Greetings, and welcome to the W.W. Grainger Q4 2021 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 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, Irene Holman, Vice President of Investor Relations. You may proceed. Good morning, and welcome to Grainger's fourth quarter and full year 2021 earnings call. With me are D.G. Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements. Actual results may differ materially as a result of various risks and uncertainties, including those detailed in our SEC filings. Reconciliations of any non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our Q4 earnings release, both of which are available on our IR website. This morning's call will focus on adjusted results, which exclude restructuring and other items that are outlined in our release. 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 disclosed will differ somewhat from MonotaRO's public statements. Now I'll turn it over to D.G. Thanks, Irene. Good morning, and thank you for joining us. Today, I'm gonna provide an overview of our full year highlights and fourth quarter results, and I'll begin, as we always do, with The Grainger Edge, our strategic framework that defines who we are, why we exist, and where we're going, as well as how we'll get there using our operating principles. This framework has been foundational for our team to work through another challenging year with resilience and strength. We remain relentlessly focused on our customers in building the company for the future. I am tremendously proud of what we've achieved and want to thank our team members for their commitment, as well as our suppliers and transportation partners for their shared passion to support our customers throughout the year. It is always a privilege to help customers keep their people safe and their operations running, and even more so over the last two years. While 2021 was our second year navigating the impacts of the pandemic, it certainly brought its own unique challenges. Labor and material shortages strained supply chains throughout the industry. We demonstrated our agility and leveraged our supply chain scale to deliver strong service. Our customer satisfaction remained high, and in my regular interactions with customers, I continue to hear appreciation for our ability to deliver over the last two years. We invested in inventory, which enabled us to improve our availability and meet growing demand, especially in the back half of the year. We've also invested in our team members with increased wages to make sure that our DCs are staffed and able to get orders out the door. I can confidently say that the Grainger team navigated these challenges extremely well and put us in a good position as we enter 2022. While we've continued to focus on customers' needs, I'm pleased with the team's progress on our strategic initiatives that we know drive short and long-term growth. Our merchandising team reviewed 1.5 billion of the assortment last year, continuing to make it easier for customers to navigate our website and find the products they need quickly. That brings our total remerchandised assortment to 4.4 billion, which helps our customers choose products with confidence. We've also increased our marketing investments, especially in areas like paid search, digital and radio ads, which have driven share gain and improved our brand recognition. We're excited by these results and the traction we've gained with both large and mid-sized customers. Since the beginning of the pandemic, our KeepStock teams have served customers on-site, supporting their inventory management needs and offering valuable insights to help them save time and money. This, in conjunction with our e-procurement services, has continued to make it easier for customers to do business with Grainger. Around 60% of U.S. revenue now comes from customers with multiple solutions that embed us in their operations. Our technology investments have been critical in supporting these efforts. Over the last two years, we've developed new product information, publishing, customer information, and marketing support systems. We continue to improve our technology capabilities to help us win in the market. Our Endless Assortment segment continues to grow as we made progress on our strategic initiatives. Zoro.com U.S. achieved its full-year SKU count goal, adding over 2.5 million SKUs this year alone, which brings the total assortment to 8.7 million SKUs. We've expanded into new customer segments and new categories, driving both new and repeat business. In 2021, MonotaRO opened the Ibaraki DC in Japan, allowing them to stock high-demand items locally, with plans for another DC near Osaka, Japan, in 2022. Finally, we are making strong progress on ESG. 2022 will be our 11th year publishing a corporate responsibility report. We've elevated its importance in our organization through our ESG Leadership Council, which I chair. In 2021, we reviewed and updated our materiality matrix to ensure our ESG priorities are in line with customer needs and to those of our stakeholders. We continue to make progress across our ESG pillars: reducing greenhouse gas emissions and driving diversity, equity, and inclusion initiatives, improving supplier diversity, and helping customers meet their ESG goals. All in all, 2021 was a strong year, which positions us well moving forward. Turning to financial highlights, we achieved the full-year expectations that we set earlier in the year. Demand was very strong, enabling us to finish the year at $13 billion in sales at the high end of our guided range. Organic daily sales growth was 12.7% for the year, 12.4% on an organic constant currency basis. Our results were driven by strong performance in both segments. Most notably, High-Touch Solutions in North America had exceptional growth at 10.8% on a daily constant currency basis. In the U.S., we outgrew the market by 100 basis points for the full year 2021, above where we expected to be, and outgrew the market by 450 basis points on a two-year average. We faced our fair share of gross margin challenges throughout the year, primarily tied to inventory. We were able to recover well to end the year at 36.2%, resulting from our ability to manage price cost spread and improve product mix. We delivered 11.9% operating margin, an increase of 65 basis points over the prior year. Lastly, we returned over $1 billion to shareholders through dividends and share repurchases and delivered a strong ROIC of 31.9%. We met the challenges of the year head on and delivered on our commitments for the full year. Turning to our quarterly results for the company, the story is similar with strong results to share. Daily sales exceeded our expectations and were up 16%, 16.9% on a constant currency basis, driven by double-digit growth in both segments with robust demand. Gross profit margin was 37.3%, 240 basis points above the prior year and in line with our expectations. We will go into more detail, but at a high level, because we follow the LIFO method of accounting, our results include an adjustment to reflect the building of core product inventory at higher costs in the fourth quarter, which allowed us to finish the year with a strong inventory position. Our SG&A as a percentage of sales was 24.9%, flat to prior year. When comparing to 2019, which is a more relevant comparison point, our SG&A leverage improved over 200 basis points in the quarter. SG&A was $836 million, driven by higher variable compensation as a result of our strong top line growth. We also saw elevated hourly wages and increased healthcare expenses and continued to invest in marketing. We gained operating margin leverage of 240 basis points over prior year, a result of the gross margin improvement. Finally, our resulting EPS was $5.44 for the quarter, up 48.6% versus the fourth quarter of 2020. With that, I will turn it over to Dee to take us through more detail on the quarter and our expectations for 2022. Dee. Thank you, D.G. Turning to our High-Touch Solutions segment, for the fourth quarter, we continued to see strong results with daily sales up 16.5% compared to the fourth quarter of 2020, and up 21.5% compared to the fourth quarter of 2019. In the U.S., we saw continued strong growth of our core non-pandemic categories. As a result of our growth investments, we're seeing continued growth with both large and mid-sized customers at 16% and 25% respectively. The U.S. business also had strong price realization in the quarter. We're encouraged by how Canada and Mexico finished the year, both with positive daily sales growth in the fourth quarter. In Canada, the business saw year-over-year sales growth with 11 of its 14 industries, most notably in our targeted end segments like manufacturing and higher education. Canadian daily sales were up 12.2% or 6.8% in local days, local currency. For the segment, GP finished the quarter at 39.6%, up 250 basis points versus the prior year, a very strong quarter for our High-Touch Solutions segment. We once again achieved price cost spread slightly above neutral, and our pandemic product mix returned to near pre-pandemic levels, both driving positive improvement in gross profit. At the operating margin line, we saw improvement of 230 basis points year-over-year. Overall, a solid quarter for High-Touch Solutions. I'd like to go into a bit more detail, specifically on our U.S. GP run rate. During the quarter, we achieved a gross margin rate of 40%. We're encouraged by these results and the GP stabilization achieved in the fourth quarter. The pandemic product mix, our pricing actions, and our ability to navigate supply chain challenges supported this achievement and will be the foundation for our GP expectations in 2022. As you're aware, Grainger follows a LIFO accounting method, which requires us to revalue the majority of our inventory sold during the year based upon the most current purchase price. At the end of every year, we calculate our LIFO adjustment based upon our ending inventory balance. This year, we increased our inventory balance significantly in the fourth quarter to set us up for 2022, and our most recent purchases were at higher cost due to inflation. As a result, our LIFO adjustment is larger than we've historically seen. You'll see this adjustment disclosed in our 10-K, and it's important to remember that it's a non-cash LIFO accounting impact and not a reflection of our operational performance. Moving to slide 11. During the quarter, our core non-pandemic product sales were up 28% over the prior year fourth quarter. Compared to 2019, sales growth was quite strong at approximately 17%. In addition, our pandemic product sales were down year-over-year, remain elevated, up around 41% over 2019. As it relates to mix, our pandemic products totaled 21% of sales in the fourth quarter, very close to our pre-pandemic mix. We're excited that our product mix is stabilizing as customers return to more normal operations. In total, our U.S. High-Touch Solutions business is up 17% versus the fourth quarter of 2020, and