Good morning and welcome to Grainger's 2022 Investor Day. I am Kyle Bland, and I lead the IR team here at Grainger. We're excited to be here live inside of our Northeast Distribution Center in Bordentown, New Jersey. To those in the room and all those streaming us live through our webcast, we thank you for joining us this morning. It's been 5 years since we've hosted an Investor Day, and we really look forward to providing you with an update on our business today. You'll be hearing from members of the management team on how focusing on the things that matters allowing us to drive differentiated growth now and into the future. Before we get started, just a quick couple housekeeping items. For those in the room, in the event of an emergency, we have 3 emergency exits from this floor. The primary exit route is through the doors in which you came, down the stairs, and out the front door. In the event of severe weather requiring us to shelter in place, we will head down the stairs and into the locker room at the bottom of the stairs. Also, if you haven't found it already, the restrooms are outside at the end of the hallway. Secondly, I wanna draw everyone's attention to the safe harbor statement on slide 3. As a reminder, some of the comments we make today include forward-looking statements, and actual results may differ materially due to various risks and uncertainties, including those detailed in our SEC filings. Reconciliations of any non-GAAP financial measures that we discuss today, along with their corresponding GAAP measures, can be found in the tables at the end of the presentation, which is available to download from our investor relations website. As a reminder, results related to MonotaRO follow Japanese GAAP and are reported one month in arrears in our financial statements. Turning briefly to our agenda, we've got a jam-packed day ahead. D.G. is gonna kick us off before handing it over to Paige and Brian to take us through how they're discussing accelerating share gain in our high-touch solutions business. Barry is then gonna take us through an update and overview of how our supply chain is structured to provide industry-leading fulfillment. We'll then take a short break, and Masaya Suzuki and Kevin Weadick will come up and discuss how the endless assortment business is spinning the flywheel to drive powerful growth at MonotaRO and Zoro. Dee will then run us through our financial details, including our 2025 financial targets. We'll then wrap it up with a Q&A session before breaking for lunch and the D.C. tour. With that, I'm gonna invite D.G. Macpherson, our Chairman and CEO, to take the stage. As he makes his way up, we're gonna play a short video. We look forward to what we expect will be a great day, and thanks again for being here. Good morning. It's good to see some familiar faces. I just realized, I think I saw Dave and Chris out there and haven't seen you for a long time in person, so it's great to see familiar faces in person. I hope you all got here safely. It's great to be with you today at our northeast distribution center. It's one of our largest buildings. There are 300,000 SKUs out there. For those of you that get a tour, you'll enjoy that. My team and I are really excited to talk to you this morning about all that we've accomplished, and more importantly, what we plan to do going forward. A lot has happened since 2017 at Grainger for sure, but certainly in the world at large, and we've learned a lot along the way. Mostly, we learned that when we focus on what matters to our customers, we do really well. The concept of acting with intent, which is part of our Grainger Edge, has really never been more important than the last few years. We've consolidated our portfolio. We shed businesses that didn't make sense for us. We're now focused really entirely on our two business models, the high-touch model in North America and the endless assortment model, primarily in Japan and the US. Now, our high-touch solutions model serves more complex customers, where we win with deep product and customer knowledge. That model is roughly 80% of our business, and with that model, we underwent a significant pricing reset in 2017 to ensure that we were competitive with the market. Since then, we've really focused on key growth engines to gain share. Our endless assortment model is for smaller businesses that have simpler needs, who wanna buy products really exclusively online, and this represents the other 20% of our business. Here, we've been able to take what we've learned from Japan and apply that to the US. We've ramped up our SKU count to offer customers everything that they need to run their businesses. We also managed through the pandemic. We stayed focused on three priorities, remaining financially strong, making sure we kept our team members safe, and then serving our customers exceptionally well. Our performance through the pandemic was really exceptional as team members stepped up to keep the world working in a very, very challenging time. In both models, we've made significant investments in technology to support growth. Our technology team is working very closely with operational leaders to build durable capabilities. We're gonna continue to invest to deliver powerful customer solutions. Finally, we've been purposeful about transforming our culture to better serve our customers and remain a company where all team members can have a fulfilling career. We've defined our purpose, our strategy, and our aspirations. We've also developed a set of seven behavioral principles which really work as a system to guide behaviors throughout our organization. We call this complete framework the Grainger Edge, and I'll talk a little bit about that later. As a result of this focus and consistent execution, we've performed well in both segments in the total company. Since our last investor day, we've gone from $10.4 billion in revenue in 2017 to $14.2 billion for the twelve months that ended the second quarter of 2022. We delivered consistent share gain within the high-touch model and profitable growth in our endless assortment segment. We've also improved our cost structure as we focus on the things that really matter most. As a result, our share price has done very well relative to the S&P 500. Really today is gonna be all about how we plan to continue our momentum. We believe that we can consistently gain share profitably in the high-touch model while continuing the growth path we're on in the endless assortment model. Now, for those of you who are a little bit less familiar with Grainger, we exist to fulfill our purpose, which is to keep the world working. Grainger was founded in 1927 on a pretty simple premise: how do you help customers with new motors to accommodate the change from direct current to alternating current? It's evolved a lot since then. We are now the largest MRO distributor in North America. We have more than 24,000 team members that are really excited every day to support our customers, and you'll get a little bit of that feel today. We have more than 30 million products in our total product assortment. We have 33 distribution centers around the world, and we deliver exceptional service in the geographies that we choose to compete in. As I mentioned, our purpose is to keep the world working. That sounds a little bit lofty, but it's often how customers describe us. This purpose has never been more clear than it has been the last few years as we've helped institutions of all types, whether that was hospitals in the pandemic, schools, military bases, manufacturing plants, continue to operate amidst the challenges of the pandemic. Overall, we work with more than 4.5 million businesses and institutions. Now, I really enjoy spending time with our customers. Last month, I had a chance to visit aerospace customers, airlines, medical device manufacturers, heavy manufacturing service company, and a food manufacturing business, and the challenges that these organizations face are real. Our teams are there to help make sure that they have what it takes to get the job done every single day. Part of our culture shift has been to spend more time with customers. Nothing is a substitute in our business for direct interaction with customers to understand their purchasing challenges, understand their inventory management challenges. Each day, Grainger's team members around the globe are resolute in fulfilling our purpose and in living our principles. This ensures that we get the best out of our diverse team and operate with the highest ethics and integrity. The Grainger Edge is our roadmap to do that. It defines who we are, why we exist, and where we're going. It's foundational to our culture. It's a culture that I'm proud to say was recognized as one of the top 100 places to work this year, and it's a culture that ensures that Grainger is there whenever our customers need us. One of the principles, and probably the most important one to start with in the Grainger Edge, is to start with the customer. While our customer base is really diverse, customers are essentially looking for two critical areas of support from an MRO partner. First, they expect a flawless experience. That means, do we have the products they need? Can they find them? Can they order them easily? Can they get them fast? Can they pay for them, and can they return them if they need to? The pandemic and the accompanying supply chain challenges have made this basic need more acute and reminded everyone just how hard that is to do in our space. Our team has done an exceptional job of keeping service levels high through this time. Now, customers also want tangible value for their business from their partners. This goes far beyond selling products. Means making purchasing simpler, managing inventory effectively, finding product substitutes to save money, supporting operational and safety challenges, and helping our customers meet their ESG objectives. Tangible value is something that our sales and service teams do every day with our customers. Now, we spend a lot of time thinking about how we operate through this customer lens to understand how to address these needs, and you're gonna hear a lot from the other leaders today on that. But with such a broad and diverse customer base, their needs can look and feel a little bit differently depending on size, complexity, and priorities for each customer. In general, smaller companies are looking for a distributor to get them product quickly, make purchasing easy, and to keep them primarily focused on their primary task. As an example, a single-site industrial laundromat may have six people. In those cases, typically, the CEO is making the MRO purchases, or the owner, typically an owner. They aren't interested in on-site solutions. They want an easy way to get what they need and then get back to work. Larger customers, like a healthcare group purchasing organization or a heavy manufacturer, often have a lot of complexity. They often have specific compliance needs. They have layers of buyers and technicians, so approval processes become critical. They have multiple processes in the facility. Oftentimes they have to have inventory pools in multiple places so each department can function effectively. They need a partner who understands how they operate and how to help. This almost always requires on-site support to make sure that, A, they have the right digital solution for the business, and B, they're getting the right expert support to reduce cost and improve operational efficiency. These complex customers expect Grainger to make it easier for them to do business through value-added services like on-site inventory management. The point here is that it is critical for Grainger to understand our customers really well so that we can truly help them perform at their best. Now, to achieve our purpose, we operate under two business models that allow us to leverage our scale and supply chain to support customers of all types. Our endless assortment model is for smaller and medium-sized businesses with simpler needs who wanna buy products exclusively online. They're looking for a distributor that can be a one-stop shop, which is why we have 30 million SKUs and growing in this portfolio. We operate this model in the U.S. and Japan, and it's been very, very successful in terms of growth. Our high-touch solutions model exists for more complex customers like the healthcare GPO and the heavy manufacturer that I mentioned before, and here we win with deep product and customer knowledge We create value by helping our customers across North America solve problems. We enable them to quickly find the right product for their unique application. We support customers by managing their inventory, removing safety risks, offering sustainability solutions, and increasing productivity. This is the Grainger brand that most are familiar with. Our two models and the work that we've done over the past five years have positioned us extremely well for the future to gain market share profitably. We play in a large, attractive market, and as the industry leader, we know there's plenty of opportunity. We have strong customer value propositions that allow us to serve B2B customers of all shapes and sizes using technology, data, and the knowledge of our team members. Our supply chain is designed to serve our customers, and we continue to make investments in capacity to strengthen that position. We're financially strong. We got a strong balance sheet and consistent returns to shareholders. As I've said, driving all of this is a purpose-driven culture where we embed the importance of doing the right thing for our people, our customers, and the external environment. As a result, customers trust Grainger to support their business. All told, we are well-positioned to continue to provide strong forward returns. Let me start with the market that we play in. We compete in a large market. It's highly attractive. Within the U.S., we are the largest player with only a 7% share. We have many strong competitors in our market who often compete with different and unique capabilities. We believe that if we enhance our capabilities to serve customers better than competitors, we have a long runway to continue to gain share. Our endless assortment model offers more than MRO and allows us to reach new customers and take advantage of the scope of the small business market in the U.S. In Japan, we've been a pioneer in our space, and we're committed to continued innovation to keep expanding our position. In addition to market size and opportunity, our industry is resilient, and our model is attractive through cycles. Our focus on keeping existing facilities and businesses up and running means we don't typically go through extreme cycles. Most of our products are nondiscretionary to our customers, making what we do less volatile than many other industries. Now, like any industry, we face challenges, but we've made the right investments, including in our technology and our supply chain capabilities, to position us very well to navigate any headwinds. Now, coming back to our customer needs, we know that we win by offering compelling advantage solutions through our expertise in digital experiences. Our high-touch solutions model serves customers that have complex needs, and they're looking for tailored solutions. In this model, it all starts with great value-added solutions and the right products. We win by knowing more about our products and our customers than anyone, so that we can offer customers relevant choices for their business. When we make it easy for customers to find the right product choice, we generally win. We leverage our improved product information and search capabilities to make it easy for customers to find what they need and buy it through a seamless purchasing process. We deepen relationships by providing the right digital connections to our customers, managing