固安捷 (GWW) 2024 Q3 法說會逐字稿

Greetings, and welcome to WW Grainger third-quarter 2024 earnings conference call. (Operator Instructions) Please note this conference is being recorded.

您好，歡迎參加 WW Grainger 2024 年第三季財報電話會議。（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 your host, Kyle Bland, Vice President, Investor Relations. Thank you. You may begin.

現在我將會議交給東道主投資者關係副總裁 Kyle Bland。謝謝。你可以開始了。

Good morning. Welcome to Grainger's third-quarter 2024 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 Grainger 2024 年第三季財報電話會議。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 the 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，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 results for the third 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.

今天早上的電話會議將重點討論 2024 年第三季的業績，該業績在報告和調整後的基礎上都是一致的。提醒一下，我們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。

Definitions and a full reconciliation 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 US GAAP and is reported in our results one month in arrears. As a result, the numbers discussed will differ from MonotaRO's public statements.

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 GAAP 財務指標及其相應 GAAP 指標的定義以及完整調整表，這兩個指標均可在我們的 IR 網站上找到。我們也將分享與 MonotaRO 相關的成果。請記住，MonotaRO 是一家上市公司，遵循日本公認會計準則（GAAP），該準則與美國公認會計準則（GAAP）不同，並且在我們的業績中報告為拖欠一個月。因此，討論的數字將與 MonotaRO 的公開聲明有所不同。

Now, I will turn it over to D.G.

現在，我將把它交給 D.G.

Thanks, Kyle. Good morning, and thanks for joining the call. Everything we do at Grainger starts with the Grainger Edge and with a focus on the customer. I've had the opportunity to spend a lot of time with customers past few months and while the demand environment remains muted, these visits have highlighted the value that we bring every day. Our strong capabilities, including digital supply chain and on-site support, allow us to help our customers succeed. No matter what each is facing, we are there to help them overcome challenges.

謝謝，凱爾。早安，感謝您加入通話。我們在 Grainger 所做的一切都從 Grainger Edge 開始，並以客戶為中心。過去幾個月，我有機會與客戶共度大量時間，儘管需求環境仍然低迷，但這些拜訪凸顯了我們每天帶來的價值。我們強大的能力，包括數位供應鏈和現場支持，使我們能夠幫助客戶成功。無論每個人面臨什麼，我們都會幫助他們克服挑戰。

Before I get into the financials, I'd like to take a moment to recognize the Grainger team for their continued work and helping those impacted by the recent hurricanes in the southeast. Fulfilling our purpose, we keep the world working in supporting our customer operations when they need us most.

在介紹財務狀況之前，我想花點時間對 Grainger 團隊的持續工作表示認可，感謝他們為東南部最近遭受颶風影響的人們提供的幫助。為了實現我們的目標，我們讓全世界在客戶最需要我們的時候為他們的營運提供支援。

Our branch, KeepStock distribution center and sales team members have gone above and beyond over the last few weeks, providing vital supplies and relief resources. And as we always have, our team will continue to work side by side with our partners to make sure that these communities have what they need to navigate the road to recovery.

我們的分公司、KeepStock 配送中心和銷售團隊成員在過去幾週內竭盡全力，提供了重要的物資和救援資源。一如既往，我們的團隊將繼續與合作夥伴並肩工作，確保這些社區擁有走上復甦之路所需的一切。

Moving to the third quarter, while the demand remains soft, the business continues to perform well, as we remain focused on being the go-to MRO partner for our customers. Both segments grew in the period, and we continue to make strategic progress across the company.

進入第三季度，儘管需求依然疲軟，但業務繼續表現良好，因為我們仍然專注於成為客戶的首選 MRO 合作夥伴。這兩個部門在此期間都取得了成長，我們繼續在整個公司取得策略進展。

In the High-Touch Solutions segment, we're leveraging our customer and product data assets and strong supply chain capabilities to help us advance our strategic growth engines. We've done great work in 2024, but I'm particularly pleased with how we're continually utilizing our vast array of proprietary data to improve our customer and team member experience.

在高接觸解決方案領域，我們正在利用我們的客戶和產品數據資產以及強大的供應鏈能力來幫助我們推進策略成長引擎。我們在 2024 年做了出色的工作，但我對我們如何持續利用大量專有數據來改善客戶和團隊成員體驗感到特別滿意。

We've launched new capabilities such as analytical tools that arm our sellers with better insights and data to drive more fruitful conversations with our customers. We're also testing a generative AI model in our call centers, which helps us scale our know-how and equip our customer service agents with fast, relevant responses to help customers get what they need quickly and efficiently. These are just some early examples of how we can leverage our data to help drive share, reduce cost, and further improve our service advantage. I'm excited about the opportunities ahead in this space.

我們推出了分析工具等新功能，為我們的賣家提供更好的見解和數據，以推動與客戶進行更有成效的對話。我們也在呼叫中心測試生成式人工智慧模型，這有助於我們擴展專業知識，並為我們的客戶服務代理提供快速、相關的回應，以幫助客戶快速有效地獲得所需的服務。這些只是我們如何利用數據來幫助推動共享、降低成本並進一步提高我們的服務優勢的一些早期範例。我對這個領域未來的機會感到興奮。

Driving a great customer experience is also underpinned by our world-class supply chain, one that is built specifically to serve B2B customers and ship next-day complete orders. During the quarter, we made progress on enhancing our service capabilities and expanding our distribution center network by officially beginning construction on our new Houston area DC. This, along with the continued progress at our new Pacific Northwest distribution center, will ensure we maintain our service advantage now and into the future.