up 22% as compared to the fourth quarter of 2019. Looking at market outgrowth on slide 12, we estimate that the U.S. market grew between 10% and 11%, and we achieved 650 basis points of market share outgrowth in the fourth quarter, largely driven by returns on our key strategic initiatives. For the full year, and slightly above our expectations, we achieved approximately 100 basis points of outgrowth. To normalize for volatility over the past two years, we're continuing to calculate and show the two-year average, which was about 600 basis points over the market for the fourth quarter of 2021. We remain committed to our U.S. share gain goal of 300-400 basis points of outgrowth on an ongoing basis. Moving to our Endless Assortment segment. Daily sales increased 15.2% or 20.6% on a constant currency basis, driven by continued strength in our new customer acquisition at both Zoro and MonotaRO, and continued growth with enterprise customers in Japan. When we account for local days and local currency, MonotaRO daily sales grew 20.2%. GP expanded 60 basis points year-over-year. As a result, operating margin for the segment finished up 45 basis points over the prior year, primarily due to improved gross profit margin. Zoro operating margin improved as a result of freight efficiency, specifically from its continued focus on B2B customers. MonotaRO's operating margin was down slightly compared to the prior year, primarily due to lower gross margin, a result of their product mix in the quarter. Please note the slide covering both Zoro and MonotaRO financial performance is in the appendix. In addition, we also continue to see positive results in our operating metrics. Registered users are up 16% over the fourth quarter prior year, and on the right, we show the continued growth of the Zoro SKU portfolio with great progress this year. Overall, we continue to be impressed by the results of our Endless Assortment segment as we grow with the right customers. Moving to 2022 guidance. For the total company, we expect revenue between $14.1 billion and $14.5 billion, with daily sales growth between 7.5% and 10.5% driven by strong top-line performance in both segments. It's worth noting there's also 1 more selling day in 2022. Within our High-Touch Solutions segment, we expect daily sales growth between 6.5% and 9.5%. For the US, we anticipate growth between 7% and 10%, 300 basis points above the estimated MRO market of 4%-7%. We expect our share gain to be driven primarily by growing volume as a result of our strategic initiatives, and that we'll continue to price to the market. In Canada, we expect to see mid-single digit top-line growth as we continue to diversify our customer base. In the Endless Assortment segment, we anticipate daily sales to grow roughly 14% or 18.5% in local currency and local days. Zoro's growth is anticipated to be in the high teens, reflecting further SKU expansion and a continued focus on acquiring and retaining high-value B2B customers. MonotaRO expects local currency growth rates in the high teens as well as they continue to grow with both small and enterprise customers. From a profitability perspective, total company GP is expected to be between 36.8% and 37.3%, up between 50 and 100 basis points in 2022. Consistent with 2021, we expect a similar LIFO accounting adjustment as we continue to see cost inflation and build inventory. We have factored into our guidance this impact. The gross profit margin expansion is driven primarily by the High-Touch Solutions segment as GP stabilizes near pre-pandemic levels and as we continue to target price cost neutrality. Endless Assortment gross profit is expected to be essentially flat as GP expansion at Zoro is offset by a modest GP decline at MonotaRO. Total company operating margins are expected to be between 12.5% and 13.1% and expand between 65 and 125 basis points versus 2021. These top-line and profitability targets, as well as continued execution of our share repurchase program, are expected to produce earnings per share between $23.50 and $25.50, equating to growth between 18.5% and 28.5%. Both segments are expected to deliver high ROIC. Continuing on slide 17. In addition to total company guidance, we wanted to provide operating margins by segment along with our plans for capital allocation. For High-Touch Solutions, we expect operating margins between 14.4% and 15%, up between 130 and 190 basis points versus the prior year, driven primarily by gross margin expansion. SG&A leverage is expected to be modest, primarily due to continued investment in growth initiatives, anticipated healthcare expenses, and higher wages. Endless Assortment operating margins are expected to be between 7.5% and 8.2%. This is primarily driven by MonotaRO as they continue to invest in DC capacity. Zoro continues to increase operating margins in line with our previous expectations. Cromwell, represented in other, is expected to further reduce its operating losses. We anticipate closing the year with operating margin down at negative 6%. Our Cromwell improvement plan is behind our original expectations, driven primarily by business closures in the U.K. and the slowdown in the aerospace industry, one of their primary end markets. We remain confident in their ability to improve performance as during the pandemic they have been able to grow with new customers and maintain high levels of service. Their results will primarily be dependent on the speed of recovery across different customer end markets. From a cash flow perspective, we