their inventory needs, and providing value-added services to improve safety and operational excellence. In this model, which Paige is gonna dive into deeper, we must really understand our customers' needs and build a specific plan to achieve their objectives. With millions of customers and product combinations, getting customers the right products when and where they need them is a very complicated equation in our space. Over the last few years, we've been investing in our technology transformation, which you'll hear more about from Brian. We've built key technology capabilities, including homegrown product information and customer information management systems that use our curated data to support our team members and our customers. We've learned a lot through this process, and we are really excited about the path we're on. Our product information management system enables us to understand our products, what makes them valuable to our customers, and helps us build the best assortment in the industry. Our customer information management system enables us to understand our customers, their context, and their needs. Using customer insights coupled with our industry knowledge makes it easier to match the customer's need with the right product. To make progress on this technology journey, we've had to hire a lot of new talent, including a new chief technology officer, who's sitting right over there, to pair with team members who have been with us a long time and understand our business. All told, the focus on technology capabilities is driving growth and improving the customer experience in ways that we could not in 2017. Switching to our endless assortment model, we provide less complex customers with an expansive product assortment and a really easy-to-use website. After seeing how MonotaRO excelled with this model in the Japanese market, we knew there was an opportunity to leverage this model here, specifically to serve small businesses. We're leveraging automation and algorithms along with our simple and efficient customer experience to develop and maintain strong customer relationships. Using what we know from MonotaRO, the team is focused on scaling product ads, leveraging data science, and marketing effectively across the very broad range of customers, and Kevin Weadick is gonna tell you more about this soon. Within each model, we've laid out very specific ways to achieve success. The high-touch model starts with providing valuable customer solutions. This leads to a great customer experience, and it allows us to win new customers and deepen relationships with existing ones. From there, we can improve our operating profit and invest back into even better customer solutions. Success in our endless assortment model begins with an expansive assortment that we use to attract and retain new customers through online channels. As more and more customers buy from us, more and more suppliers wanna work with us, and we can improve profitability and drive growth. Now, one of the most distinguishing qualities at Grainger is our world-class supply chain. You're gonna see some of that if you're here today. This is specifically to serve business customers. This means having the right products in the right place. To do this, we invest in capacity, demand forecasting, operation space management, and other solutions to fulfill orders and keep up with demand. By doing this, our distribution center team members are able to ship high-quality products with orders complete and on time, so our customers receive what they need, when and where they need it, and all at once instead of in multiple shipments. Today, we're here in Bordentown. For those able to get a tour, you're gonna notice that this building is configured to get complete orders to customers as much as possible. Now, the investment in automation that you're gonna see in this building is not cheap, but it creates a service advantage that bolsters our value proposition. Complementing our DCs, our customer service team members provide effortless expert problem-solving, and the branch network, which offers in-person exceptional service, technical expertise, and value-added services. Combined, our supply chain serves customers on multiple fronts, which makes us a reliable partner. As I have spoken with customers during the pandemic and after, it's very clear that while everyone has struggled with supply chain issues, Grainger's ability to maintain service and get them product has really stood out. Now, our ability to generate cash, maintain minimal debt, and remain prudent with our investments has supported our strong financial position. This has enabled us to deliver robust growth, 51 years of consecutive dividend increases, and continued share repurchases. D.G.'s gonna talk more about the path forward here. While numbers are important, our success is sustained by a purpose-driven culture. Grainger has always had a very strong culture, one that was rooted in doing the right thing and being customer-centric. With the Grainger Edge, we are building on that foundation to ensure that we have competitive advantage for the future. The Grainger Edge includes seven principles that work together as a system. These principles are at the heart of how we work with one another, with our customers, our suppliers, and our communities. When we demonstrate our principles as we execute against our strategy, we create a culture that keeps the world working. I'd like to show a video now of three of our team members that are gonna tell you a bit more about what it's like to work at Grainger. We're ready for you. Is that what you are gonna ask me? Yeah. If I forget, then I'll, it's fine. All right. Okay, we'll give it a shot. Grainger is so much more than products. It's a little bit of a cliché, but it's about the people. The reason I stay at Grainger and have been with Grainger for the past 30 years is I look at Grainger as more than just a company and a paycheck. I mean, it's real exciting coming to a company that you take pride in what they do, how they do it, but equally or even more importantly, who you're doing it with. The last 15 years, Grainger has given me opportunity to do so much. I've grown with this organization. This is my second job out of high school, and Grainger has held my hand throughout my entire adulthood and has shown me how to become a professional. Sustainability is really engineered into our buildings. We are LEED certified, which is unusual for a distribution center. We take pride in shipping our customer orders complete to minimize our packaging footprint. We're also serving customers to be more productive, be more sustainable, and be more profitable. The purpose of Grainger means to me satisfying our customer. We keep the world working. We do this together as a partnership to really help them be their best. Our first principle is starting with the customer, and that's what I've done for the last 30 years. I've been fortunate. I've been with Grainger for 19 years. I've had a variety of both operational and support roles. The titles are a mouthful, but Yeah. Senior Operations Manager, Senior Director for our business systems teams. Real Estate Development Manager, Supply Chain Infrastructure Project Manager, Supply Chain Capacity and Throughput Engineering Team Lead. I've been a huge part of Grainger's technical support. Supply Chain Strategy and Design Team Senior Manager. Product Management. Senior Consultant on Consulting Team. DC Ops and Technical Support. Vice President for Distribution Operations. Hey, I even met my wife at Grainger. You know, we don't talk a lot about five years ago. I had the chance to clip in and listen to Robert for about an hour. Our technical knowledge and his ability to support customers is really unmatched in his category. When you spend time with him, he's great. So in the video, Rich told you a little bit about our ESG and how that shows up in our day-to-day work in distribution centers. ESG is tightly woven into and a key component of our future. Our principles of starting with the customer, investing in our success, and doing the right thing heavily influence our approach. As you can see on this slide, and you know this probably, we've been a leader in this space for some time. You know, as I look to the future, I wanna share the near-term priorities we have identified to make the greatest impact within Grainger for our customers and our communities. Based on work we've done, we believe that these are the areas of greatest opportunity. First, customer sustainability solutions. Really, that boils down to helping customers reduce energy and water consumption. In 2021, green certified products were about $1 billion of revenue for Grainger, and we're working to develop more powerful customer solutions to help our customers meet their ESG objectives, which is becoming more of a common request. Second, diversity, equity, inclusion. We wanna make sure that Grainger is a place where each team member feels welcome and able to give their best work. Third, energy and emissions. We continue to make great progress on improving our carbon footprint, and we have very significant plans moving forward. As an example, the building we're in is LEED certified, but it also has solar panels on the roof. Our carbon footprint in this building is very small and Barry will talk about that. Finally, supplier diversity, which helps us identify and support great supplier partners to propel the business forward. With so many high-quality products and relationships, we're very well positioned to make significant impact in this space. Now, all of what I've shared positions us well to gain more share, to drive growth, and deliver strong shareholder returns now and in the long term. Assuming we turn to more normal market growth rates, 2%-3% including price and volume, and Dee will talk about this. We would expect revenue of $19 billion-$20 billion in 2025 and adjusted EPS of approximately $40 per share. Dee's gonna dive into that later. For the rest of the morning, my colleagues on the Grainger leadership team are going to give you more details of how we're gonna achieve share gain and growth across both segments and remain the industry leader by continuing to stay focused on what matters. With that, let me turn it over to Paige Robbins, who is the president of the Grainger Business Unit. Thanks, D.G.. Good morning, everyone. It's great to be here to provide you an overview of the High Touch Solutions business. I'm gonna really talk about three things. First, how we deliver value to our customers. Second, I'll provide you an overview of our strategic growth engines, and then finally, our plans to continue to deliver strong performance. You will also hear from Brian Walker, the Vice President and Chief Product Officer, about how we're using technology to enable this growth. Let's start with a quick snapshot of this important segment. This business has been around for a long time, 95 years. It's a large and profitable business model, and as you can see on the slide, for the last rolling twelve months, it's generated a little bit over $11 billion in revenue at a 15.2% op margin. We are really focused on value-added MRO solutions for our customers. Now, as D.G. mentioned, one of our principles is to start with the customer. Let's start there by talking about who they are, what they want from an MRO supplier, and how we deliver value add solutions. High Touch customers are generally large and mid-sized businesses with complex purchasing processes. As D.G. said, customers are generally looking for two things. First, they want a flawless experience, and that means they wanna be able to find what they need quickly, order through their preferred channel, and have their product delivered very quickly with a no hassle experience. The other thing that they're really looking for is value. They want a supplier who understands their business, who can help them simplify their purchasing process, help them reduce inventory, and provide tangible cost savings. Let's go deeper on both of these needs. Delivering a flawless experience might sound simple, but in practice it is anything but easy, because there's no one size fits all solution, 'cause each of our customers have unique needs and preferences about how they want to interact with us. Every day, we fulfill orders for our customers, and we offer customers 2 million products from 3,500 suppliers, flexibility to order through multiple digital or in-person channels, and a variety of delivery methods. It is very challenging to deliver scalable solutions across this much complexity, and we do it every day. Being able to manage this complexity is a huge opportunity to create competitive advantage because it's very hard to replicate. Success in this business goes beyond just taking and fulfilling orders. Success is also about creating tangible value for our customers. It means getting under the hood with every customer and understanding their businesses. It means using that knowledge to reduce inventory, and I'm gonna provide example of that on the next slide. It means helping customers simplify their purchasing process by syncing a customer's purchasing system with one of our digital solutions. That makes ordering seamless. It also means we provide our customers tangible cost savings beyond inventory management and purchasing in multiple ways, including helping customers improve their safety programs or helping customers achieve their ESG goals. Let's look at an example of how this works in practice. Managing MRO is not core to what our customers do. What you see here on this slide is a typical example of a manufacturing facility maintenance room. You can see it needs some help. There are products in the storeroom that are not needed, it's hard to find products, and space is not being utilized efficiently. Managing MRO is complicated just given the number of SKUs and varied demand patterns. Fixing this problem requires expertise in things like industrial processes, inventory planning management, and even safety. That's why in an example like this, a Grainger seller might start by bringing in our consulting team, which has great expertise in solving these problems. In a situation like this, we would start by analyzing the customer's purchasing patterns. We would review the customer's operations. We would consider what physical layouts were available, and we'd really just understand how the facility worked. Then we would make operational and design recommendations to get things in order and save the customer's time and money. The result is what you see here, a best-in-class maintenance storeroom. You can see that materials are organized with standard bins and labels, dead inventory has been eliminated, and inventory tracking has been implemented, just to name a few of the improvements. As I said, given the number of SKUs and variable purchasing pattern, this is very, very complicated work that's difficult to replicate. It's something we do well. We accomplish this through a team effort. As you can see on this slide, there was a wide range of Grainger teams that were involved with this project. When we optimize a facility, customers realize a tremendous amount of value by being able to quickly find products, having the right products in stock, and eliminating excess inventory, all which unlock working capital. We have found that customers can often realize five times their investment. You know, in this case, the customer invested around $150,000 in racking and storage systems and realized more than $800,000 in savings. This is just one example of how our high-touch solutions model creates value beyond delivering product. Okay, let's switch gears now and talk about how we have been building multiple growth engines to grow share profitably and at scale. This has always been a business where profitable growth depends on adding products and high-quality