我們世界一流的供應鏈也是推動卓越客戶體驗的基礎，該供應鏈專為服務 B2B 客戶並在隔天發貨完整訂單而構建。本季度，我們正式開始建立新的休士頓地區配送中心，在增強服務能力和擴大配送中心網路方面取得了進展。這一點，加上我們新的太平洋西北配送中心的持續進步，將確保我們在現在和未來保持我們的服務優勢。

Within the endless assortment segment, our focus on growing share of wallet with enterprise customers at MonotaRO and the changes we made to better communicate delivery expectations of Zoro have both helped reaccelerate growth over the last couple of quarters. These businesses are on the right track for a strong finish to 2024, setting us up nicely to continue gaining share in 2025 and beyond.

在無盡的分類領域中，我們對不斷增長的MonotaRO 企業客戶錢包份額的關注，以及我們為更好地傳達Zoro 的交付期望而做出的改變，都有助於在過去幾個季度中重新加速成長。這些業務正走在 2024 年強勁業績的正確軌道上，為我們在 2025 年及以後繼續擴大市場份額做好了良好準備。

Now shifting to third-quarter financials. Total company reported sales for the quarter were up 4.3% or 4% on a daily organic constant currency basis, which normalizes for the E&R divestiture and one more selling day in the current year period. Operating margins for the total company remain healthy at 15.6% and EPS finished the quarter up 4.7% to $9.87. Operating cash flow came in at $611 million in the quarter, which allowed us to return a total of $328 million to Grainger shareholders through dividends and share repurchases.

現在轉向第三季財務狀況。公司報告稱，本季總銷售額成長 4.3%，以每日有機固定匯率計算成長 4%，這是 E&R 剝離和本年度多一個銷售日的正常化。該公司整體營運利潤率維持在 15.6% 的健康水平，本季每股收益成長 4.7% 至 9.87 美元。本季的營運現金流為 6.11 億美元，這使我們能夠透過股利和股票回購向 Grainger 股東總共返還 3.28 億美元。

Overall, 2024 is playing out largely as expected as the business continues to perform well, and we stay focused on serving customers. With this, we are narrowing our earnings guidance ranges to close out the year, which Dee will outline in a few minutes. As we wrap up 2024, I'm confident that we will continue to execute well, meet our goals, and drive solid results for all stakeholders.

整體而言，2024 年的情況基本上符合預期，業務持續表現良好，我們將繼續專注於為客戶服務。因此，我們正在縮小今年年底的獲利指導範圍，迪伊將在幾分鐘內概述這一點。在 2024 年即將結束之際，我相信我們將繼續良好執行，實現我們的目標，並為所有利害關係人帶來堅實的成果。

Now I'll turn it over to Dee.

現在我把它交給迪伊。

Thank you, D.G. Turning to slide 7, you can see the high-level third-quarter results for the total company, including 4% revenue growth on a daily organic constant currency basis. This number includes a headwind of roughly 50 basis points from the lap of a heightened level of service engagements in the prior-year quarter. Within the period, we saw relatively stable gross margins across both segments, along with slight deleverage in High-Touch.

謝謝你，D.G.翻到投影片 7，您可以看到整個公司第三季的高水準業績，包括以每日固定匯率計算的 4% 的收入成長。這一數字包括與去年同期服務參與度提高相比約 50 個基點的逆風。在此期間，我們看到這兩個細分市場的毛利率相對穩定，並且 High-Touch 業務略有去槓桿化。

This led to total company operating margins to be down 30 basis points in the third quarter, largely in line with expectations. Diluted EPS for the quarter of $9.87, was up $0.44 over the prior-year period as higher sales were further aided by a lower share count in the current year.

這導致第三季公司總營業利潤率下降 30 個基點，基本上符合預期。本季稀釋後每股收益為 9.87 美元，比去年同期增加 0.44 美元，因為本年度股票數量減少進一步推動了銷售額的增加。

Moving on to segment level results. The High-Touch Solutions segment continues to perform well, with sales up 3.3% on a reported basis or 2.5% on a daily organic constant currency basis. Results were driven by solid volume growth and improved price contribution within the segment. We also delivered growth across all geographies in the period in local days, local currency.

轉向細分級別結果。High-Touch 解決方案部門持續表現良好，銷售額按報告計算成長 3.3%，以每日有機固定匯率計算成長 2.5%。業績的推動因素是該細分市場銷售的穩健成長和價格貢獻的提高。在此期間，我們還在所有地區實現了以當地天數、當地貨幣計算的成長。

In the US specifically, we continue to see flat to positive growth in nearly all customer end segments, including persistent strong performance with contractors, warehousing, and healthcare customers. For this segment, gross profit margin finished the quarter at 41.6%, down 10 basis points versus the prior year. In the quarter, we experienced an unfavorable product mix headwind as we lapped the heightened level of service engagements from the third quarter of 2023. This 60-basis-point year-over-year headwind was largely offset by several small tailwinds, which included the lap of a one-time adjustment made to clear out unproductive inventory. Price cost for the quarter was roughly neutral.

特別是在美國，我們繼續看到幾乎所有客戶端細分市場都呈現持平甚至正成長，包括承包商、倉儲和醫療保健客戶的持續強勁表現。該部門本季毛利率為 41.6%，較上年下降 10 個基點。在本季度，我們經歷了不利的產品組合逆風，因為我們超越了 2023 年第三季以來服務參與度的提高水準。這一同比下降 60 個基點的逆風在很大程度上被幾個小的順風所抵消，其中包括為清理非生產性庫存而進行的一次性調整。本季的價格成本大致呈中性。

SG&A costs for this segment increased over the period as we continue to invest in demand generation activities, including marketing and seller head count as well as normal wage inflation. Coupled with the softer top line, this led to SG&A deleverage of 30 basis points. Taking all this together, operating margin for this segment was down 40 basis points versus the prior year which was largely in line with expectations and remained at a healthy 17.6%.