expect operating cash flow to be between $1.1 billion and $1.3 billion. Our capital expenditures outlook for the year is between $275 million and $325 million. This includes DC investments in North America and Japan, ESG investments to improve sustainability of our facilities, KeepStock and IT enhancements in the U.S. at a normal level of maintenance capital. We expect the balance of our cash to be used to fund our quarterly dividend and to continue share repurchases. For 2022, we are expecting between $600 million and $800 million of share repurchases, which continues to reflect our confidence in successfully executing our strategy and in our growth initiatives. We're optimistic for a more normal year with reasonable sequential trends. As a result, we are now resuming more standard guidance practices. Similar to our approach before the pandemic, our guidance will be limited to annual expectations, and we will provide commentary and or updates to our full year ranges as warranted. With that, I will turn it back to DG for closing remarks. Thank you, Dee. Before I open it up for questions, I want to really reiterate my appreciation for the Grainger team and our partnership with our customers and suppliers in this challenging year. While we all hoped that 2021 would bring more normalcy than it in fact did, the team remained steadfast in our purpose of keeping the world working and in turn achieved outstanding results for the year, both financially and operationally. In the coming year, we will continue to focus on serving our customers better than anyone else, profitably growing market share, and making Grainger a great place to work. We have three core priorities. First, execute on our growth drivers that provide customers with a flawless experience and tangible value to help them operate safely and effectively. Second, drive operational excellence and productivity in all that we do to support our growth investments. Third, strengthen our culture and focus on talent development at all levels of the organization. We will execute these efforts with our long-term environmental, social, and governance objectives in mind. Finally, I'm excited to announce that we'll be hosting an Analyst Day in the fall of this year, where we will be focused on providing more details on our strategic initiatives and longer-term outlook. With that, we will open the line up for questions. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Nigel Coe with Wolfe Research. Please proceed with your question. Hey, guys. This is Sabrina Abrams on for Nigel Coe. Congrats on the blockbuster quarter. That was amazing. Thank you. Good morning. My question was really on, like, you know, the 2022 guide. You've kind of put for HTS US that you see 300 BPS of market outgrowth. How much of that do you really see volume versus the 3% price, I think you've quoted in that particular assignment? Just to be clear, thanks for the question, and that's a good clarification point. I can turn it over to Dee for specifics, but in general, when we talk about share gain, we're talking all about volume. Our philosophy is to price to market, and then we expect to get volume share gain. That's how we think about it when we talk about it. As it relates to the components, for the U.S. market, we anticipate low single-digit volume growth and about 4%-5% in price, which results in a market of about 4%-7%. We expect to grow 300 basis points above the market, which gets you to High-Touch U.S. guide of between 7%-10% growth. All right. Got it. I mean, that's all for me. Thank you. Our next question comes from Christopher Snyder with UBS. Please proceed with your question. Thank you. I also want to follow up on the U.S. at 2% outgrowth guidance. You know, certainly a positive level, you know, when we compare it to the long-term outgrowth that the company's achieved. You know it is below. I believe 2021 came in at 4.5% outgrowth on the two-year. In Q4, you guys exited very strong at over 6%. You know, is there anything specific, you know, that is kind of pushing that guidance down to just 3% in 2022? Yeah. You know, we expect 300. We're really confident and at a minimum. We're really confident in the first half outlook, and we anticipate, you know, robust growth and some price inflation there. The second half remains really harder to predict for us. Based upon having better visibility, we feel pretty confident in the outlook that we've stated right now, and know that as things change, you know, we'll be more than willing to talk about that and talk about those changes in the future and how they impact our results. Appreciate that. For my follow-up, I wanted to talk about zoro.com margins. You know, previously the company has communicated, you know, a pathway to getting zoro.com to high single-digit margins over three years. You know, but over the last couple quarters, zoro.com gross margin, you know, has really surprised and impressed to the upside. Does that change the operating margin outlook for zoro.com? If you could just kind of refresh us on what's the latest expectations for there. Thank you. Yeah. I guess I can start with that one. We have not changed our expectations for zoro.com operating margin. We still are on the same path we talked about. You know, we have gotten strong gross profit improvement in the business. Most of that is squarely focused on quality growth, so making sure we are acquiring business customers that have long-term positive value and really focusing our efforts there, which means we've gotten out