customer interactions or touches. how we offer these products and how we interact with customers, both digitally and in person, continues to evolve. our growth engines are focused on how we add products and improve our interactions with our customers. The fuel for these growth engines is our product and customer information, which we are leveraging in a scalable way to provide more value to our customers. That is really the heart of our digital transformation. Let's look at the five strategic growth engines. The five growth engines are focused on merchandising, marketing, seller coverage, seller effectiveness, and customer solutions. I'm gonna provide a quick overview of the last four, and then we're gonna spend some more time on merchandising, what it is, why it matters, and Brian will join me and talk about how our technology transformation has accelerated our progress on merchandising. Let's start with marketing. We invest in marketing in three areas. The first, brand awareness, and this is really about getting our name in front of current and prospective customers, and we do this mainly through radio and TV advertising. The second area where we invest is we invest to engage targeted customers with targeted messages, and we do this via direct mail, catalogs, and email. The last area we invest is digital advertising and primarily through paid search, and we're doing this in order to capture the in the moment demand online. We know many of our customers start their purchasing journey on Google or another search engine, and we wanna make sure that we are right at the top of the page in their search results. Now, for the past few years, we've been on a journey of increasing our marketing spend and optimizing the spend, and we are really purposeful about testing new ways to attract customers and increase share of wallet. More importantly, we've been very deliberate and scientific about tracking and measuring every single dollar we spend so we understand what is working and what's not. We've been able to continue to increase our marketing spend as new initiatives are proven out, and we've actually seen an increase in our overall return on investment as we've increased the spend. We really believe this rigorous framework of investing, measuring, adjusting, and repeating is why we've improved returns. Given where we are today, we see a path to continue to increase our investment in marketing, which will drive profitable growth in the future. Now let's talk about our sales force, which remains an important demand generator for Grainger. Our sellers are critically important to providing value to our customers because they are on-site, and they work with our customers to understand our customers' purchasing process, operations, and needs. When we have this understanding of our customers, we can provide more value to our customers and save them time and money. Doing this well means we have to have the right type of seller in front of the right customer to have the right conversation. This is really a high-quality touch or interaction. We know that there are more customer locations that we can cover profitably, and we can always improve the quality of our seller interactions with customers. To accomplish both of these, we've been investing in customer data and technology. As we have started on this journey improving our customer information, it has highlighted where we can increase our sales team to cover uncovered locations, and the opportunity seems meaningful. In parallel, we're investing in tools for sellers with customer-specific information and insights that will help them be even more effective in helping our customers save time and money. We are very excited about this work, and we are confident that the actions we're taking provide a long runway for profitable growth. The next strategic growth engine is customer solutions. Now, when we think about the teams that we put in front of our customers, we're not just talking about our sales force. We're also talking about the teams who deliver the solutions that embed Grainger in our customers' operations and provide additional value. These in-house teams include our KeepStock inventory management teams, our safety and metalworking specialists, our consulting team, which I just talked about, and our ePro and EDI teams who ensure that we are digitally linked with our customers' ordering systems. These teams add value, drive returns, and make Grainger very difficult to replace. A significant portion of our revenue is derived from customers with one or more of these embedded solutions. Customer satisfaction remains exceptionally high with these solutions. Now again, with our improved customer information, we're finding more and more opportunities to continue to embed with customers, which will drive additional profitable growth. Okay, now let's look at our final strategic growth engine, merchandising. Merchandising is all about having the right product assortment, organizing in a way so it's easy for customers to find what they are looking for and having accurate, complete product information so customers can choose the product they need confidently. Why is this so important? I'm gonna provide three examples to illustrate the importance of merchandising. You can see the three pictures on the slide. The first picture is a flashlight. This happens to be an explosion-proof flashlight. Now, if you're a janitor looking for a flashlight, you really don't care if your flashlight is explosion-proof. If you're a miner, it is critical that the flashlight you choose is explosion-proof. We need to make sure that we have the right product information and that it's easy for a miner to find the exact flashlight they need. The second picture is a bur. Burs are really complicated and hard to describe. How would you think about describing that second picture? That's why it's really important to have the right filters, attributes, pictures, and copy to make selection much easier. Now, the third picture most everyone knows. That's a picture of an earplug, which would seem like a pretty simple product, but there's actually many technical attributes to earplugs, such as noise reduction ratings or being metal detectable. If you're a food manufacturer, you really care that your earplugs are metal detectable. Having this information really helps customers find the right product. Suppliers don't supply all this information in the same way or format, and so we invest a lot of time and money to clean our product information. We ensure that it's accurate, complete, standardized, and consistent. Now, think about the complexity of organizing and providing accurate and complete product information across 2 million products. It really requires deep product and customer knowledge, and this product information is really the fuel for our merchandising growth engine. Let's go a little bit more deeper into merchandising. When we start merchandising a category, we focus on three principles. First, sell the products customers want. Second, organize and present products in a way that makes it easy for customers to find what they're looking for quickly. Finally, provide the information customers need to select the right products confidently. In 2018, we started to remerchandise our assortment to be in line with these principles. Here's an example of what merchandising looks like in practice using a common product like earplugs. Our merchandising efforts always start with a customer, and we gather customer feedback in multiple ways. Initially, we had more than 500 earplugs in our assortment, and when we analyzed the assortment, we had products with overlapping functionality, and they were redundant, which can be really confusing to customers. In addition, customers told us we were missing earplugs for certain applications. The first thing we do is we determine the right assortment. For earplugs, that meant that we eliminated redundant SKUs and added SKUs where we had gaps. Now, in addition, customers told us it was hard to find the product they needed because we did not have the search filters or content around the specific attributes they cared about. By merchandising our earplug assortment, we improved how earplugs are organized and made it easier to filter for the attributes that matter. We strengthened content and visuals to help customers identify products that may be unfamiliar, and we added copy and structured product information in a way that helps customers compare different products. Now, overall, the results have been significant, both financially and improving the customer experience. We have seen revenue lift of anywhere between 200-700 basis points by category through our merchandising efforts. We have added roughly 80,000 new products annually, and we've also significantly improved the customer experience. There are now fewer calls with product questions into our call centers and technical product teams. In addition, we're receiving fewer returns, which means the customers are ordering the right product the first time more often. All this results in a better customer experience and internally reduces hours for our customer service and DCT members. Merchandising is an important growth engine, and it's gonna remain a strong contributor to market outgrowth. A major key to our success is how we manage, harness, and leverage our vast amount of product information to make merchandising decisions. We could not do this without our own customized software. Now I'm gonna turn it over to Brian Walker to talk about our technology transformation and how it has really accelerated our merchandising efforts. Brian? Thanks, Paige. As D.G. and Paige have described, Grainger is building custom software and systems that underpin our strategy to help us make our customers' experience flawless and provide our customers with tangible value. The benefits of building custom software are far-reaching. This purpose-built approach helps us codify and scale our operations, remove waste from our processes, connect team members in disparate parts of our organization, and enables us to serve our customers more consistently and reliably, no matter what their industry, their product or service needs, or their preferred procurement channel. Perhaps the greatest potential benefit that comes from building custom software lies in our ability to create our own data models within our systems. Creating our own data models helps us reproduce the experience and expertise of Grainger's team members and our 95 years leading this space. As an industrial distributor, we think it is foundational to know our customer's context and the products and services that they require better than the competition, and that's why we started with building proprietary customer and product information systems. Let's get into this a little bit more and make it real. Paige mentioned that we're adding 80,000 products next year to our assortment. How do we know what the right products are to add, the products that customers care about? How do you enable customers to find the products that they require, given so many options? You know, we brought up the earplugs example, perhaps the most straightforward and easy product line in our space. Trust me, even earplugs aren't easy. A simple search on Amazon will yield thousands of results. How would a customer pick the right one? Why are there thousands of options? Can anyone name a brand of an earplug or a feature that they really appreciate? Our customers often can't either. So even something as basic as earplugs can be very important for our business customers. What earplugs have the right decibel ratings? What OSHA standards apply and when? Which ones are appropriate for food processing environments, so that they can be detected and not contaminate food? Which ones can be recommended for law enforcement or the military? Why? In what quantities? When should customers use both earplugs and ear muffs? These are the types of questions that our merchants wrestle with as they build out our assortment. The technology that we've developed enable our teams to structure data so that we can clearly show the item attributes that make products different from each other, so that customers choose the right products for different situations in their contexts. We also capture much more data than our competition, which helps our customers find the right product for the right situation more quickly and more confidently. Our systems also use the language that our customers use. What do they call the product? How they describe it, which helps us not only design search, but digital marketing, even speaking, even building out our catalog indices. It helps us speak our customer's language on the front lines, from the web, to the branches, to our sales organization, to our mobile applications, to our call centers. Our software also helps us support, build supporting content like product images, CAD copy, and more. We can use the information not only to build our website, but to feed in procurement systems and build custom catalogs. By working with our operations teams, we're not only helping them build a more productive website, we're helping them improve our website, generally our customers' experience, drive share gain, and helping them execute their work more efficiently, driving down expense. Understanding our customer's business better than our competition is also fundamental to our strategy. We've developed custom systems and data that helps us understand how customers' lines of business work, how they purchase products, where and why. Our data and the data models help us understand trends within an industry and structure information that enables us to effectively help a customer find the right products and services to help lower their total costs and improve efficiencies, and that is far from trivial. Remember, there are more than 25 million businesses in the United States. They employ about 150 million people, and without exaggeration, there aren't many businesses that don't buy the products that Grainger sells. Our custom systems, married with our multi-channel, high-touch business model, enable us to work across our organization and develop advantage, insights, and strategies that keep customers safe, productive, and working more effectively. We know that each industry is quite different, and that businesses that sound the same are often unique. Take an industry as well established and old as coal mining. It's simple, right? Well, which types of coal mine are we talking about? Are we talking about an anthracite mine, which is much deeper in the earth and therefore requires more significant safety guidelines and onerous OSHA standards? Are we talking about a peat mine, which is on the surface and more likely in the Western United States, where because of its on the surface, it has less significant requirements around filtering air circulation, respiratory equipment, non-sparking equipment than its anthracite mine cousin. Within each industry are customers' business preferences around their procurement strategies, their myriad procurement systems, their reporting needs, even our customers' need to manage spend and different types of employees, and their relative access rights to buy or approve team member requisitions. Structuring the data enables Grainger to understand our customer's business, organize it so they show up consistently across all channels and touchpoints, and provide our team members and customers with valuable insights is at the heart, that's at the heart of our strategy and will enable Grainger's shared data for years to come. A large part of our success in this journey has been the result of the evolving from an IT mindset to a true technology organization. We've reset the bar on the skills and experiences required and invested more in our product and engineering teams. More than 40% of our team is new since 2019, and we've