由於我們持續投資於需求創造活動，包括行銷和銷售人員人數以及正常的薪資通膨，該部門的銷售、管理及行政費用在此期間有所增加。再加上營收疲軟，SG&A 去槓桿化達 30 個基點。綜上所述，該部門的營業利潤率比上年下降了 40 個基點，基本上符合預期，維持在 17.6% 的健康水準。

Looking at market outgrowth on slide 9, using headline industrial production and producer price index, we estimate that the US MRO market grew between 2% and 2.5% in the quarter, with price once again contributing nearly all of the market growth. With our High-Touch Solutions US business growing at 2.6% organically, our mathematical market outgrowth in the quarter was roughly 50 basis points in total. This includes approximately 200 basis points of volume outgrowth contribution for the quarter, netted with continued price headwinds when comparing our price contribution to PPI.

從幻燈片 9 上的市場成長來看，使用整體工業生產和生產者物價指數，我們估計美國 MRO 市場在本季成長 2% 至 2.5% 之間，其中價格再次貢獻了幾乎所有的市場成長。隨著我們的 High-Touch Solutions 美國業務有機成長 2.6%，我們本季的數學市場總成長約為 50 個基點。這包括本季約 200 個基點的銷售成長貢獻，在將我們的價格貢獻與 PPI 進行比較時扣除了持續的價格逆風。

Volume outgrowth year to date is roughly 350 basis points, just shy of our 400 to 500 basis point outgrowth target. As we've discussed this year, we're currently in a cycle where the growth rate implied by the headline IP and PPI metrics used in our market model, is higher than a number of other external data points across the MRO landscape would suggest. This difference continues to cause noise in our share gain calculation.

今年迄今的成交量成長約為 350 個基點，略低於我們 400 至 500 個基點的成長目標。正如我們今年所討論的，我們目前正處於這樣一個週期：我們的市場模型中使用的主要 IP 和 PPI 指標所暗示的增長率高於整個 MRO 領域的許多其他外部數據點所暗示的增長率。這種差異繼續在我們的份額增益計算中造成噪音。

Although we will not mathematically achieve our market outlook target in 2024, when using our headline market model, we remain pleased with returns we're driving across our outgrowth initiatives and are confident we're taking solid share in the current environment. We believe this market measurement dislocation will normalize over time, and we continue to target 400 to 500 basis points of outgrowth annually on average.

儘管我們在數學上無法在2024 年實現我們的市場前景目標，但在使用我們的整體市場模型時，我們仍然對我們透過我們的成長計劃所帶來的回報感到滿意，並且有信心我們在當前環境中佔據穩固的份額。我們相信，隨著時間的推移，這種市場衡量錯位將會正常化，我們繼續以平均每年 400 至 500 個基點的成長為目標。

Now focusing on the endless assortment segment. Sales increased 8.1% or 11.5% on a daily constant currency basis which adjust for the impact of the depreciated Japanese yen. Zoro US was up 11.3%, while MonotaRO achieved 15.4% growth in local days, local constant currency.

現在專注於無盡的分類領域。經調整日圓貶值的影響後，以每日固定匯率計算，銷售額成長 8.1% 或 11.5%。Zoro US 上漲 11.3%，而 MonotaRO 則以當地固定貨幣計算，當地日內上漲 15.4%。

At a business level, Zoro built on its second-quarter performance and once again saw strong growth in the mid-teens from its core B2B customers. The headwinds from noncore B2C and B2C-like customers continues to dissipate with sales to those customers roughly flat versus the prior year. The headwinds we've seen from this group are largely behind us, and we should go forward on even footing.

在業務層面，Zoro 在第二季業績的基礎上再次看到其核心 B2B 客戶的強勁成長。來自非核心 B2C 和 B2C 類客戶的不利因素持續消散，這些客戶的銷售額與前一年基本持平。我們從這個群體中看到的逆風基本上已經過去了，我們應該平穩地前進。

At MonotaRO, sales growth remains strong with enterprise customers, coupled with solid acquisition and repeat purchase rates with small and midsized businesses. On a reported basis, these results were partially offset by foreign exchange as the yen continues to be a year-over-year headwind. On profitability, the operating margins for the segment increased 130 basis points to 8.8% with both businesses contributing leverage year over year. MonotaRO margins remained strong at 12.4%, with DC operating efficiencies driving continued year-over-year improvement.

在 MonotaRO，企業客戶的銷售成長依然強勁，中小型企業的收購率和重複購買率也穩定。根據報告，這些結果被外匯匯率部分抵消，因為日圓仍然是同比的逆風。在獲利能力方面，該部門的營業利潤率成長了 130 個基點，達到 8.8%，兩項業務都比去年同期貢獻了槓桿作用。MonotaRO 的利潤率維持在 12.4% 的強勁水平，DC 營運效率推動了持續的同比改善。

At Zoro, operating margins were up 120 basis points to 4.3%, aided by solid operating leverage and a favorable one-time reserve true-up of roughly 70 basis points. These items more than offset an increase in marketing spend. Overall, we're encouraged by the strong progress we've made across the segment and remain on track to finish the year at or above our original expectations.

Zoro 的營運利潤率成長了 120 個基點，達到 4.3%，這得益於穩健的營運槓桿和約 70 個基點的有利的一次性準備調整。這些項目足以抵消行銷支出的增加。總體而言，我們對該領域的強勁進展感到鼓舞，並繼續按計劃在今年完成時達到或高於我們最初的預期。

Now moving to the updated outlook for the full year of 2024. As D.G. mentioned at the beginning of the call, while the market has remained muted, results have largely played out as expected for the year. With this, we're narrowing our full-year 2024 earnings outlook. The narrow guide includes daily organic constant currency sales growth of between 4.5% and 5.25% and a diluted adjusted EPS range of $38.65 to $39.35.