of some lower quality growth avenues that we've had in the past. That has shown a pop. That pop is gonna stick, but you're not gonna see similar growth in the gross profit line like we've seen. That has been very specifically towards actions to improve the quality of our growth. We think we're on a good path now, but we're still on the same operating margin path. Our next question is from Deane Dray with RBC. Please proceed with your question. Thank you. Good morning, everyone. Morning. Look, I fully respect that you guys are not a manufacturer, and that's a big advantage in this environment for sure. You do have some manufacturing exposure with your private label. Just any update there, how you've been holding up in terms of supply chain issues there? It's a great question. You know, there's a lot of chaos in the supply chain for sure. It has been very costly to get containers out of Asia. We have been prioritizing what we can get in. I think we've done a nice job of navigating the things that we can control. I think the other thing I would point to is we've done a really nice job of crossing items to more locally sourced items to help support customers during this time. I think our ability to improve our product information has helped us navigate this. You know, we are starting to see some loosening coming from Asia now, and we do expect things to get at least modestly better through the next couple of quarters. It's been a challenge. I think it has been a constant siege if you're working in the supply chain, certainly the last year. Our team's done a great job of navigating, and I think relatively we're doing well, but it's challenging for sure. Yeah. It really does look like you're holding up well, so congrats there. Second question, maybe some color on the CapEx plans. It's an uptick from last year, pretty noticeably. We've heard some companies say, hey, look, because of supply chain issues, they couldn't do as much, in the way of projects. There were delays there. Is this a catch-up? Maybe some color on where that money is being spent. Thanks. Yeah. I'll turn it over to Dee in a second. I mean, so it's not really a necessarily a catch-up. I'd say our CapEx is almost always in supply chain investments and in technology, and that will continue to be the case. I'll turn it over to Dee to talk about specifics. Yeah. Just a little bit more of that. To add to that, D.G., I agree. Really not a catch-up. We're really focused on maintenance capital in the DCs. The DCs have been running hard, as you can expect. We're trying to keep up with demand. We're making sure that we're spending the right amount of capital there. In addition to that, you hear us continue to talk about continued capacity investment in Japan. That is a portion of that, as well. We mentioned, you know, our focus on ESG, so that's about 10% of our capital spend going into next year. Really just getting back to what we would call normal levels of capital as we come out of the recovery. Our next question is from David Manthey with Baird. Please proceed with your question. Thank you. Good morning, everyone. Dee, could you share with us the amount of the LIFO adjustment? Just to be clear, is that? Is it still in the adjusted results you present here in the slides, or is that factored out? Yes, the LIFO adjustment is in the adjusted results. Just wanna remind everyone again, you know, that this is a non-cash, accounting entry and really is not reflective of operational performance. This year at the end of the year, because we invested, you know, heavily in growing our, inventory so that it set us up well for the start of this year, that coupled with, cost inflation, is the result of a larger, adjustment than normal. That adjustment, which you'll see in the 10-K, is more than two times what it's historically been. You'll see it, net of tax around $49 million. Okay. I was under the impression that Grainger historically at least was something like 30% FIFO in part of your business as well. I'm just wondering, was there any kind of an offset from FIFO to offset some of that LIFO gain? Or not explicitly in that number you just mentioned, Dee, but just operationally, if you have some business on FIFO that might have benefited from the inflation. You're correct. It's about 25%. That is factored into our numbers. We really didn't get a benefit, you know, from that, this year, and we don't expect to on a go-forward basis unless inflation changes materially. Our next question comes from Ryan Merkel with William Blair. Please proceed with your question. Good morning, and thanks for all the details on guidance. My first question was on gross margin for 2022. Could you just unpack it a little bit more? Q4 is exiting at 37.3%, but the low end of guidance for 2022 is 36.8%. Is that the LIFO impact or just what are the puts and takes? If I just start back with the U.S. GP, it would probably be a good place to start there. You know, our goal was to exit the year, you know, in line with pre-pandemic levels for high-touch U.S., and we achieved that around 40%. We expect high-touch U.S. GP to stabilize into 2022. But we're also expecting a little bit more normal seasonality for our plan this year. We do expect to continue to manage price-cost spread into 2022. And then, you know, we'll have a little bit of compression potentially from EA. Even though the High-Touch business is growing, you know, much faster than it has historically been, it is still a little lighter than the EA business, so that causes a little bit of