built a top-tier technology leadership team with a broad array of expertise from within and outside of Grainger. In this time of machine learning and artificial intelligence, our ability to scale, scalably and efficiently service our customers and develop insights is gated by the quality of the information and the signal in our data. That is why we have been so focused on developing differentiated information assets which reside in the data models that we have developed within our custom software. We capture that knowledge and insights and expertise of our team members in merchandising, in tech support, in marketing, consulting, our field sales organization. This data reflects Grainger's collective understanding of the industry based on our 95 years of experience. It enables to provide our customers better experiences, whether they're searching for products and services on Grainger.com, or using our visual search and computer vision technology in our mobile applications, or through a customer's e-procurement system, or go through team members who go out to our customers' sites supporting our KeepStock operations. We can help customers save time and money and take out costs and get their jobs done. Now I'll pass it back to Paige to wrap up. Thanks, Brian. Okay, let's pull it all together. Our goal was to grow 300-400 basis points faster than the market. In practice, we've grown faster, driven really by two things. First, our supply chain outperformed competitors during the COVID-19 pandemic. Then second, our strategic growth engines, specifically marketing and merchandising, performed better than expected. As you can see, merchandising and marketing drove the bulk of the market outgrowth, which is really where we've been focused over the last few years. Now, with the investments in customer information and seller tools, we are confident that we're going to not only see outgrowth from marketing and merchandising, but also from seller coverage, seller effectiveness, and customer solutions. Therefore, we now believe we are positioned to grow 400-500 basis points faster than the market. In closing, I just wanna leave you with three key takeaways about the high-touch solutions business. First, we are consistently gaining share through a track record of strong execution. Second, we expect our investments in customer-centric growth engines will continue to deliver strong returns. Third, our technology and data transformation is accelerating our progress. As I just mentioned, we expect continued strong execution against our growth engines to yield 400-500 basis points of annual market outgrowth. Thank you for the opportunity to share insights into the high-touch solutions business. I'm now gonna turn it over to Barry Greenhouse, Senior Vice President and President of Global Supply Chain and Customer Experience, who leads the team that delivers the best service in our industry. Barry? Thank you. Thank you, Paige. In our next section, we'll highlight how we deliver industry-leading fulfillment with a focus on our high-touch solutions model. Now, to be a leader in distribution, you have to have a supply chain geared for exceptional service and growth, and at Grainger, we've done that. Our network is designed and built to ensure that we can deliver on the promise we've made to our customers, being easy to do business with and providing a consistent, flawless fulfillment experience. Now, service in our space is defined not only by speed of delivery but also completeness of shipment, given the high cost to receive and reconcile shipments where the purchaser, receiver, and end user may be three different people or teams at a customer site. Now, we've solved it through a purposefully built network that has evolved over the past 95 years and really accelerated in the last 20 years as direct-to-customer delivery has continued to grow. We've thoughtfully designed our network to deliver best-in-class, next-day complete delivery of orders while managing our cost to serve and ensuring our network is resilient and adaptable as the business grows. Now, we've added new buildings over the years to keep up with demand. We've evolved our older buildings as our offer has grown and customer preferences have migrated. As mentioned earlier today, business customer expectations are different. They need availability. That's having the right product in the right place in the right quantity. They need speed, product delivered at the right time. They need convenience and efficiency, which means products that's delivered complete as ordered, on time, consistently. In 2019, we conducted a survey of about 4,000 MRO customers. Two of the leading drivers of fulfillment satisfaction were on-time delivery performance and complete orders versus receiving multiple shipments. With how we've designed our network, complete and next day is the largest segment of orders delivered. Now we optimize for a combination of fewest shipments and/or fastest delivery for more complex orders. It takes a significant investment of time, development of know-how, but we think this gives us competitive advantage that's hard to replicate, and we can replicate it, scale it, and do it profitably. While this need seems simple enough, the combination of delivering orders next day and complete across a broad product portfolio at reasonable shipping rates is quite complex. We utilize thousands of suppliers providing millions of products. These items are fulfilled through 24 North American distribution centers in our 350 branches to millions of customers' locations across North America. Doing this in a repeatable, scalable, and profitable way is not easy, and we do this over 145,000 times a day. While this is operationally complex, what is even more challenging is the need to balance our customer service levels with the needs of our stakeholders. While we are striving for industry-leading service levels, we need to do so while managing operating cost and reducing our environmental footprint as much as possible. Now interestingly, these 3 competing priorities actually work together, which I'll cover here shortly. To drive an industry-leading customer experience at scale, we must solve for a number of things. It starts with having a logical network footprint with the right buildings in the right locations, which is leveraged through a demand sensing stocking strategy required to put the right products in the right buildings with the right quantities. Now, execution requires a flawless operating model with curated rules that drive scalable processes and route orders to the right buildings. Really what ties it all together is it takes a mission-focused team deeply committed to delivering exceptional service, which is also supported by strong third-party partnerships. I'd like to break this down a bit further and talk through how we've done this at Grainger. Now at the foundation of our supply chain, we've built a network model that creates both flexibility and choice. We know what our customers in our industry want, what they are buying, and we can anticipate those needs. Our current network can reach 99% of the U.S. market next day, and in Canada, we offer next day delivery reaching 80% of Canadian postal codes on over 200,000 in-stock products. Our footprint is designed to maximize ship complete while providing overlapping coverage for resilience. Let's start by looking at our biggest facilities, like the one we are in here today in New Jersey. These facilities anchor our network by stocking the highest breadth of product. As you can see, these buildings are strategically located on both coasts and throughout the midsection of the country. These buildings are then augmented by regional facilities that enable us to bring higher demand items closer to the customers using them. You can see from the map that this fills in critical geographies. From there, we have smaller warehouses as well as our branch network to help reach geographically dispersed areas. What this creates is a network with maximum reach while still operating efficiently. By having overlapping coverage between buildings, along with our branch network, enables resiliency in times of disruption, both in short term as well as with longer-term disruptions like what we've seen recently. Now, given the significant growth we've had in the past several years and the confidence we have in the future growth rates of the business, we do anticipate the need to add space to our network faster than we have historically. Dee will cover this further this morning. What is worth noting, however, that we generally like where our buildings are at and believe we have the right coverage. Our future investments will primarily focus on augmenting capacity in existing markets we already have positions in. Now, next, we have a proven stocking strategy to ensure we have the right products in the right places. This starts with having very deep relationships with suppliers that grant us access to inventory we need to support our customers. Given this advantage product access, we then use a series of calculations and optimization logic to determine which items to stock, where, and how much. This maximizes inventory availability and our local order fill rates. We understand what items and product categories are purchased most frequently in a market while making allowances for the size of items and the quantity required to best use available storage space. Generally speaking, our goal is to put the fastest-moving items closest to the customers purchasing those items. This allows us to have the best chance of being able to ship an order complete and have it delivered the following day. Among the key decisions we use and take into consideration are, first, our stocking policy. This dictates if a product is shipped from us or drop-shipped directly to a customer from a supplier. Second, our deployment policy, which dictates where we put items in our network. Third, our stocking levels, which are based on customer demand. We then use a series of optimization models to balance trade-offs between how many items to stock at each location and at what depth to maximize order fill rates. Now, from there, it comes down to execution, which I'll talk about next. What is shown here is a simplified view of our order-to-cash process, which we strive to deliver flawlessly on every customer order. Making it all work end to end is where Grainger's know-how and operations also creates advantage. When we are able to ship an order complete in a single box from the closest location to a customer, it helps us achieve our three priorities of service, cost, and operating sustainably. To do this, we use tailored systems and processes to purchase inventory and route orders, along with systems and reporting to identify and escalate more complex orders or orders encountering friction that require more specialized attention from very highly trained team members. What really drives inertia in our operation is delivering orders next day and complete from the closest shipping point to our customers. To the extent that we're able to do that, we are able to concurrently reduce freight expense by reducing the distance orders must travel and get the most reliable on-time delivery performance. Our teams are also focused on consolidating shipments in the fewest and smallest cartons or envelopes possible. This reduces packaging material and increases the number of packages we're able to fit on a trailer. Now, automation propels us even further. It ensures the long-term resilience of our buildings through increased flexibility and durability. It also helps us reduce waste, such as walking, automates very simple, mundane, and/or repetitive tasks, and assists team members with tasks that create the most strain and wear. This allows our team members to focus on the most value-added activities of their time, that makes the best use of their time, including making really good decisions and/or performing tasks that require high dexterity. In select distribution centers, including this one, we also employ automated packaging solutions that customize a carton size to its contents. This further reduces the amount of air we ship every day. We're very intentional about threading sustainability into how we operate and not just bolting it on. Now, we've been building a sustainable supply chain operation for a long time, and we do it not just because it's the responsible and the right thing to do, but it also makes sense financially. It gives us the highest service at the best cost, and it reduces our environmental impact. It doesn't just stop there. Our buildings are purposefully built. For instance, we've heavily invested in not just generating power, but consuming less power as well. Grainger currently has 6.4 megawatts of solar panel installations at our DCs, and we have plans to expand our solar footprint in the future. This will help us achieve our greenhouse gas reduction goals, provide additional clean energy independence, secure financial incentives, and lower operational risk. Our building management systems also reduce energy consumption and cost while providing the proper working environment for our team members. About 40% of our footprint in North America has been built or retrofitted with building management systems. These systems include things such as occupancy lighting that only illuminate when someone is in the area and conveyance systems that only run when packages are on the line. We generally see about a 10%-15% reduction in energy use and expense at those facilities where BMS is employed. Our recycling efforts go beyond the materials and are also threaded into our leaders' goals. Using a color-coded system to separate inbound materials such as cardboard, plastic wrap, and metal, our US DCs recycled 92% of all waste leaving the facility in 2021. Our iconic Grainger box, boxes are fully recyclable, made from significant post-consumer content, and certified by the Sustainable Forestry Initiative. Now, we've set the bar high for our facilities, and we're always looking at future enhancements. For example, we are currently piloting hydrogen fuel cells in a few of our buildings, which will replace traditional battery-powered vehicles. Now, lastly, our flawless execution is enabled and advantaged by our dedicated team members and strategic partners. Our more than 10,000 supply chain and customer experience team members are critical to providing Grainger customers the products they need and delivering the service they expect. We have a long-standing belief in the need to have a stable workforce where everyone is supported and positioned for success. Now, as D.G. mentioned, our performance through the pandemic was exceptional as our team members really stepped up to keep the world working in a very challenging time. Simultaneously, we have been investing to enhance our competitiveness and brand as an employer of choice in the rapidly changing labor market and talent landscape. We are seeing increased engagement with our DC team members and they tell us they feel proud to work at Grainger and understand how their work impacts our customers. Our transportation and strategic partners also play a key role in delivering on our promise to customers. Grainger's transportation network is designed to provide the broadest next-day reach. As part of our ongoing effort to evaluate and improve customer service and ensure delivery at the right cost, Grainger has expanded its network of strategic partners for ground delivery services across U.S. markets. We continue to work with our supplier and transportation partners to ensure products are available and delivered to customers on a timely basis, helping us maintain relative service level advantages over the competition. In recent years, we've added more integration points and information sharing with our transportation partners. This helps us plan together to address