現在轉向更新後的 2024 年全年展望。正如 D.G.在電話會議開始時提到，雖然市場仍然平靜，但今年的業績基本上符合預期。據此，我們縮小了 2024 年全年獲利預期。狹義指導包括 4.5% 至 5.25% 之間的每日有機固定貨幣銷售額增長以及 38.65 美元至 39.35 美元的稀釋調整後每股收益範圍。

The updated revenue outlook implies a fourth-quarter 2024 daily organic constant currency growth rate in the mid-single digits, which includes month-to-date growth in October of approximately 6.5%. This preliminary daily organic constant currency sales growth rate for October includes roughly 200 to 250 basis points of hurricane-related sales, meaning normalized month-to-date results are closer to 4% and 4.5%.

更新後的收入前景意​​味著 2024 年第四季每日有機恆定貨幣成長率為中個位數，其中包括 10 月迄今約 6.5% 的成長率。10 月初步的每日有機固定貨幣銷售額成長率包括約 200 至 250 個基點的颶風相關銷售額，這意味著正常化的本月至今的表現接近 4% 和 4.5%。

Our operating margin expectations haven't shifted much from our prior guide. If you were to squeeze the operating margins from the updated annual guide, it implies a seasonal sequential step down in the fourth quarter to just above 15% at the midpoint. Supplemental guidance has also been updated, including an increase of $150 million to our operating cash flow outlook at the midpoint.

我們的營業利潤率預期與先前的指導相比沒有太大變化。如果你要從更新的年度指南中擠壓營業利潤率，這意味著第四季的季節性環比下降到中點略高於 15%。補充指引也已更新，包括將我們的營運現金流前景中位數增加 1.5 億美元。

As a note, we've lowered our full-year 2024 tax rate assumption to approximately 23.2% or 80 basis points less than the prior guide, which implies our fourth quarter tax rate somewhere between 20% and 21%. This reflects anticipated favorability in the fourth quarter as we adjust audit reserves from prior year tax returns and execute various tax planning strategies. Full year foreign exchange rates have also been updated in the revised outlook.

請注意，我們已將 2024 年全年稅率假設下調至約 23.2%，即比先前的指引低 80 個基點，這意味著我們第四季的稅率在 20% 至 21% 之間。這反映了我們在調整上一年報稅表的審計準備金並執行各種稅務規劃策略時對第四季度的預期有利程度。修訂後的展望中也更新了全年外匯匯率。

Overall, the year has played out largely as expected, and our updated earnings guidance remains within the original ranges we communicated at the beginning of the year. We look forward with confidence in finishing the year strong.

整體而言，今年的表現基本上符合預期，我們更新後的獲利指引仍處於我們年初傳達的原始範圍內。我們滿懷信心地期待今年的強勁表現。

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

有了這個，我會把它轉回 D.G.

Thanks, Dee. Before I open it up for questions, I'd like to recognize the Grainger team on earning another notable workplace achievement. Earlier this week, we were named a top rank company across all industries on the American Opportunity Index, which primarily focuses on the experience of workers in noncollege degree roles and the company's ability to offer them growth and development no matter their career path. The index measures the career trajectories of 5 million employees at 400 of America's largest companies via publicly available data. In other words, it's all about the facts, not a submission or a survey, so it's completely objective.

謝謝，迪伊。在開始提問之前，我想先對 Grainger 團隊在工作場所取得的另一項顯著成就表示認可。本週早些時候，我們在美國機會指數中被評為所有行業中的頂級公司，該指數主要關注非大學學位員工的經驗以及公司為他們提供成長和發展的能力，無論他們的職業道路如何。該指數透過公開數據衡量美國 400 家最大公司 500 萬名員工的職涯軌跡。換句話說，這一切都是事實，而不是提交或調查，所以它是完全客觀的。

This ranking of a testament to our culture, most importantly, our commitment to ensuring every team member can have a meaningful fulfillment career here at Grainger. We are honored to receive this recognition.

這項排名證明了我們的文化，最重要的是，我們致力於確保每個團隊成員都能在 Grainger 擁有有意義的職業生涯。我們很榮幸獲得這項認可。

With that, we will open up the line for questions.

這樣，我們將開放提問熱線。

Thank you. And at this time, we will conduct our question-and-answer session. (Operator Instructions)

謝謝。這個時候，我們將進行問答環節。（操作員說明）

Ryan Merkel, William Blair.

瑞恩·梅克爾、威廉·布萊爾。

I wanted to start, D.G., with the Endless Assortment growth rate really stood out to me this quarter. It was a nice acceleration and -- from what we saw in the first half. Is there anything you'd point out company-specific or otherwise that really drove that growth a lot higher this quarter?

D.G.，我想從這個季度無盡分類的成長率對我來說確實很突出開始。從我們上半場看到的情況來看，這是一次很好的加速。您是否會指出公司特定的或其他方面的因素確實推動了本季的成長？

Yeah. So what I would say is that MonotaRO continues to have really good success with enterprise customers and has also made some improvements with small businesses as well. So that has been a continuation of some improvement. And then Zoro, we talked about B2C and B2C-like customers being a headwind. That is really no longer a headwind.

是的。所以我想說的是，MonotaRO 在企業客戶方面繼續取得了巨大的成功，並且在小型企業方面也取得了一些改進。所以這是一些改進的延續。然後 Zoro，我們談到了 B2C 和類似 B2C 的客戶是一個逆風。這確實不再是逆風。

They were roughly flat with those customers. And so what you're seeing now is -- is mostly the strong business to business growth, which was strong last quarter and strong this quarter. So the results are much improved.