compression for us. Got it. Okay, that's helpful. Pandemic sales flat in January. You know, it's been negative, so the trend is looking good. I'm just wondering on the outlook there, 'cause I think you said it's still 40% above 2019. Just wonder, is there any give back as things sorta normalize or what's your feelings there? No, I don't see that. You know, I think we're about where we expect to be. You know, if you look at our January results sequentially, we're still up a little bit on pandemic sales, but so we have a little ways to go that we hope will help us in our current outlook. We've embedded that we get back to more normal levels in 2022. We've embedded that in our plan and in our guide. Our next question comes from Christopher Glynn with Oppenheimer. Please proceed with your question. Thanks. Good morning, everyone. Just looking at the six points compound two-year market outperformance in the fourth quarter. You know, as everyone's talking about supply chain has got worse and tighter in the quarter. Are you a net beneficiary of that dynamic that everyone else is more bothered by, just strictly from a volume perspective? Well, I think you know, there's a number of factors that go into that. We think we probably had some net benefit in the sense that we have product that others probably don't have, and we've been able to navigate the challenge as well. You know, I talked about it before, but you know, almost every customer call I have now talks about finding alternates that are in stock as opposed to waiting to receive from Asia. We are aggressively helping our customers find solutions to keep them up and running. I think that all of that in our scale and the inventory pools we have help. We did build inventory in the back half of the year pretty significantly, and that has been a help as well. I'd say we're a net beneficiary, and I think it's also helped us develop stronger relationships with our customers because we've been able to serve them during this time. That makes sense. How do you assess the risk, if any, of, you know, that Q4 volume strength, you know, with being a net beneficiary on how you process the transition to the expected 2022 volume growth? Well, I think Dee talked about this a little bit before. We have a lot more clarity about, you know, what we'd expect in the first half of the year. Just on compares, we would expect the first half of the year to be stronger in terms of revenue growth. That said, you know, we look at run rate volumes, and we understand how our initiatives impact volume, and we're confident at this point in what we've talked about from a range and feel pretty good about the year in terms of our ability to grow. Our next question is from Hamza Mazari with Jefferies. Please proceed with your question. Good morning. Thank you. My first question would just be coming back to medium customer strategy. You know, we saw the growth numbers were pretty good. Could you maybe just remind us, you know, where you are in the process of gaining market share with medium customers and is that number, you know, could that number be similar to your large customer wallet share over time? Just any thoughts on where that's trending. Just as a reminder for everybody, I think we've talked about this before. At our peak, we had about $2 billion worth of midsize customer sales. We went down to about $800 million. We have recovered a portion of that, but we still have a long ways to go. Our share with midsize customers is still smaller. We are getting smarter in terms of our ability to acquire and develop relationships with midsize customers. You know, it's hard to argue that we'd ever get to the wallet share in any reasonable time horizon that we have with large customers. We do think we can grow it faster than we grow large customers for years to come. We're pretty confident in the growth path that we expect. Got it. Just my follow-up question, and I'll turn it over, is just as you think about MonotaRO, you know, you had strong enterprise customer growth. Is there an opportunity for enterprise customers at zoro.com, or is the market just different where, you know, you service that through the High-Touch brand? Just any thoughts there would be great too. Thank you. Yeah. No, I think it's a really good question. The short answer is the competitive market is very, very different in Japan. The market typically goes through wholesalers to local distributors to customers versus what we have in the U.S. with the big distributors that serve customers with all kinds of services today. We don't see an opportunity for zoro.com to enter enterprise customer business. We see that squarely on the shoulders of the Grainger brand on the High-Touch Solutions, and the competitive environment makes that very different in the U.S. That's our growth path there. Our next question comes from Josh Pokrzywinski with Morgan Stanley. Please proceed with your question. Hi. Good morning. Morning. Just to follow up on some of the market share dynamics, you know, maybe GG, you know, if you could talk about how kind of supply chain inconsistency has helped Grainger. I got to imagine that for maybe your smallest competitors, those guys are still having a hard time getting product and are maybe the most likely to, you know, to use price as sort of a competitive weapon. Yeah, how do you think, you know, share gains sort of attributable to that have trended here kind of through the second half? What do you expect as we, you know, kind of continue in this tighter supply chain