣？預期的好處是什麼？重組方面還有更多進展嗎？還是只是到第二季才出現這種情況？

Sure. As we've talked about making sure that we could continue to invest in the cycle to ensure that we have long-term share gain, a part of that is making sure that we're paying for some of those investments through productivity actions. And so our entire business is really focused on continuous improvement and looking at how we can drive productivity. So a lot of those actions were focused on voluntary actions with team members, and that happened both in the US and internationally quite a bit.

當然。正如我們所討論的，確保我們能夠繼續在這個週期中進行投資，以確保我們擁有長期的份額收益，其中一部分是確保我們透過生產力行動來支付其中一些投資的費用。因此，我們的整個業務真正專注於持續改進，並研究如何提高生產力。因此，許多行動都集中在團隊成員的自願行動上，這種情況在美國和國際上都發生過很多次。

We see that as a onetime specific incident. However, our focus on continuous improvement is longer term. In doing those things, we are gaining scale on our non-demand generating expenses, and we expect that to continue through the cycle as we continue to invest in demand generation.

我們認為這是一次特定事件。然而，我們對持續改善的關注是長期的。在做這些事情的過程中，我們的非需求生成支出規模不斷擴大，隨著我們繼續投資於需求生成，我們預計這種情況將在整個週期中持續下去。

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.

我們的問答環節已經結束。我想將會議轉回 D.G.作結束語。

All right. Thanks for joining us. It must be a busy day because we didn't get as many questions as normal, but appreciate you joining. And I would just reiterate that we are -- we feel really good about where we're at. We're going to continue to invest in the core capabilities that we need to build to make sure that we can serve customers better than our competitors. That's really what we're focused on.

好的。感謝您加入我們。這一定是忙碌的一天，因為我們沒有像平常一樣收到那麼多問題，但感謝您的加入。我只想重申，我們對自己所處的位置感覺非常好。我們將繼續投資於我們需要建立的核心能力，以確保我們能夠比競爭對手更好地為客戶服務。這確實是我們關注的重點。

And we're also focused, as Dee said, on driving productivity through the business. We think doing both of those things at the same time is absolutely critical for our long-term success. So I hope you enjoy the rest of your summer. And thanks. Thanks for joining our call.

正如迪伊所說，我們也致力於透過業務提高生產力。我們認為同時做這兩件事對於我們的長期成功絕對至關重要。所以我希望你能享受剩下的夏天。謝謝。感謝您加入我們的通話。

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

謝謝。今天的會議到此結束。此時您可以斷開線路，感謝您的參與。