things like seasonal peaks and consumption based on demand patterns, enabling the best outcome for both partners. Now, coming back to the three elements of driving service, managing cost, and doing so in a sustainable manner, you can see Grainger is doing quite well. We regularly survey our customers on their experience with Grainger, and we've seen that our customer satisfaction, on average, outpaces the competition by about 13 percentage points. We also continually monitor how effectively and efficiently we are managing cost. Our cost as a percentage went up during the pandemic, but we have seen that come down to below 2019 levels year to date. Lastly, we look at our ESG metrics and our carbon emissions, which have trended down over time. Our approach on ESG relies in part upon increasing the use of solar at our Grainger facilities, investing in lighting retrofits and HVAC improvements, and improved technology and efficiency in our building management systems, among other interventions. In summary, our supply chain is purposefully built to serve the needs of our customers, and our capabilities are driven through innovation and 95 years of know-how. We feel we are quite good at delivering industry leading service while also balancing costs and improving our environmental impact. Now, looking ahead, we will be accelerating our investment in capacity, automation, and ESG initiatives. As I noted earlier, given the growth we've had in the past and the confidence we have in the future, we'll need to put up space faster than we would have done historically, which is a good problem to have in support of heightened and sustainable top-line growth. We will continue to do this in a sustainable way while driving competitive advantage. With that, I'd like to thank you all, and we'll now take a break and resume at 11:25 A.M. Thank you. Hopefully, everyone can take their seats and we'll get started with the second half of our show. I hope everyone found the first three sessions to be insightful and informative. I think it was great to hear how members in our high-touch solutions business are partnering with our supply chain organization to drive profitable share gain and increased share gain targets. We're now gonna move into our next section, and I wanna introduce both Masaya Suzuki, our Managing Director of Endless Assortment, who will be joining us via a brief video, and Kevin Weadick, President of Zoro. Now, let's hear from Masaya. Nearly 25 years ago, Grainger and Sumitomo Corporation had an idea to start an online distribution platform that would disrupt the growing B2B market in Japan. At the time, the supply chain in Japan was multi-layered and very complex. Knowing the opportunity, we developed MonotaRO, a one-stop shop with one price and a simple buying experience for business customers. To win in the market, we needed a new way to attract customers and keep them buying from us. We introduced a model that made sense for our business. One that allow us to have every product for every customer. While both Grainger models are positioned to focus on the basic needs of customers, our endless assortment businesses address them differently than our curated high-touch model. Let me walk you through that. One, expand product assortment. We intended to be a one-stop shop for our customers, carrying everything they need, even beyond MRO. To do this, we have grown our assortment sharply since our inception and have 80 million SKUs today. Two, increase web traffic. Each product that we add to the assortment fuels traffic to the site, both through organic search and paid advertising. Customers find these products through external search engines that direct them to the item on MonotaRO.com. Three, increase purchase frequency. As customers make purchases, we learn more about their preferences, which allows us to market adjacent product categories and drive customer spend in new and existing categories. We have increased customer lifetime value for each annual customer cohort since our inception. We specifically focus on our high lifetime value customers, those most likely to purchase multiple times, and we continually enhance our websites to showcase our vast product assortment and make it easier for customers to find what they need. 4, attract new suppliers. Having more customers buying more products makes our website more compelling platform for potential suppliers. It creates the opportunity to add new brands in existing categories and to add entirely new categories. By unlocking more supplier relationships, we can scale our product assortment, allowing us to gain more customers, making us an even more attractive partner for a greater number of suppliers. 5, improve profitability. As we increase our customer base, generate strong repeat purchasing rate, and attract new suppliers, we gain scale, improve profitability, and can re-invest those earned dollars back into the business to drive faster growth. It didn't take long for us to realize our model was working, and we've been able to generate consistently strong growth over our history. Our success in Japan made it clear there was an opportunity to target smaller businesses in the U.S. Small businesses are a major part of the U.S. economy, and they are looking for an easy solution to help keep their business up and running. That's where Zoro comes in. We go to market by providing customers, more small businesses, a simple and efficient way to purchase their indirect supplies. Like MonotaRO, we find these customers by merchandising our assortment through both organic listing and paid search advertisement on digital channels, primary search engines. Zoro is 10 years into its journey, and the story tells itself. Since Zoro's inception, the business has grown at an even faster pace than MonotaRO, thanks to the learnings we had in Japan. What made Zoro such a quick success? First, Zoro initially leveraged Grainger product assortment and supplier fulfillment to ramp up their product count quickly. They're working with other supplier partners over the last few years to accelerate the growth in Zoro's assortment. Second, collaboration. MonotaRO has developed a strong partnership with Zoro team. While the markets are different, the learnings around key analytics and trends to generate repeat businesses have many similarities. The businesses meet regularly to share best practices in digital marketing and other capabilities to learn from each other. Both Zoro and MonotaRO have benefited from Grainger's supply chain expertise. I'm very excited about our progress and ability to generate consistent profitable growth across both MonotaRO and Zoro. At MonotaRO, we are continuing to build our DC network to support B2B customers of all sizes, while also expanding our technologies and data expertise to drive continued growth into the future. At Zoro, there is tremendous opportunity to support smaller businesses in the U.S. with our unique customer value proposition, and we remain focused on executing our flywheel to drive profitable growth. For both businesses, we expect top line growth solidly in the teens with improving segment profitability over the next few years. As we look ahead, our focus is to continue to create something different in the market, an endless aisle with every product for every customer. Thanks, Masaya. Like Kyle said, I'm Kevin Weadick, and I lead the Zoro U.S. business. Over the past 10 years, we've created an exciting organization that's had the opportunity to serve millions of small business customers. We began with Grainger's broad product assortment, and that still delivers 80% of our revenue today. We've greatly expanded that assortment beyond what we receive from Grainger and now have over 10 million items live on Zoro.com. We are well on our journey to provide every product for every customer need. This has allowed us to accelerate our growth, and we are now delivering mid-single-digit margins. As D.G. said, Zoro's customers have two basic needs. They want a flawless experience and tangible value, and our small customers are typically defining that by looking for a simple and efficient purchasing experience. Their needs are significantly less complex than Grainger's high-touch solutions customers. In particular, our small business customers value having access to a broad product assortment, helping them easily find and purchase the items that they need, getting them the products they need quickly with transparent and fair pricing. This informs our value proposition and propels our flywheel. First element of our flywheel is our aspiration to have every product for every business need. We then use this product assortment to drive both organic and paid search traffic so that we can introduce ourselves to new customers. We use this assortment then, once we've acquired the customers, to make relevant product recommendations, driving increased purchase frequency. Having an expanded customer base buy more frequently makes us an attractive destination for our suppliers and helps us to add even more assortment. All of this works together to help us gain scale and improve the profitability of the business. Let's dive into each element of the flywheel a little bit more. In our journey to have every product for every business need, we started with Grainger's assortment of 1.5 million items. That allowed us to get off to a great start. By 2018, we had added over 500,000 items to our assortment. To capitalize on our opportunity, we knew we needed to go faster. Starting in 2019, we invested in the people and technology to rapidly expand our assortment, and those investments have paid off. We now have 5 times the number of items that we had in 2018. We're truly adding every product for every customer need, but that also required us to go beyond traditional MRO products. We've had great success in adding a broad range in new product categories like automotive, grounds maintenance, and restaurant supplies, all product categories that serve thousands of small businesses across the U.S. Within MRO, we've continued to add millions of items. We've added both brands that Grainger doesn't merchandise and greater brand depth with brands that we share with Grainger. We believe that we have a really strong pipeline with our suppliers and have plenty of runway ahead and expect to continue to add 2 million items per year over the next several years. Looking at what this means for our addressable market, our current assortment allows us to serve approximately $500 billion in annual purchasing. As we expand into new assortments, new product categories, we expect that our addressable market will grow. We also know that the B2B supply market is highly fragmented without a dominant competitor. As a result, we believe that we're well-positioned to gain share for years to come. Turning to the second step of our flywheel, leveraging this assortment to expand traffic to Zoro.com. Our small business customers are online millions of times a day searching for the products that they need, and having more of the items that they need available in our assortment allows us to connect with more of these potential customers. We've leveraged this assortment to great effect. Since 2018, our organic traffic is up over 160%. This organic traffic and our paid search marketing activities allow us to acquire new customers, and what we know is MonotaRO, which further in their journey, has seen the exact same trend. As they add more assortment, they have the ability to introduce themselves to more customers. Moving to the third flywheel, increasing purchasing frequency. We know that having the right assortment enables us to serve a greater share of our customers' needs, allowing us to increase our purchasing frequency with them. This is where investments in our e-commerce experience and marketing analytics, supported by our learnings from MonotaRO, have really paid dividends. We're making more and more relevant product recommendations to our customers and helping them learn all the ways that Zoro can be a one-stop shop for their needs. Our focus in this area has driven great results. We've seen a 25% increase in the number of customers purchasing on Zoro.com each day and a 45% increase in the monthly purchase frequency for our customers. Let's take a few minutes to bring this to life. Let's start with a small cafe in Stanford, California. They went online in the fourth quarter of 2021 searching for an entrance mat. There they found Zoro, and after conducting a simple and efficient purchase transaction with us, we used our marketing analytics to further introduce how we could help them. They're now buying across additional product categories, including food service items and cleaning supplies, and their quarterly sales have doubled since the initial purchase. The second example is an egg farm in rural Washington state. Similarly, they went online looking for a handheld debris pan. They found Zoro had a simple and efficient purchase transaction, and then our analytics allowed us to introduce a broad range of our assortment to them, and they're now buying products across 14 categories from safety to tools and machining. Their initial purchases have more than quadrupled since that time. In both examples, we've been able to create a one-stop shop for the customer. Our broad product offering and digital marketing expertise brought them to Zoro.com. Once they landed on our website, they found what they needed quickly and easily. We had a competitive price, strong fulfillment, and our analytics allowed us to market relevant products and new product categories to them, resulting in increased purchase frequency. We see tremendous opportunities to continue to leverage our marketing e-commerce capabilities to acquire new customers and then increase their purchasing frequency. Which brings us to the next step in our flywheel, how we add more suppliers. What do we do that makes Zoro attractive to our potential partners? What we do is we have industry-leading digital marketing capabilities that enable our partners to reach customers that they otherwise wouldn't, driving profitable incremental share for them. Also, Zoro owns the customer experience, so we don't have multiple product listings for the same item where suppliers are asked to compete on price. We help our suppliers through analytics learn what is driving their success with Zoro, and in many cases, we provide them the opportunity to co-market alongside Zoro. What do we expect from partners? World-class fulfillment experience is at the top of the list. We certainly have that through Grainger's assortment, which you heard Barry describe earlier. It's important for our entire assortment. We're careful about adding the right supplier partners, and we vet those suppliers with a focus on those who can provide our customers with high-quality products and the brands that our customers need and fast and reliable delivery. We build strong partnerships with these suppliers, and when we do that, we can drive long-term mutual success. Which leads us to the fifth element of our flywheel, increasing profitability. We know that more customers purchasing more frequently helps us grow and increase profitability. Repeat customers have a lower cost to serve. In 2019, we made significant investments to allow Zoro to scale beyond Grainger's assortment. Since then, we've continued to both grow our operating earnings and reinvest in the business to accelerate our momentum. Looking forward, we expect Zoro to deliver high-teen sales growth in the coming years. We'll have modestly lower GP rates as our third-party SKU mix increases. This will be offset by improved SG&A leverage on the higher sales volume and higher customer repeat activity, enabling us to reach high single-digit operating margins by 2025, with continued increases in our ROIC as our asset-light model grows. Leaving you with a few takeaways for the