environment, at least through the first half of this year? Yeah. I mean, I think through the last two years, we have done well in terms of navigating the supply chain. At first it was pandemic product, and then this past year it was mostly non-pandemic product where we have been able to find solutions and work with our customers and our suppliers to figure out how to get the right solutions for our customers. I don't see that changing at all in the first half of the year. I think we're gonna be constrained. I know we're constrained now, and we'll continue to be constrained as an industry. I think the things we've been working on, figuring out how to help customers find the right solutions in a constrained world will continue to be beneficial. Certainly, you know, we don't really know how every distributor is doing, but you know, having the inventory tools we have, having the information we have, having the data, having the deep customer relationships, all helps us help our customers navigate through these really challenging times. Got it. That's helpful. Then just from an end market perspective, what percentage of the portfolio, if any, 'cause I know you have some important, you know, customer groups and, you know, maybe some hospitality and, air, you know, airlines, things like that, is still below pre-pandemic levels? I'm not sure if I've got the exact numbers. You know, it's – I would say most industries are above pre-pandemic levels for us now. Pretty much all manufacturing would be, there might be some subsegments. We mentioned aerospace in the U.K. European aerospace has been challenged for sure. Then there are certainly industries that we supported, like cruise lines and hotels and airlines that are still below. It's a small portion of our total, and we continue to support those customers well and expect to continue to support those customers. I think, you know, it's sort of a – We aren't talking as if the large portion of our customer base is challenged right now. We're seeing very strong demand in general and we know there are subsegments that are still struggling. We would expect those to recover over the next couple of years. Our next question comes from Michael McGinn with Wells Fargo. Please proceed with your question. Hey, good morning, everybody. I wanted to go back to the cash flow conversation. It seems like it's a little heavy on working capital or at least the conversion is a little bit below historic levels. Any comments on the timing of the MonotaRO DC load-in process, also general inventory, how you're preparing for pre- and post-Chinese New Year? Oh, you want me to start, D.G., and then maybe. Yeah ... you talk about operations? You know, when you look at our operating cash flow for the year, really two components contributed to that. Neither of them is a reason for concern for us. The major factor was really our decision to invest in inventory, you know, later in the year so we could have a strong start. The second one was, you know, we had a very robust sales growth in the U.S. in December, really exceptionally strong. Accounts receivable balance increased, you know, based upon the number of orders. Most of those payments are gonna come due early in the year. We're already seeing, you know, a consistent trend to what we've seen in prior years related to AR development. However, you know, as long as we continue to drive very strong sales, our AR balance will be higher than what it has traditionally been, and we expect to continue to support growth with inventory investment. I know you had a question specifically about inventory related to Chinese New Year, so I'll turn it back to DG for that. Yeah. I mean, without going into too many details, we always look to Chinese New Year and try to get out in front of it. Part of the inventory build that we had was being able to pull containers in earlier. Clearly, things are still backed up coming out of China. You know, the Chinese New Year, we're in the midst of it. When it comes out, it typically takes 2-4 months for things to get totally back to normal. We do expect some ease of supply chain, some more flow to come in. We're starting to see signs that is likely to occur. Certainly this year it wasn't just Chinese New Year. We're just managing constrained supply chains, and so that was part of it. Great. Then somewhat more of a longer term question. With zoro.com SKUs fast approaching the 10 million benchmark, can you talk about the addition and curation process? Are you now able to leverage search on the platform to target potentially high volume value add SKUs that would benefit or versus using external search dynamics in the past? Then also maybe the general learnings and mix improvement from last quarter where I think you mentioned some channels were turned off. Yeah. You know, we expect to have a strong SKU count addition this year. The team is working on analytics and works with the team in Japan as well to understand which customers and which product pairs we wanna go after. We do most of that analytically. We use some platform, you know, artificial intelligence type tools to help with that, but a lot of it's good old-fashioned analytics and understanding which target segments we wanna go after, small business segments we wanna go after, and which products to add. We continue to have a lot of success with getting those products in and having them be a source of growth for those customer segments. Our next question is from Patrick Baumann with JPMorgan. Please proceed with your question. Hi, good