他們對這些顧客的態度大致持平。所以你現在看到的是——主要是強勁的企業對企業成長，上季和本季都很強勁。所以結果有了很大的改善。

Got it. Okay. And then on the fourth quarter, a nice start to October. I'm just curious, are you assuming the macro really just stays the same? And then in November and December, should we assume that the hurricane bump of 2%, 2.5% falls off, or is that unclear?

知道了。好的。然後在第四季度，十月有了一個良好的開始。我只是好奇，你是否認為宏真的保持不變？然後在 11 月和 12 月，我們是否應該假設 2%、2.5% 的颶風衝擊會下降，還是不清楚？

I think on both of those, we would say, yes, we would agree with you that macro stays the same and then the hurricane bump falls off in the November, December timeframe.

我認為對於這兩個問題，我們會說，是的，我們同意你的觀點，即宏觀經濟保持不變，然後颶風衝擊會在 11 月、12 月的時間範圍內減弱。

Jacob Levinson, Melius Research.

雅各布·萊文森，Melius 研究公司。

I think it has been quite some time since we've had at least for you folks such a sluggish macro backdrop and you're still spending -- understandably spending quite a bit of money and demand-generating investments. So I guess trying to understand how do you kind of balance that investment spend when you're trying to manage growth in this type of environment versus holding the line on margins?

我認為已經有一段時間了，至少對你們來說，我們已經經歷瞭如此低迷的宏觀背景，而你們仍然在支出——這是可以理解的，花費了大量的資金和產生需求的投資。因此，我想嘗試了解當您試圖在這種環境下管理成長與保持利潤率時，您如何平衡投資支出？

Yeah. So I think the -- the simple answer, of course, is it something on demand generation is we're spending in good times. It's probably we're spending in bad times. You may adjust the levels depending on sort of the market growth, but we'd still expect to spend in areas that we think are going to create a long-term advantage for us and help us grow.

是的。所以我認為——當然，簡單的答案是，我們在美好時期消費的是按需生成的東西。這可能是我們在困難時期花錢的原因。您可以根據市場成長的情況調整水平，但我們仍然希望在我們認為將為我們創造長期優勢並幫助我們成長的領域進行支出。

I think the most important thing to do is to make sure that in all the core areas of the business, we continue to drive productivity. So we have a lot of core operations. We are very much an operation-intensive business and making sure that we're consistently getting productivity in those parts of the business, and we've worked on that in the past and continue to work on that going forward is really critical to make sure that you're able to continue to invest in those demand-generating activities.

我認為最重要的事情是確保在業務的所有核心領域，我們繼續提高生產力。所以我們有很多核心業務。我們在很大程度上是一家營運密集型企業，確保我們在這些業務領域始終如一地提高生產力，我們過去一直致力於這一點，並且未來將繼續努力，這對於確保您能夠繼續投資於那些產生需求的活動。

Okay. That makes sense. And then just quickly on the balance sheet, I think you're sitting on the largest cash pile you've had since maybe the height of the pandemic here. Balance sheet leverage is pretty low. Obviously, the stock has had a pretty phenomenal run at this point. But can you just give us a sense of how you're thinking about your balance sheet options at this point, whether it's buying back stock or even if there are M&A bills out there on your radar?

好的。這是有道理的。然後很快就在資產負債表上，我認為你正坐擁自疫情最嚴重以來最大的現金儲備。資產負債表槓桿率相當低。顯然，該股目前的走勢相當驚人。但您能否讓我們了解一下您目前如何考慮您的資產負債表選項，無論是回購股票，還是您關注的併購法案？

Well, thanks for the question. If you look at our cash balance over the quarter, we did increase cash meaningfully because we closed on our new $500 million bond offering, which we'll use to pay down senior notes early in 2025. And if you pull that to the side, it's important to note that the pace of our cash growth really over several years has been in line with our sales growth. And when you look at the excess cash that we do have and look at our capital allocation strategy, we don't envision any changes to that strategy. And we will most likely return that cash back to shareholders in the form of share repo. And if you look at our updated guide for the end of the year, you can see that represented in that number.

嗯，謝謝你的提問。如果你看看我們本季的現金餘額，我們確實顯著增加了現金，因為我們完成了新的 5 億美元債券發行，我們將用它來償還 2025 年初的優先票據。如果你把它放在一邊，值得注意的是，我們幾年來現金成長的速度實際上與我們的銷售成長一致。當你看到我們擁有的多餘現金並看看我們的資本配置策略時，我們預計該策略不會發生任何變化。我們很可能會以股票回購的形式將現金回饋給股東。如果您查看我們年底更新的指南，您可以看到該數字所代表的內容。

Sabrina Abrams, Bank of America.

薩布麗娜·艾布拉姆斯，美國銀行。

I just want to ask about the self-help initiatives to gain share in HTS between -- you mentioned the marketing, seller headcount. Just looking to understand the traction, anything going particularly well? Anything you're looking to improve on? And just early thoughts on expectations for 2025 in terms of the outgrowth. Thank you.

我只是想問一下在 HTS 中獲得份額的自助舉措——您提到了行銷、賣家人數。只是想了解牽引力，有什麼進展特別順利嗎？有什麼需要改進的地方嗎？這只是對 2025 年成長預期的初步想法。謝謝。

Yeah. So I'll start and then Dee may add on to this. But basically, what we are doing broadly is leveraging our proprietary data and product information and customer information to provide better solutions, whether that's in marketing, where we get more refined in how we market the customers or whether that's in merchandising where we look to make sure that the website is easier for customers to navigate or add products. And then we also are leveraging some of that customer information to improve seller coverage. So we have continued to add sellers this year at a relatively modest rate, but a consistent rate.