endless assortment model. The Japanese business and the US business are both growing very well. Zoro is doing a great job in adapting the learnings from MonotaRO to our market and executing. Both businesses are continuing to propel our flywheel. We expect to continue to drive strong revenue growth and profitability across the segment. Thank you. With that, I'll turn it over to our CFO, Dee. Thanks, Kevin and Masaya. It's really exciting to see the work that the endless assortment segment is doing to drive such strong results. Good afternoon. As Kevin said, I'm Dee Merriwether. I, too, am glad to be here and hope that you found the day thus far to be very insightful. We're gonna dive into our 2025 targets a bit, but before we do, I think it's important to provide a little bit of perspective. I wanna start with a recap of where we've been. Our business has performed very well over the last several years, marking a meaningful inflection point for the company. We've doubled our growth rate over the last few years and really over the last decade, where we were growing about 4%-5%. Now we're closer to 9%. This step change in growth has been fueled by both segments. High touch with this renewed focus on our execution of strategic growth engines, supported by a competitive pricing offer that is relevant for all size customers, accelerated by technology and our data transformation, and of course, supported by our advantage service. You heard all about that this morning from D.G., Paige, Brian, and Barry. In addition, our continued compounding growth from our endless assortment segment, which has more than doubled its top line in the last five years, is fast approaching $3 billion in revenue. More importantly, we've delivered this strong growth alongside expanding operating margins, and we've executed well with customers and managed our costs effectively. This highlights our ability to drive strong leverage and operating margins in our business. We remain on track to deliver an exceptionally strong year in 2022 and are reaffirming our full year guidance, which we previously provided on our second quarter earnings call in July. This includes revenue expected above $15 billion with strong margin expansion and significant EPS growth in the range of up 37%-45% compared to 2021. Our reaffirmation is supported by our continued strong growth in the third quarter through mid-September, including total company daily sales up 17% or 20% on a constant currency basis. A solid year as our team continues to navigate this challenging environment. Now if we move beyond 2022, we believe we're poised to continue to deliver sustainable results into the future, resulting in revenue of $19 billion-$20 billion and around $40 of adjusted EPS by 2025, representing attractive and profitable growth for shareholders. Let's dive into a little bit of the details. Starting with revenue, by 2025, our revenue target is supported by strong growth in both segments, including 6%-8% CAGR from high touch and 16%-18% in endless assortment. Strong growth off of an elevated 2022 base. In high touch, while market performance is expected to be uneven over the course of the next three years, we're assuming that the US MRO market normalizes towards its historical annual growth rate of 2%-3%, including volume and price. Now you add in our revised target of 400-500 basis points of outgrowth from our strategic growth engines in the US and steady contributions from both Canada and Mexico results in strong 6%-8% growth from our largest business segment. In our endless assortment business, we're expecting both MonotaRO and Zoro to grow in high teens in local currency. This growth is underpinned by execution of the flywheel, which you just heard about, as MonotaRO captures strong repeat and enterprise customer business and Zoro continues to rapidly add SKUs. For the reported segment, this high teen growth translates to slightly lower reported sales growth due to currency fluctuations, specifically due to the Japanese yen. All in all, our $19 billion-$20 billion revenue target reflects confidence in our ability to execute well, take share, and continue our momentum now and into the future. On the gross margin line, we expect total company to remain relatively stable. Within the high touch segment coming out of the pandemic, we've achieved more stable gross margins around the 40% mark in the U.S., which is our target going forward. We've been able to achieve this through more disciplined pricing approach, holding to our two core tenets, staying market competitive, and targeting price cost neutrality over time. On these tenets, we continue to make great progress. The depth and breadth of our product data that we're capturing now, coupled with our price matching sophistication, has really improved our ability to price more confidently and effectively. Our sales and merchandising team members are now armed with this richer dataset and are having more robust conversations with both customers and suppliers, helping to deliver a better result for all parties. Within the endless assortment segment, we do expect very modest margin contraction given the strategic focus of both MonotaRO and Zoro. This is primarily driven by customer mix at MonotaRO as they increase growth with enterprise customers and supplier mix at Zoro as they continue to add SKUs beyond the Grainger assortment. As we aggregate this at the total company level, we expect business unit mix to drive about a 15 basis points headwind on an annual basis as the lower margin endless assortment segment grows faster than high touch. As it relates to SG&A, we expect to gain leverage while ramping up our investments in demand generation to drive sustainable long-term growth. We've taken out cost. We've streamlined our operations over the last number of years. We've focused our efforts on the right geographies, and we continue to eliminate waste and processes that help us improve the customer experience. This has allowed us to become a leaner organization, gaining 270 basis points of SG&A leverage since 2019, and close to 500 basis points if you go back to 2017. Going forward, it's important to look at our SG&A in two different buckets. First, core SG&A. These are areas that help us run the business. We expect to gain leverage as this spend will continue to grow at a rate significantly lower than sales. What this allows us to do, while still gaining leverage, is to invest in our demand generating activities and drive elevated top-line growth. We're seeing great results from the initiatives that you heard Paige talk about in high touch and in marketing and endless assortment. While not all of our investments produce immediate returns, we're taking a portfolio approach and balancing investments that enable shorter term growth while also investing in areas that result in sustained elevated growth through 2025 and beyond. You add all this up, and we expect to achieve operating margin of approximately 14.5% for the total company by 2025. This assumes we gain about 70 basis points of leverage compared to the midpoint of the 2022 guidance as SG&A leverage more than offsets modest gross margin headwinds. We expect improvement across both segments, including a ramp up in profitability in our Canadian high touch business and at Zoro. You couple the top line, our strong top-line growth, continued margin expansion with our balanced capital allocation approach. We had anticipated achieving adjusted EPS of $40 per share by 2025, implying low double-digit EPS growth off of a strong 2022 base. Our EPS expectations are fueled by our top-line growth projections, where the power of an accelerated growth rate really drives meaningful value. You pair this with expanding margins and strong cash flow to support our capital allocation principles, and we expect to create significant shareholder returns. Pivoting to CapEx, we expect to accelerate our capital investments to a three-year average spend between $500 and $600 million per year. As Barry alluded to, the increase in capital investment relative to recent history is primarily in supply chain as we expand to support growth now and into the future. This includes a meaningful step-up in investment in the U.S. as we catch up with recent elevated volume and ensure we maintain our service level advantage in the future. It also includes continued expansion of our DC footprint in Japan as we anticipate the build-out of another large-scale DC outside of Tokyo over the next few years. We expect to increase our investments in technology to better leverage data and build tools to support the value we provide to customers and in ESG as we continue to invest in environmentally friendly initiatives with good returns. While our level of capital investment is increasing, we expect to maintain our ROIC in the high thirties, which is in line with the last few quarters. This also represents a meaningful step change compared to the last several years. Our improvements here have been driven by the powerful combination of expanding operating margins and capital efficiency, both leading to this ROIC performance improvement. With our go-forward expectations to continue to expand margins while also remaining disciplined as we accelerate the pace of capital deployment, we expect to drive significant value creation for shareholders over time. We expect these strong results will lead to significant cash flow, with operating cash flow around $2 billion by 2025. This translates to free cash flow between $1.4 billion and $1.5 billion, a roughly 45% increase in 2025 compared to the midpoint of 2022 guidance. These results, coupled with our robust financial position, support our ability to effectively allocate capital to high-value activities. We intend to continue to prioritize capital allocation first towards organic investments, secondly, to grow our dividend, which we have done consistently for 51 consecutive years, and lastly, to share repurchase and/or potentially opportunistic M&A. We think this balanced approach affords us the flexibility needed to ensure we can deliver on our commitments and maximize value to shareholders. Summing this up, we think the combination of accelerated growth, improving margins, and disciplined but flexible capital allocation positions us with a very attractive earnings algorithm that supports strong total shareholder returns through 2025 and beyond. We are extremely proud of our rich history, our strong recent performance, and are very excited about our strategy and confident in our ability to execute with customers and achieve our long-term targets. With that, I'll turn it back to Kyle, who will open us up for Q&A. Great. Thank you, Dee. At this time, we're gonna invite our panelists and presenters to come to the stage and take your questions. For those in the room, if you just raise your hand and state your firm and firm name and your full name, we'll get a mic to you, either Deanna, Abby, or myself. For those online, there's a chat box at the bottom of the screen. You can submit your question through that feature, and we will take that as well. If we don't get to your question today, a member of the IR team is available to follow up in the coming days. With that, we will have the panel take their spots, and we will take our first question from the room. Please raise your hands. We are gonna start with Dave. All right. Thanks, Kyle. Yeah, hi, David Manthey with Baird. My first question is for Paige. In your five different pillars, you talked about seller effectiveness, and you talked about seller coverage. As I'm thinking about those, effectiveness makes sense, but when I read under coverage, it kind of sounds the same. Could you help me understand when you say better seller coverage? Could you expand on that just a bit? Sure. to help us understand? Sure. Seller coverage is all about expanding our sales force because we believe that there are business locations that we can cover that we don't cover today. That's really about adding sellers versus seller effectiveness is making the sales force that we have more effective. Any quantification to that? We are actually piloting expanding our sales force in 3 markets right now. I think, we'll see how those progress and then be able to understand the magnitude. It looks to be pretty meaningful. We'll have more information, you know, after those pilots run out. What I would say is there's two things Paige talked about. One is we have much better customer information now than we've ever had. We can look at customers and understand who they are and we find uncovered customers. The other thing is, this is not a new type of sales force, this is mostly expanding sell-sellers that already work and filling in gaps in coverage as opposed to starting something new just for your own benefit. 'Cause we've done that in the past as well. Okay. All right, we'll watch for that. My second question is for Kevin. When you say 80% of Zoro sales are Grainger stocked SKUs, was that in 2011 or is that today? That's today. That's today. Okay. The related question is that's on the bar chart. It's a lot of SKUs for a pretty small amount of sales. I'm wondering if you could talk about how you're able to add those all of those SKUs cost effectively, and maybe if you could talk a little bit about the profit dynamics of those SKUs that you don't stock, that you just list on the Zoro website. Sure. We've invested a lot in technology in order to be able to efficiently add new items to our assortment. We don't take an inventory position in those items, so our marginal cost of adding an item is fairly low. What I would say is that we use all that assortment to drive traffic to our website. That doesn't always mean that the customer lands and transacts on the item that they first clicked through to. They may actually, through the process of exploring our website, transact on a different item. You know, what we're encouraged by is year- over- year, as we add to the assortment, we're seeing consistent returns from those items that we add. Great. Hey, Christopher Glynn, Oppenheimer over here. I was curious about the second pass on the expansion of the remerchandising there that you alluded to. Given the success of the first pass to date, you know, what can you tell us about how you're formulating the second pass strategy and just kinda peel back on that a bit. Chris, maybe I'll take a shot at that before we. Paige can probably provide more details. What I would say is that what we've learned both in merchandising and marketing is that we are getting smarter as we go, and staying on those activities has actually proven to be very beneficial in share gain. It's not an initiative where you sort of do a bunch of activity and you're done. You actually keep learning and keep learning. We've seen nice results in our early second passes. You know, we'll talk more about that as we go. We'll learn more about that, but we're encouraged by what we see. I think it's pretty important, you know, one of the things you didn't hear a lot of new initiatives today. What you heard about is we think we've got a long runway if we get better and better at the things that we know matter, and that's really what we're focused on. Follow up with inflation and supply chain issues haven't been so forefront in the economy the last couple of years, are you seeing any material change in the kind of potency of the smaller local competitor base, or are they pretty resilient in your view? You know, what I would say is during the pandemic, we saw. You know, our industry's been consolidating for decades at a very slow rate, is what I would say. There's all kinds of reasons we could go into as to why that's the case. We saw a little bit of acceleration during the pandemic in terms of the level of consolidation, given that difficulty in having product, and certainly the larger players had more product than others. We haven't seen