morning. Thanks for taking my questions. Wanted to go at the share gain thing in the High-Touch business from a little bit different vantage point. Can you talk about the revenue growth you saw for the year in that segment broken down between like the digital piece, whether that's EDI or website, and then how that compares to kind of the growth rates you're seeing in KeepStock and the branches? Just curious where you're seeing the most growth and across those different channels, and then how you see that playing out into this year. I'm sorry, just to clarify the question. Did you say Endless Assortment or No, no. Specifically High-Touch. Just. High-touch. Okay Okay thinking about the different channels in High-Touch that you touch the customer with. Yeah. Yeah. We had strong growth through almost all the channels. I would say that KeepStock grew faster than the core business last year, continues to be a really core driver of growth in serving customers on site, as does ePro, which is typically connecting our systems directly to purchasing systems. We continue to have a lot of large, complex customers that have multiple points of stickiness and helps the customer manage their purchasing process and their inventory. We have seen obviously strong growth with digital, grainger.com has continued to grow very quickly. I think if you looked at it with midsize customers, you'd see digital as the primary source of growth. If you looked at it with large complex customers, you'd see more balance with strong growth in KeepStock and ePro, is what you typically would see. Understood. That would mean that if those are all growing faster, then branches are growing slower, I guess, than the rest? Yeah. I think over the last two years, branches have grown slower than e-commerce. That doesn't mean they aren't growing. They've actually had, you know, solid growth. But yeah, I think, Dee, unless you correct me, I think I'm pretty sure that branch, if you looked over the last two years, walk-in traffic has been down and the pandemic has probably contributed to that. We saw a nice bounce back this year after a pretty significant down in 2020. That's correct, DG. That's correct. Our next question comes from Steve Barger with KeyBanc Capital Markets. Please proceed with your question. Hey, good morning, guys. This is, Ken Newman on for Steve. Thanks for taking the question. Good morning. Morning. I just wanted to circle back on the December ADS number I think you guys had mentioned. It did see a pretty decent sized jump up from October, November, despite what looks like it would be a slightly more difficult comp. Can you just talk through what drove that jump and where is ADS kind of trending now through January? Again, if you go to slide 11, you'll see in High-Touch U.S. our January estimate, you know, up about 15%, and that's broken down by the pandemic and non-pandemic sales. I hope that answers your trending for January question. Sure. That makes sense. Okay. You know, for December sales, you know, I think I'd go back to, like, what DG has articulated. You know, a lot of customers are finding our product availability to be appealing, and we believe that led to a lot of our growth in the U.S. late in the December timeframe, driven by core pandemic or non-pandemic products. Understood. Then for my follow-up, I'm just curious if you can give a little more color on the capacity investments in zoro.com and in MonotaRO. Any color on just the timing of when you expect the margin trends to kind of return back to normalized levels? Or how do you view the ramp of more normalized ROIC for those investments? Yeah, that's a great question. It affects MonotaRO only. zoro.com is not having unusual investment at this point, and we expect the operating margin to continue to expand for zoro.com over the next several years. MonotaRO has given the Japanese geographic footprint, it's not as broad or as big as the U.S. obviously, and they have very high volume DCs, but very few of them. What you're seeing right now is expansion, capacity expansion around Tokyo and Osaka, which are the two primary places where you need distribution capacity. You're gonna see a lot of redundant assets this year, which is why costs go up. You know, you're basically running two buildings and doing the transfer. That falls off in 2023. In 2023, you'll see more of a normal return to SG&A for the MonotaRO business. It's just that they're. I think they're going from a 1.1 million sq ft building to 1.7 or something like that around Osaka. These are very large buildings, and when you're running both of them at the same time, you have a lot of redundant costs during the transition. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back over to D.G. Macpherson for closing remarks. All right. Well, thank you. I appreciate everybody's questions, and thanks for the time today. You know, we obviously feel good about the way the year ended and are excited about 2022. We're gonna stay focused on making sure we provide the right solutions to our customers and investing in things. I think the thing I'm most excited about is we have a lot of things we can still get a lot better at. It does feel like we are working on the right things, and we'll stay committed to making sure that we build the right systems and processes to support our customers and win for the future. Hope you all stay warm, and you're not getting hit too hard by the storm, and look forward to talking to you soon. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.