是的。所以我先開始，然後迪伊可能會補充這一點。但基本上，我們廣泛做的是利用我們的專有數據、產品資訊和客戶資訊來提供更好的解決方案，無論是在行銷方面，我們在如何行銷客戶方面更加完善，還是在推銷方面，我們希望確保網站更方便客戶瀏覽或新增產品。然後我們也利用一些客戶資訊來提高賣家覆蓋率。因此，今年我們繼續以相對溫和但穩定的速度增加賣家。

And all of those are -- are showing very strong returns and continue to show strong returns. Our expectation is that they will continue to show strong returns into next year as well. We won't update our market expectations for 2025 until after fourth-quarter earnings. It's probably safe to say that 2025 will start similarly the way 2024 ends, that's usually the way it works. So it'll probably be muted to start the year. But in any case, we are going to continue to invest in leveraging our data assets to provide better customer solutions and better outreach to marketing through coverage through -- through merchandising.

所有這些都顯示出非常強勁的回報，並將繼續顯示出強勁的回報。我們的期望是他們明年也將繼續表現出強勁的回報。在第四季財報公佈之前，我們不會更新對 2025 年的市場預期。可以肯定地說，2025 年的開始方式與 2024 年的結束方式類似，通常就是這樣。因此，今年年初它可能會被抑制。但無論如何，我們將繼續投資利用我們的數據資產來提供更好的客戶解決方案，並透過行銷來更好地進行行銷推廣。

And the only thing I'd add, Sabrina, is that we still are targeting from the collective investments in demand generation to outgrow the market by 400 to 500 basis points. As I noted in our prepared remarks, we are in a period where we do have some dislocation versus our headline IP and PPI metrics.

Sabrina，我唯一要補充的是，我們仍然將需求產生的集合投資目標定為比市場成長 400 到 500 個基點。正如我在準備好的發言中指出的那樣，我們正處於一個與我們的整體 IP 和 PPI 指標相比確實存在一些混亂的時期。

However, when we continue to internally test the return on those investments, those investments are still returning as we would expect. And there still is really a lot of noise, I would say, if you look at market surveys, other competitive results or other economic data points related to what volume really is. We believe it's actually muted, and we are performing fairly well versus the competition.

然而，當我們繼續內部測試這些​​投資的回報時，這些投資的回報仍然符合我們的預期。我想說，如果你看看市場調查、其他競爭結果或與實際銷售相關的其他經濟數據點，仍然存在很多噪音。我們相信它實際上是靜音的，而且我們與競爭對手相比表現得相當好。

Okay. Great. Thank you, guys. And then just a follow-up. I think you mentioned price cost was neutral in the prepared remarks. Do you feel you need to take incremental pricing actions following the May 1 price increase? Or do you sort of feel you've taken the appropriate measures for the levels of inflation we are at right now?

好的。偉大的。謝謝你們，夥計們。然後只是後續行動。我認為您在準備好的評論中提到價格成本是中性的。您是否認為 5 月 1 日漲價後需要採取增量定價行動？或者您認為您已經針對我們目前所處的通膨水準採取了適當的措施？

So yes, we -- we did take an additional increase in September, as you know, versus where we expected price to be at the beginning of the year versus where it appears is landing. And based upon 70% of our business and High-Touch being contract related, we've had to kind of chase to catch up on some of that. And so our goal would be, as you noted, to exit the year price cost neutral, and we are in line with that.

所以，是的，我們確實在 9 月進行了額外的上漲，正如您所知，與我們年初的預期價格相比，價格似乎正在下降。基於我們 70% 的業務和 High-Touch 與合約相關，我們不得不努力追趕其中的一些。因此，正如您所指出的，我們的目標是退出今年的價格成本中性，我們也同意這一點。

Now we're right in the midst of our cost cycle with our suppliers heading into 2025. And as D.G. noted, really not ready to disclose where we think that will head. But we do have a philosophy, of course, as a distributor of passing on cost inflation through price to our customers since we sell on value, and we don't expect that to change in 2025.

現在，我們正處於成本週期中，我們的供應商即將進入 2025 年。正如 D.G.指出，實際上還沒有準備好透露我們認為這將走向何方。但當然，作為經銷商，我們確實有一個理念，即透過價格將成本上漲轉嫁給客戶，因為我們以價值銷售，我們預計這一點在 2025 年不會改變。

David Manthey, Baird.

大衛曼蒂，貝爾德。

My question is on slide 9, essentially, you're saying the disconnect between your sales and industrial production is just inflation, I guess, or deflation. And so the third quarter '23 share gains might have been overstated while the third quarter of '24 are understated. Is that what you're saying?

我的問題在投影片 9 上，本質上，你是說你的銷售和工業生產之間的脫節只是通貨膨脹，我猜，或是通貨緊縮。因此，23 年第三季的股票收益可能被高估了，而 24 年第三季的股票收益則被低估了。你是這麼說的嗎？

No, no. We think that third quarter of last year was probably stated correctly. What we're seeing right now is -- the way we calculate share gain is based on IP and based on market price increases as well. And as we look across different other performance indicators, market surveys, competitor results, economic data points, we think we're performing quite well right now.

不，不。我們認為去年第三季的表述可能是正確的。我們現在看到的是—我們計算份額收益的方式是基於智慧財產權和市場價格上漲。當我們查看其他不同的績效指標、市場調查、競爭對手的結果、經濟數據點時，我們認為我們現在的表現相當不錯。

And so we think that the share gain number we're quoting isn't necessarily reflecting all reality. And so in any case, we expect that dislocation to correct itself in the long term, and we'll continue to gain 400 to 500 basis points on average annual market growth.

