Greetings and welcome to the W.W. Grainger first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kyle Bland, Vice President of Investor Relations. Thank you. You may begin. Good morning. Welcome to Grainger's first quarter 2026 earnings call. With me are D.G. Macpherson, Chairman and CEO, and Dee Merriwether, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements that are subject to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially is included in the company's most recent Form 8-K and other periodic reports filed with the SEC. This morning's call includes non-GAAP financial measures, which reflect certain adjustments in previous periods as noted in the presentation. There were no adjusting items in the first quarter 2026 period. We have also included organic revenue adjustments in the presentation, which normalize sales growth to reflect our exit from the U.K. market, including the Cromwell divestiture and the closure of Zoro U.K., both of which are completed in the fourth quarter of 2025. Definitions and full reconciliations of our non-GAAP financial measures with our corresponding GAAP measures are found in the tables at the end of this presentation and in our earnings release, both of which are available on our IR website. We'll also share results related to MonotaRO. Please remember that MonotaRO is a public company and follows Japanese GAAP, which differs from U.S. GAAP and is reported in our results one month in arrears. As a result, the numbers discussed will differ from MonotaRO's public statements. Now I'll turn it over to D.G. Thanks, Kyle. Good morning, everyone. Thank you for joining today. We're off to a strong start in 2026 with both our business segments performing well. Despite the ongoing tariff uncertainty and the broader geopolitical climate, we are encouraged by the positive signals we're seeing in the demand environment. By staying focused on what we can control, we continue to drive performance through solid execution and by consistently delivering value to our customers. I had the opportunity to experience this firsthand on a recent visit with a major agricultural customer. While many of our large customers are complex, our approach is simple. Start with the customer, stay curious about how their operation works, then bring our full suite of capabilities to solve their MRO challenges end to end. What differentiated Grainger with this customer, and with other contract customers where we are seeing growth, is our ability to deliver highly coordinated capabilities beyond the products themselves. That same coordinated approach was on display at our most recent Grainger sales meeting in March. This event showcased the breadth of our products, services, and solutions. With more than 10,000 customer, supplier, and team member attendees, the event demonstrated the power of listening, asking good questions, and staying focused on the problem the customer is trying to solve. We invest in this meeting because it results in stronger teams, stronger partnerships, and ultimately improved performance. Earning trust and building strong relationships is also at the core of how we approach our workplace and culture. While awards aren't the goal, they serve as useful signals that we're executing the right way. In recent weeks, Grainger was once again recognized as a top workplace, this time being named one of the Fortune 100 Best Companies to Work For and a 2026 Platinum Employer on the Where You Work Matters list, which is powered by the American Opportunity Index. We don't take this recognition like this for granted, and we're proud that it reflects the experiences we create for team members and the outcomes we deliver to our stakeholders. On the subject of team members, you may have seen that several of our senior leaders recently took on new roles within the organization. We are fortunate to have a broad and deep set of leaders at Grainger, a clear strategy and high-performing company. Having such a strong foundation allows us to provide leaders with new experiences to develop for the future. Moving to Q1 results. We delivered a strong quarter of profitable growth, meaningfully outpacing the expectations we communicated for the company back in February. Results benefited from healthy price realization, strong operational execution across both segments, and improved market demand. The broader MRO market showed positive momentum as we moved through the quarter and appears to have sustained that strength in April. At the same time, our High-Touch growth engines are gaining traction, and the EA segment is continuing to power the flywheel. Total company- reported sales for the quarter were up 10.1% or 12.2% on a daily organic constant currency basis. Operating margin was strong at 16.7%, and diluted EPS finished the quarter up over 18%. Operating cash flow came in at $739 million, which allowed us to return a total of $345 million to Grainger shareholders through dividends and share repurchases. I also want to mention that we recently announced a 10% increase to our quarterly dividend, marking the 55th consecutive year of dividend increases. This reflects our continued commitment to returning cash to shareholders through a balanced and return-focused approach. Overall, the quarter finished ahead of expectations, and we are increasing our 2026 guidance to reflect the strong start and continued momentum we are seeing. I will now turn it over to Dee. Thanks, D.G. As