that reverse, but we haven't seen, you know, throngs of smaller competitors out of business either. We think most of them are still functioning and competing at this point, but we have seen some additional consolidation through the pandemic. Chris Snyder, UBS. I wanted to talk about the U.S. or the North America high touch outgrowth. I think, you know, if we look at the long-term time series, the spike in outgrowth kind of very much lines up with the pandemic. You know, I think investors have a hard time separating the, you know, maybe some of the transitory tailwinds in that, you know, the pandemic, you know, benefited the big distributors, particularly, you know, Grainger with the e-commerce platform, from the more company-specific initiatives that you guys touched on a lot today that are, you know, more viewed as more sustainable. You know, I guess as you guys were, you know, trying to determine what is the sustainable outgrowth and, you know, we're at 4%-5%, you know, I would just be interested in how you kind of arrived at that number, and how you kind of thought about those puts and takes. Sure. What I would say is that versus five years ago, we are much better able to understand cause and effect. With every one of our initiatives, we can tell you for what we spend, what we get out of it. The 4%-5% is just looking at the 5 initiatives that Paige talked about, and saying, what have we been getting, and what do we expect to get going forward based on incremental activity or dollars or whatever. We feel very confident that number is an impact of the things we're actually doing. Now the supply chain is a thing we've actually done, too, and we also have looked at what benefit we've gotten out of that. It helps us get to some of the additional, but maybe not all of it at this point. We can see what happens when we have product at different layers of delivery performance, and so we can analyze that as well. We've got a very strong analytics team that's helped us decouple supply chain advantages from some other initiatives. The 400%-500% is just the cause and effect of the initiatives that we have. Appreciate that. If I could follow up on SG&A. My, you know, literal back of the envelope math over here, it seems like SG&A is growing in maybe the 7%-8% range annually, you know, through 2025, which is, you know, I guess a bit below company growth, but not, you know, significantly below. I know in the past, the company has had a 50% kinda target there on. Can you just talk about, you know, the drivers there? I'm assuming it's a lot of ad spend. Then, you know, is there any way to think about the returns, you know, on that? I know the company says, you know, returns are good, but anything, you know, you can just quantify because it does feel like, you know, we're, you know, it's taking some operating leverage out of the business, but obviously providing good growth. Thank you. Sure. You're exactly right. Yes, you know, prior to this, we were focused on growing expenses at half the rate of sales. Again, that's why I pointed back to 2017, where we have taken a number of actions to pull costs out of the business to focus on continuous improvement. We did some restructuring, as well. We have become a much leaner organization than we were prior to that. You can look at our SG&A as a% of sales drop, as an indicator for that. Some of that is scale, you know, as you know, because revenue grew faster as well. On a go-forward basis, we intend to still gain leverage while continuing to invest in demand generation. That's why I think it's important to really start to look at those two buckets that I laid out, whereas we continue to invest in sales and marketing and other demand generation, those investments will grow faster, but the rest of the non-core sales and marketing businesses will grow at a much slower rate than sales. That is where we will get our productivity. Even with those two, we are still gonna gain about 100 basis points of leverage. At the highest end, I would say the thing I would point to related to return is the fact that our ROIC is now back in the high thirties, and we expect it to continue to be around that level. You know, those investments are driving a very high return in the business. Yep. We've got a question online from Dominic Carver from Close Brothers Asset Management and around transportation. Is all of your transportation procured through third parties? And how would you describe the advantages or disadvantages of owning your own fleet, if that's something you've considered? You want me to take it? Go ahead. For the most part, for the vast majority of our transportation, it is contracted through third-party providers, whether it be parcel or LTL delivery services. We do a handful, and I mean a handful of dedicated deliveries for more complex customer sites, but again, it is very customer-centric. The big thing with transportation, essentially, it's a scale play. How transportation generally works, and I'm sure a lot of you are familiar with this, is it's how many packages are you delivering per stop, and what is your average distance between stops? That's essentially driving scale. In general, when we look at our outsourced, our third-party partners, they have better scale than we do in terms of having density, in terms of reducing the average distance between stops and delivering multiple deliveries, not just from Grainger, but from other suppliers into a customer site. We have very, very strong partnerships with all of our our transportation carriers. We do think our go-forward part of the business is to partner very well with our carriers, and we have very healthy relationships with our parcel carriers and LTL carriers and very strong contracts. We think that is from a cost advantage standpoint, that is the right thing to do. I think the question did allude to a little bit of kinda risk or insulation, and we think the partnerships we have built provides a level of de-risking in terms of how we've built our networks jointly with our providers and have built kinda information sharing with our providers. Hi, this is Dan Hanson with Neuberger Berman. We're a longstanding shareholder. Appreciate the venue today. I've got several questions, really around the U.S. endless assortment business. I think for Kevin, Deidra, and D.G., kinda would love to hear just kinda broadly. You know, just broadly wondering a few things. Can you address. Like, is there any risk of sorta channel conflict or are these all incremental customers? Like, you know, that's kinda one category. Just love to hear the thinking about that. These questions, to make it more complicated or whatever, I'd love you to have the spirit of like today, but also the 5 and, you know, even beyond 25, but like the 5, 10-year kind of vision and game plan. Where I'm going at is just the complexity that. Hmm that it seems it has to entail. You know, there's the customer-facing, I guess, perspective, but then sorta internal capital allocation. You know, you've talked about the you know, the outcome in terms of return on invested capital, and that's a reflection of internal capital discipline. The challenge of you know, a revenue growth-oriented business that's in a different life cycle, that creates, I imagine, tensions and complexity internally. Kinda how do you manage that? You know, I can't help but note the blue jersey versus the black jersey. Like, how do you just kinda motivate and keep everybody rowing in the same direction long term? Maybe before you ask anything else, maybe I'll start answering. Yeah. Yeah. Yeah. I could forget- I mean, it's just like. I could forget what you're asking if you keep talking, so we'll get started. Yeah. You know, I guess what I would say is, you know, I've been involved with this from the very beginning in the sense that Kinya Seto and I sort of hatched the plan to bring the MonotaRO model back here in around 2010. You know, what we noticed at the time was that we had been trying for years under the Grainger brand to actually go after small businesses and failing miserably over and over again. Part of that was an allocation issue because anytime things got tough, the business would pull resources into large customers and you'd sort of get rid of the thing that was focused on small businesses. We made a conscious decision to start it very independently. You know, I fell on the sword a little bit and got yelled at times during that period, but we thought it was the right thing to do to start a business that was very, very independent and let them do their own thing. Pretty much today, that's still the way it works. I mean, there's conversations across the businesses about what's working and together and learning that happens. Generally, both businesses are operating as they do and independently. You know, what I would say the benefits of that. Obviously, there's been benefits in the sense that there's very little cannibalization in the small business revenue we've gotten out of Zoro. You can get to cannibalization numbers that are maybe high single digits, but even when you call the customers that sort of look like they're cannibalizing, what was happening was somebody was just online and was gonna buy, and they found Zoro and bought. It's hard to argue that they would have then bought from Grainger at that time. There's been several benefits from this. One is going after small business is effective. I think the other bigger benefit that sometimes is forgotten is, I think it's really helped in the high touch model forge a path to a much crisper value proposition. Because the reality is there are others like Zoro out there that Grainger has to compete against. I think it's been very valuable for the company to have the business model in the ecosystem and to allow the Grainger brand to say, "You know, how do we win against that thing?" Because that thing exists. It's not just Zoro. All told, there's certainly some friction. I think Kevin probably has black gear too and blue gear. I don't think they have a color. I guess they sort of have a color preference. It's blue now. We do. Because they have a blue box. Kind of blue and orange. Yeah, blue and orange. A little orange. Yeah, exactly. You know, we don't see that as much of a conflict. We do share talent across the businesses in some cases, for sure. For the most part, they're operating independently, and we expect both of them to win independently and do what they need to do to win. Hi. Ken Newman with KeyBanc Capital Markets. Oh, hi. We can't see you. We can see us. Yeah. The lights dark. Okay, gotcha. Yep, got that. Just my first question is really on the new CapEx guide, and obviously a pretty big step up to support the growth that you're expecting. Curious if you just give a little bit more color on that and how much is geared towards technology investments, and specifically just any color on what's left, how much work is left to do on leveraging or building out that AI engine to kinda meet the increased high touch market outgrowth that you're targeting? You wanna talk about the projects first? I would say generally in dollars, the majority of our increase is gonna be in the supply chain space in the U.S. and then in Japan. I would say next will be investments in technology and data transformation, and then ESG, and then there's some other there in your materials. There's really other countries within North America, like Canada, Mexico, their needs, and then corporate function needs. The vast majority of our incremental capital needs going forward will be to help us catch up from a capacity perspective and then expand capacity to support service and growth. For supply chain, mostly. The only thing I'd add is that from a technology perspective, we certainly plan to spend more. The investments we're making, though, are not add-ons. In many cases, they're replacements for other investments we would have made historically. We've seen an increase in our technology costs, but it hasn't been that much of an increase over time because what we've done is we've focused on building our own capabilities and therefore not invested in off-the-shelf software and integration. We've really been focused very much on what creates value for us, and we will continue to do that. We will see some increase in technology. Most of the spend, as Dee says, is around supply chain capacity, given the growth we've seen already and what we expect going forward. That's helpful. For my follow-up here, you know, I think the 37% gross margin target makes sense as it's kinda back in line with that downward trend that you've experienced since you started the whole endless assortment initiatives and the lower cost to serve focus. I'm curious if you have an idea of where you think the ultimate floor for gross margins can be longer term as you kinda get to this ideal mix of endless assortment versus high touch. Yeah, I mean, we don't have a crystal ball in terms of how fast necessarily the endless assortment business is gonna grow. I think what Dee talked about and, you know, we have said is we are pretty stable in the high touch model from a gross profit perspective now. The reason we're stable is we are competitively priced, and we create a bunch of value for our customers, and they recognize that. You know, when we talk to customers, if we actually are doing the things we should be doing, finding substitute products, managing inventory, taking purchasing cost out, price is not the first conversation. It's just not for the high touch model. We would expect some modest degradation over time, just given that the endless assortment's gonna grow faster. How fast it grows will determine how much that is, but it's fairly modest over the next several years because the high touch model is still so big and will continue to grow as well. Thanks. Sam Darkatsh, Raymond James. I want to make sure we convey thanks for putting this day together. I know there's a lot of work goes into it, both in what we see and what we don't see. Thank you for that. I wanted to piggyback the CapEx question to an extent. Does your CapEx in 2023 immediately step function higher to that $500-$600 million range, or does it ramp over time? I'm trying to get a sense not only of by the time you get to 2025, what is CapEx looking like and how variable is that CapEx knowing that a lot of it is for supply chain capacity, and so if the macro is more uneven than perhaps you expect, can you toggle it back down? Let me start. Yeah, it'll probably be a little bit lumpy. You know, plans to spend money and then actually spending that dollar, sometimes there's a differential, especially as you're ramping up. Of course, Barry and team will need to find the right locations and partners to assist with construction in some cases there. I would say by the time we get to 2025, we will be at a higher point in our spend because we've had time to ramp that spend up. Yeah, I would just add, Sam, to your point, obviously, if there's a significant macro event, then we don't have to spend as fast as well. Correct. This assumes that 2%-3% market growth and you know, that the company share gain, and that would be what we'd expect to spend if that's the case. If things really slow down and pull back, we could change that. Mm-hmm. Gotcha. My follow-up, ballpark, what percentage of your suppliers does Grainger represent, like, their largest customer? And is that a function or a governor to determining where you increase product assortment? And is that an impediment or an accelerant to growth therein? Thanks. There are a lot of suppliers for whom Grainger would be the largest industrial customer they have. If you think about suppliers that have consumer business, we probably are rarely the largest customer they have, but we may be the largest industrial. We would tend to be the largest customer for more industrial, smaller manufacturers in many cases. We think that's probably a benefit to being able to add assortment if they've got it. Historically that's been true. You know, one of the things that Paige talked about with the merchandising is we've taken a very customer-back lens in how we're adding products. We're really starting with what should the category be and then figuring out what products we need and then working with suppliers to get them. We're less, I would say historically, we were probably more reliant on suppliers saying, "Add this." We're now more reliant on ourselves saying, "This is a gap. Let's go get it." That's been a big shift in our merchandising perspective over the last few years. All right. Yeah. Question may be for Dee or D.G.. Considering that you expect a meaningful increase in free cash flow despite the meaningful increase in CapEx noted, have you given any thought, you guys and the board, to perhaps increasing the dividend payout ratio over a multi-year period, given the stability of your cash flows, especially versus other industrial companies? Because your dividend payout ratio has come down for good reason, your earnings have grown ahead of your dividend. Also just perhaps, D.G., separately, you've noted opportunistic M&A as towards the tail end of the priority list. Can you confirm or not that if you were doing any M&A, it would be more U.S.