因此，我們認為我們引用的股票收益數字不一定反映所有現實。因此，無論如何，我們預計這種錯位從長遠來看會自行修正，我們將繼續獲得年均市場成長 400 至 500 個基點。

Okay. And then, D.G., if I'm trying to square up slide 19 with slide 9, 19 as maybe a lens of the US commercial industrial economy, it looks like steady deceleration in most of those categories. And so I'm just trying to understand that relative to your saying the MRO market is kind of steady right now. Is that just Grainger comps that's influencing that? Or how should we think about 19?

好的。然後，D.G.，如果我試圖將幻燈片 19 與幻燈片 9、19 作為美國商業工業經濟的一個鏡頭，那麼大多數類別看起來都在穩步減速。所以我只是想理解相對於你所說的 MRO 市場目前比較穩定的情況。難道只是 Grainger 的比較影響了這一點嗎？或者說我們該如何看待19？

So we would say that the demand trend has been pretty consistent most of this year. You see some fluctuation warehousing up as an example. But certainly, things like heavy equipment is down right now. So there are puts and takes. Net-net, it's not a huge change from the beginning of the year to now, but it has been pretty slow growth all year, I would say.

因此，我們可以說今年大部分時間的需求趨勢相當一致。您可以看到一些波動倉儲作為範例。但可以肯定的是，像重型設備這樣的東西現在已經停產了。所以有放和取。Net-net，從年初到現在，變化並不是很大，但我想說的是，全年成長相當緩慢。

Tommy Moll, Stephens.

湯米·莫爾，史蒂芬斯。

So you mentioned that the year is playing out largely as expected. And I was curious if we -- if we go one layer deeper just in terms of the pricing versus volume trends, would you say the same for each of those? Or are there may be some offsets where pricing maybe is coming in a little bit better than expected volumes a little bit weaker or the reverse of that?

所以你提到今年的情況基本上符合預期。我很好奇如果我們——如果我們在定價與銷售趨勢方面更深入一層，你會對每個趨勢說同樣的話嗎？或者可能存在一些抵消作用，即定價可能比預期的銷量好一點，但銷量稍微弱一點，或者相反？

Yes, market price, as you noted, has been fairly resilient all year. Now for us, as I kind of talked about in a prior question, we started off the year pricing fairly light versus what has actually occurred and have been pulling through price as appropriate while we're still maintaining price competitiveness.

是的，正如您所指出的，市場價格全年都相當有彈性。現在對我們來說，正如我在之前的問題中談到的那樣，我們年初的定價與實際發生的情況相比相當輕，並且在我們仍然保持價格競爭力的同時，一直在適當調整價格。

From a volume perspective, I think the market is closer to -- to right there. And if you look at those components, it's like flat to down on volume. And as you can kind of see in the US, we have actually grown volume positively.

從成交量的角度來看，我認為市場已經接近那裡了。如果你看一下這些組件，你會發現音量持平甚至下降。正如您在美國看到的那樣，我們的銷量實際上有所增長。

I've been around here for about 11 years. And when I looked at IP and PPI over time, you'll get to the next year, and it does a really good look back and makes a lot of corrections. When we look at what D.G. kind of talked about, other surveys or other metrics, it feels like those corrections will be to the downside as we look back at 2024, and that's what all of our data as it relates to our AB testing and a lot of our pre and post testing on our investments are telling us.

我在這裡已經待了大約 11 年了。當我隨著時間的推移查看 IP 和 PPI 時，你會看到明年，它確實做了很好的回顧並做出了很多修正。當我們看看 D.G.有點談到，其他調查或其他指標，當我們回顧 2024 年時，感覺這些修正將是下行的，這就是我們所有的數據，因為它與我們的 AB 測試以及我們的許多前期和後期相關對我們投資的測試告訴我們。

And sticking on the market share theme, are there any anecdotes you could share just on competitive contract wins or things you're seeing in the business that you're winning every day that would also corroborate what you're communicating in terms of the share capture?

圍繞市場份額主題，您是否可以分享有關贏得競爭性合約的軼事，或者您在每天贏得的業務中看到的事情，這些軼事也可以證實您在份額方面所傳達的內容捕獲？

Yeah. I think the easiest one is just to look at sort of revenue growth across all the competitors to get a sense for that. I would say from a customer input, I've been with a lot of customers in the last couple of months. And generally, there's no panic, and we are viewed as adding a bunch of value to their business. And I think we're doing all the right things and winning contracts and of course, losing some as always. But generally, the customer interactions feel pretty good right now in terms of how they view us and the value that we're creating.

是的。我認為最簡單的方法就是查看所有競爭對手的收入成長情況，以了解這一點。我想說，根據客戶的回饋，過去幾個月我接觸過很多客戶。一般來說，沒有恐慌，我們被視為為他們的業務增加了很多價值。我認為我們正在做所有正確的事情並贏得合同，當然，一如既往地失去一些合約。但總的來說，就客戶如何看待我們以及我們正在創造的價值而言，現在的客戶互動感覺非常好。

Patrick Baumann, JPMorgan.

派崔克鮑曼，摩根大通。

Maybe first, just wondering if we could talk a little bit about KeepStock. It feels like it's not something that's come up in a while, not because you haven't had success there, I think. It has been growing nicely, but maybe you could provide some perspective on how big it is now in terms of the High-Touch segment. What type of growth you're seeing? And any thoughts on that announcement from Amazon around like the Amazon Business Restock program, like where might they be trying to go after customers in terms of vending, in terms of inventory management?