mentioned, we had a great start to the year, with total company sales up 10.1% or 12.2% on a daily organic constant currency basis, which included strong growth across High-Touch Solutions and Endless Assortment. Gross margin for the quarter was healthy at 40%, up 30 basis points versus the prior year period, as we saw expansion in both segments. Operating margin was up 110 basis points year-over-year as gross margin flow-through and leverage in both segments helped drive results. Both gross margin and operating margin benefited from the exit of the U.K. market. Overall, we delivered diluted EPS for the quarter of $11.65, which was up 18.2% versus the first quarter of 2025. Moving to segment level results. The High-Touch Solutions segment delivered sales growth of 10.5% on a reported basis or 10% on a daily constant currency basis. Sales growth included roughly equal contributions from price and volume. From an end market perspective, we believe the MRO market demand gained momentum in the period. This view is supported by various market indicators as well as the activity we're seeing on the ground with customers. For Grainger specifically, we saw broad-based acceleration across end markets with strong contributions from manufacturing, government, and contractor customers. On profitability, gross margin finished the quarter at 42.6%, up 20 basis points versus the prior year as positive mix and freight were partially offset by the impact of the annual Grainger sales meeting. We also continued to experience LIFO inventory valuation headwinds in the quarter. Relative to our verbal guide, gross margin results exceeded expectations for the quarter as price cost was roughly neutral, faring better than anticipated on stronger price realization. We saw cost timing favorability compared to expectations on lower sell-through of certain SKUs within our private label inventory. We anticipate this cost pressure will now hit in the second quarter. On SG&A, we gained nice leverage year-over-year as we benefited from strong sales, productivity, and a tailwind from the Grainger sales meeting. This more than offset continued marketing investment and higher payroll and benefits expense, including higher incentive-based compensation, given our strong start to the year. This helped drive operating margin for the segment to 18.3% or 60 basis points versus the prior year period. All told, it was a great start for the High-Touch Solutions segment, and we're excited about the momentum we have as we move towards the rest of the year. Now focusing on Endless Assortment segment. Sales increased 19.6% on a reported basis or 21.9% on a daily organic constant currency basis, which normalizes for the closure of the Zoro U.K. business and the impact of foreign currency exchange. Zoro U.S. was up 18.7% on a daily basis, while MonotaRO achieved 24.3% in local days local constant currency. At a business level, Zoro saw strong growth from its core B2B customers along with improving customer retention rates. The team continued to deliver on core foundational capabilities, improving the customer experience across pricing, fulfillment, and website functionality. At MonotaRO, sales were strong with continued growth from enterprise customers, coupled with solid acquisition and repeat purchase rates with small and mid-sized businesses. Additionally, MonotaRO continued to benefit from an increase in web traffic stemming from a competitor cyber outage, which provided a meaningful tailwind to sales in the period. As expected, this impact waned as we moved through the quarter. On profitability, operating margins increased 190 basis points to 10.6% with favorability across the segment. MonotaRO margins remained strong at 12.9%, up 90 basis points, and Zoro margin improved to 7.3%, up 210 basis points, with both businesses benefiting from healthy top-line leverage. Overall, another strong quarter for the Endless Assortment team. Before moving on, I wanted to share a brief update on the inflationary environment as we navigate tariffs and geopolitical cost pressures. We continue to manage the business with the goal of maintaining price- cost neutrality over time. With this, we passed further price increases in January in response to previously delayed tariff inflation and to offset annually negotiated cost increases with our suppliers, which were largely in effect as of February 1st. These actions were net of a partial rollback on certain Chinese tariffs announced at the end of last year. As it relates to the recent Supreme Court ruling on IEEPA tariffs, we are only anticipating a modest impact on the business since the tariff rate differential with prevailing Section 122 duties is minimal. With this, our May pricing actions were net neutral in total. Where we have seen modest cost reductions, namely on products that Grainger is directly importing, we adjusted prices as part of our May update. For the remainder of our assortment, we're working with supplier partners to assess cost reduction opportunities and will take subsequent pricing actions as warranted. Moving forward, the team is busy evaluating further inflationary pressures from recently announced tariff changes and the knock-on effects from the conflict in the Middle East. On fuel, we're working with our supplier and transportation partners to minimize cost headwinds that have risen as diesel prices remain pressured. We ultimately strive to pass these costs through to