-focused as opposed to international? Thank you. You want me to start? We are always looking at our capital allocation approach and specifically our dividend, as I noted. We have a great track record of increasing our dividend over the last 51 consecutive years, and we'll continue to, as you noted, discuss with the board about what that increase will look like in 2023. You'll hear more about that probably around the January or February timeframe here. As you note, we will be generating quite a bit of operating cash flow and will continue to maintain a flexible approach, which will, of course, include the dividend. That will definitely be in our consideration set. We traditionally don't peg it to a metric like payout per se, because we are trying to balance our inorganic investments as well as dividend share repurchases and then potentially some opportunistic M&A. I'll throw it to you for that, D.G.. Sure. On the M&A front, what I would say is we are very much trying to be an organic first growth company. That's. We think we've got a long runway given the markets we're in to have organic growth. We would, in fact, if we're looking at M&A, generally be looking at U.S.-type acquisitions at this point. We have not had much success with acquisitions outside North America. That's probably an understatement, although unless you count MonotaRO as part of that deal, that has been fantastically successful. We are mostly focused on, you know, our core market in terms of thinking about M&A. You know, we're first focused on core growth and organic growth. Thank you. I think we'll go back to a few from online. Yep, we've got one online from Tommy Moll at Stephens. Can you talk about the level of investment you've made in technology and continue to make in your proprietary software for product and customer information? How many engineers have you hired? How do you think these trends will unfold going forward? I don't think we're gonna probably talk about specifics in terms of number of engineers. I will say that we have shifted our team pretty substantially from a team that was not sort of building software internally to one that is largely or partly at least building software internally. We have had a huge shift. The team's done a nice job of a lot of new leaders and a lot of new software engineers hired and other areas we've hired. What I would say is, you know, we are making the transition. We'll continue to make it as we build capabilities and find capabilities that we think we should build internally. That will continue. Any more online? Wait. Why don't you get these? Thanks. Nigel Coe from Wolfe Research. Can you just touch on your branch network, how that's evolving, and maybe how the role of the branch is also evolving in your plan? Maybe if you could just also touch on as well, you know, what proportion roughly of your customer base in high touch is truly high touch, you know, where you have inventory management, supply chain, you know, consulting, et cetera. You know, to kind of compare and contrast how a high touch, true high touch customer economics compare to, you know, just a standard su pply. Sure. The branch network has been very stable the last few years. Since the price reset, we've seen nice growth in terms of walk-in traffic. The branches exist for several reasons. One, to serve walk-in traffic, either counter or will call. That business has actually grown, and branches are a profitable portion of our volume still. They also do special services for customers. They also have supported shipping, particularly during the pandemic, to keep service levels high for our customers. We feel like branches are a lot of expertise in the branches, and we think the branch network we have right now is roughly what we expect to have in the next few years. Other questions, anybody? What was the second one? I'm sorry. Yeah. What I'm trying to get to is, you know, what percentage of your high touch customer base is truly high touch? And how is that evolving and how do the economics compare, you know, between, you know, a customer where you have inventory management, KeepStock, et cetera, versus just a standard supply arrangement? Yeah. Do you want that? If you're thinking about at least one with a, even at, with a seller being part of it is upwards, I think, of 80%. If I'm- 80% of revenue? Revenue. Yeah. Would do that if I'm doing my math. If you're talking about any sort of seller. Not all of that would have KeepStock, but a sort of start with the high touch. You know, what I would also say is 80% of the revenue would have some sort of on-site high touch. Even for the others, though, we do a lot of things where the website is configured to them, or we have special pricing with those customers that mirrors what their industry is. There's some sort of link, even with customers that don't have a lot of on-site activity going on. One thing we shared is that the embed strategy. If you're talking about KeepStock or some other EDI, ePro, it's 60% of revenue, but if you add a seller in, then you're at a higher amount of revenue. If I could throw one more in. You know, the Fed seems, you know, intent on, you know, causing a recession, you know, next year. What's your mindset right now? I mean, obviously you've got a plan that's really focused on growth, and you've got some pretty significant growth investments. What's your mentality right now? Is it more of a wait and see, or are you just plowing straight ahead here? We obviously are paying close attention to what we're seeing from our customers. We are not adding cost that is not necessary, for sure. I mean, we feel like one of the things that's helped the company over the last few years is we've been very planful to make sure we're investing in areas that really matter to our customers. We will continue to do that. We will not add other costs. You know, it's sort of interesting with all the sort of economic projections and concerns. Dee talked about what we've seen this quarter. It's very strong still. We do see some customers that went through sort of pandemic-driven cycles that have certainly fallen off in areas that would be obvious. We've seen others that are still building because they're still not anywhere near where they are during the pandemic. I don't know how it'll all shake out, but we think we're ready for whatever does happen. Ry? Hey, everyone. Ryan Merkel from William Blair. My first question is on ROIC. Should we be viewing the high thirties as a peak ROIC, or is there a timing element based on the increase in CapEx? I wouldn't necessarily say it will be a peak, but yeah, as we look out to 2025, we think it will be relatively stable, even as we continue to invest in CapEx and drive, you know, top-line growth over this period of time and continue to expand margins. You know what I would So fo- What I would add to that is that, you know, when your ROIC is that high. Mm-hmm Growth matters a whole lot more than expanding it. Mm-hmm. We're really trying to gear up to grow at that level as opposed to we could expand it, of course. Increasing it. That wouldn't create as much value as growing with that ROIC. Got it. Okay. That makes sense. My follow-up is on the increased share gain in the high touch. I guess a couple questions. You're pulling the lever to increase sales coverage, but you could have always pulled that lever. Why now are we increasing it? Are these sellers like, how many are you gonna add a year? Are they gonna have vertical expertise? And are they gonna be going after new customers mainly? Sure. I'd say the biggest driver of why now is the work that we've been doing on customer information. It's really been able for us to understand who to target, and we have better information on MRO potential and to understand what type of seller to put against the opportunity. The investment in customer information and the technology tools is helping us make better decisions. In terms of how many, not sure yet. As I said, we are doing 3 pilot markets where we have expanded the sales force to understand what the returns are, and then we will make determinations. You know, we do measure everything and with cause and effect, and we'll make determinations then. On verticalization, we're looking at different models. We're testing different models, still TBD. We just started these pilots in, like, the last month or so. We're very excited and it looks good, but we wanna test it out before we do a full investment. In general, just I think you know this, but verticalization is most common in government and hospitals for us, where the purchasing processes are very distinct. We also have manufacturing-focused sellers and commercials, kind of all other. We aren't tightly verticalized with the exception of government and hospitals. Great. I think we have time for one more question up here in the front right. Morning. Jake Levinson from Melius Research. You know, M&A is not something we think we've heard of as a focus for some time, so just curious how you're thinking about how M&A plays into your strategy from here and maybe even what types of assets are in the funnel. Yeah, we're actually talking about that all the time. You know, I think we will get sharper on answering that question. For now, we obviously are building sort of out where we think we might be looking at, but we haven't seen all that many attractive opportunities in the last couple of years, to be fair. We feel like organic growth is absolutely the core of what we're trying to do and will continue to be the core for the unforeseeable future. That doesn't mean we're afraid of M&A, but we just need to make sure that we're targeting potential acquisitions that could really add value. Mm-hmm. Thanks for the questions. Let me leave you with this. We think that Grainger's a special place. We have a great culture. We have very dedicated people. We know our customers and serve them better than anyone else, we believe. As you've heard today, we focus on the things that matter. We're executing our strategy well, and we're confident we're gonna remain the industry leader for a long time to come. You may have heard one of our taglines, "For the ones who get it done," and nowhere is that more evident on the floor of our DCs, which are really the heartbeat of our business. Our DC team members come in each and every day to ensure that our customers have what they need to keep their operations running and their people safe. At this time, I invite those in the room to grab lunch next door before we begin our DC tours and get a firsthand look at really what truly differentiates Grainger. For those online, we're gonna give you an inside look at our Louisville DC with a brief video. Again, we appreciate you joining us today. It's been a long time. We hope it's evident how we're gonna continue up to our purpose to keep the world working, and hope you have a great tour if you're here, and safe trip back. Thank you so much. Hi, I'm Abby. Thanks for joining me. We're here at the Grainger Louisville Distribution Center in Louisville, Kentucky. This is just one of our DCs that serve more than 5 million customers, providing them what they need to keep their operations up and running and their people safe every day. At Grainger, our 23,000 team members all are focused on one thing, keeping the world working. In our distribution centers, that means we are shipping high-quality products, orders complete and on time. Grainger has more than a dozen distribution centers in operation today. The combined size of these operations centers is more than 12 million sq ft. Like all of our DCs, the Louisville building is strategically located in a prime transportation hub and growing industrial area. It also sits at the intersection of Grainger's other super-regional facilities in this part of the country. This new LVDC plays a critical role in serving both our customers and our entire DC network. This place is massive, about 1.5 million sq ft to be exact. The racking around us is filled with more than 300,000 different products, and at peak, 600 team members work hard every day to make sure that this facility keeps running smoothly. That means Grainger customers get what they need when they need it. While we're on the tour, feel free to take a look around and check out the space. It's pretty cool. I wanted to start up here so you can see just how big this place is. It's the largest single building currently in the Grainger network, with plenty of room to grow in the future. Speaking of the future, the LVDC houses the latest in network infrastructure and equipment. It's perfect to pilot new technologies and automation in industrial distribution. Now let's go see how products flow through the DC, and for that, we'll head down to where items come through some of our 180 dock doors. The Grainger team is busy working to get products off of the trucks and shipped back out to our customers as quickly as possible. State-of-the-art technology and a lot of equipment helps make sure that we always get the right product to our customers when they need it. When products come into the distribution center, they are sorted into these totes. Each tote is scanned, and information about the item, the quantity, and where it will be stored in the rack is saved in the database. Then, as the orders are filled, the totes are automatically pulled and delivered to the picking station, where we're standing now. Here, team members place the right amount of product in the order tote and use touchscreens to help keep track of everything and make sure the right product gets to where it's needed. Once the order tote is built, it's sent up to the packing area. Let's go for a quick ride. Here's where all of the items are consolidated and packed securely. Next, packing lists and other important information like material safety data sheets are automatically inserted into the boxes. Lastly, shipping labels are automatically applied. Here at the LVDC, they also have capabilities to create on-demand boxes of all shapes and sizes. This helps save space and makes our shipments more efficient. With the help of all of this technology and our team members, our mission is to exceed 99% order accuracy. All in-stock orders received by 5:00 P.M. local time ship out the same day and are delivered the next day to our service region. After the boxes are packed, they go back down to the dock to be loaded on a truck. We fill thousands of orders every day, and we couldn't do that without everything you just saw working together seamlessly. I hope you enjoyed this brief tour of the Louisville DC. Thanks for visiting.