也許首先，只是想知道我們是否可以談談 KeepStock。感覺這不是最近才出現的事情，我想不是因為你沒有在那裡取得成功。它一直發展得很好，但也許你可以提供一些關於它現在在高接觸部分有多大的觀點。您看到什麼類型的成長？對亞馬遜宣布的亞馬遜商業補貨計畫有什麼想法，例如他們在自動販賣、庫存管理方面可能會在哪些方面努力吸引客戶？

Just seems like they're moving to a higher touch offering than historically. Wondering if you had any thoughts on that at all? I know it's early. So (multiple speakers) that you might not.

看起來他們正在轉向比歷史上更高的觸感產品。想知道您對此有什麼想法嗎？我知道現在還早所以（多個發言者）你可能不會。

Yeah, yeah. So KeepStock continues to grow faster than the business on the whole. A large majority of our revenue volume comes from customers that have some sort of KeepStock installation as well. So you can track it sort of the volume through KeepStock, which would be probably high teens or something like that. But you can also track it in terms of how many customers -- the total revenue has that KeepStock installation, and there's a lot of them.

是啊是啊。因此，KeepStock 的成長速度持續快於整體業務的成長速度。我們的大部分收入來自也安裝了某種 KeepStock 的客戶。所以你可以透過 KeepStock 追蹤它的交易量，這可能是十幾歲或類似的東西。但你也可以根據有多少客戶來追蹤它——安裝 KeepStock 的總收入，而且有很多客戶。

What I would say is that doing KeepStock well requires, particularly in the spaces that we operate in, understanding dirty places and manufacturing plants and making sure you locate them right. And there's a lot of work that goes into that, consulting, having the right industrial products and getting them to customers quickly and being able to stock bins and make sure we're at the right locations within a plant.

我想說的是，做好 KeepStock 需要了解骯髒的地方和製造工廠，並確保它們位於正確的位置，尤其是在我們運作的空間中。這需要做很多工作，包括諮詢、擁有合適的工業產品並將其快速交付給客戶、庫存箱並確保我們位於工廠內的正確位置。

And so we don't know everything about the Amazon announcement, but it's pretty simple to get vending going which is what they're talking about doing. And I think they're planning to use third parties they announced to stock. We don't know how that will play out, but we feel pretty confident in our ability to provide a lot of value on the plant floor.

因此，我們並不了解有關亞馬遜公告的所有信息，但讓自動販賣機運行起來非常簡單，這就是他們正在談論的事情。我認為他們計劃使用他們宣布的第三方進行庫存。我們不知道結果會如何，但我們對自己為工廠提供大量價值的能力充滿信心。

Thanks for the color. And then maybe one for Dee on the gross margin outlook for the fourth quarter. I'm squeezing into something that's higher sequentially than the third quarter and would be up nicely year over year. Just wondering if I'm doing the math right? And if so, what's driving that? And if that's right, like should we expect gross margin expansion in '25? It just seems like a nice exit rate for the year.

謝謝你的顏色。然後迪伊可能會談到第四季的毛利率前景。我正在努力爭取比第三季連續成長的產品，並且同比也會有很好的成長。只是想知道我的數學計算是否正確？如果是這樣，是什麼推動了這一點？如果這是正確的，那麼我們是否應該預期 25 年毛利率會成長？今年的退出率似乎不錯。

Yeah. Maybe I'd point you to like sequential versus year over year and price/cost, which kind of came up. We were expecting to end the year a positive, mainly due to the supplier rebates. That's going to definitely help us. We do have some business unit mix offsets to that and a little bit of freight.

是的。也許我會指出你喜歡連續與逐年比較以及價格/成本，其中出現了這種情況。我們預計今年將取得正面成果，主要歸功於供應商回扣。這肯定會對我們有幫助。我們確實有一些業務部門組合來抵消這一點以及一點運費。

But net-net, on a sequential basis going from Q3 2024 to Q4 2024, we do expect to expand gross margins. Since we're not talking about 2025 outlook -- like I noted earlier, we're in the midst of our contract negotiations on COGS and, of course, watching market pricing. But as D.G. noted, we expect the first quarter -- or the first half to look a whole lot like we're ending this half.

但從 2024 年第三季到 2024 年第四季的環比來看，我們確實預期毛利率將會擴大。由於我們不是在談論 2025 年的前景——就像我之前指出的那樣，我們正在就銷貨成本進行合約談判，當然也在關注市場定價。但正如 D.G.值得注意的是，我們預計第一季——或者上半場看起來很像我們即將結束這半場。

And that has been price moderating -- continuing to moderate a bit as we've exited the pandemic. So I don't see it being particularly strong in 2025, but do feel like there will be some price in the market.

價格一直在放緩——隨著我們已經擺脫了疫情，價格繼續放緩。因此，我認為 2025 年它不會特別強勁，但確實感覺市場上會有一些價格。

Thank you. And there are no further questions at this time. I'll hand the floor back to D.G. Macpherson for closing remarks.

謝謝。目前沒有其他問題。我將把發言權交還給 D.G.麥克弗森致閉幕詞。

All right. Well, thank you -- thanks for joining our call. Really appreciate it. As we discussed, we think we continue to perform well in certainly a muted demand environment, but we're really confident in the things we're doing and feel good about the way the company is moving. And we're going to continue to execute on the things that really matter.

好的。好的，謝謝您—感謝您加入我們的電話會議。真的很感激。正如我們所討論的，我們認為我們在需求低迷的環境中繼續表現良好，但我們對我們正在做的事情非常有信心，並對公司的發展方式感到滿意。我們將繼續執行真正重要的事情。

Appreciate the time. Have a safe and fun Halloween if you're into that, and we'll talk to you next quarter. Thank you.

珍惜時間。如果您對此感興趣，請祝您度過一個安全有趣的萬聖節，我們將在下個季度與您聯繫。謝謝。

Thank you. This concludes today's call. All parties may disconnect.

謝謝。今天的電話會議到此結束。所有各方都可以斷開連接。