customers, but there is some leakage since a number of our customers don't fully pay for partial shipping. While currently only modest in total, these heightened costs are pressuring our margins, and this will likely continue until our next pricing window. We have included this fuel impact in our updated guidance. On the recently announced Section 232 modifications, given the significant complexity, we are still working to understand what the full impact might be across our assortment, but our initial analysis suggests it is likely minimal. Separately, we're starting to see supply pressure from the conflict in the Middle East related to certain raw material inputs on some categories, like nitrile-based gloves. As of now, this is minimal on the U.S. business, but we're starting to see more strain in the Japanese market, given the region's reliance on energy inputs which move through the Strait of Hormuz. We will continue to assess the situation and are working with our suppliers and manufacturing partners to minimize supply impacts, including changing our sourcing strategy where needed. Despite these challenges, we're not anticipating a step change in cost inflation from these pressures at this time, and thus have not included any impact in our updated guidance. However, if the conflict persists, these impacts could result in incremental costs for the business, and this will be felt more quickly in the U.S., based on LIFO accounting. Lastly, we're also monitoring for the potential recovery of previously paid IEEPA tariffs where Grainger is the importer of record, but the timing and the magnitude of any recovery remains uncertain at this time. As you might imagine, the broader inflationary landscape remains highly fluid, as it has been for the last several quarters. Importantly, our team is staying agile, and we continue to be confident in our ability to maintain supply for our customers while adhering to our core pricing tenets. Now turning to our guide. As a result of our strong start and continued momentum, we are raising our full- year 2026 guidance. On the top line, our new outlook includes expected daily organic constant currency sales growth between 9.5% and 12%, reflecting first- quarter strength, continued strong execution, and improved MRO market demand. Our operating margin expectations for the full year have ticked up slightly at the midpoint to incorporate our first quarter outperformance. This is partially offset by headwinds from higher incentive-based compensation and leakage related to increased fuel costs. While incremental margins remain healthy, you'll see that the added revenue dollars for the balance of the year are less profitable because of these transitory headwinds. Taking all this together, EPS is expected to be between $44.25 and $46.25, representing nearly 15% year-over-year growth at the midpoint. This represents a $1.75 improvement at the midpoint versus the prior guidance range. We've also updated our supplemental guidance in the appendix, which includes an increase in total company operating cash flow compared to the prior guide. We've continued our strong momentum into the second quarter with preliminary April sales up north of 13% on a daily organic constant currency basis. This start supports our expectations for the second quarter sales north of $4.9 billion or approaching 12% on a daily organic constant currency basis, which is 330 basis points lower on a reported basis when normalizing for the U.K. market exit and currency headwinds. We expect operating margins will be down sequentially in the second quarter compared to the first quarter. Beyond normal seasonality, we expect this step down will be exacerbated by headwinds from fuel costs, along with increased costs on our private label inventory, the latter of which is in line with what we had expected to hit in the first quarter. All told, we anticipate second- quarter operating margins will be in the low 15% range for the total company. With that, I'll hand it back over to D.G. for his closing remarks. Thanks, Dee. Overall, we feel good about how the business is operating and are confident in our strategy. I'm encouraged by our ability to continue to grow profitably in this ever-evolving environment while staying focused on creating value for the long term. Looking ahead, we will continue to focus on what matters most to our customers and earn their trust through strong execution, differentiated capabilities, and a consistent focus on doing the right thing. We recognize the significant uncertainty in the macro, but we'll stay nimble to serve customers and perform well in any environment. With that, we'll open it up for Q&A. Thank you. At this time, we will conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please while we pull for questions. Your first question comes from David Manthey with Baird. Please state your question. Thank you. D.G., Dee, good morning. Good morning. First off, I appreciate that you finally moved away from the myopic quarter-to-quarter share gain discussion, particularly in a quarter where you could have taken a major victory lap. Thanks for that. We'll draw our own conclusions. My first question is on price. Could you just tell us in simple terms, just what was price contribution by each segment and overall? Generally, we don't talk about the segment details. David, thank you for the question, though. I would say when you look at North America, we're about 5% or 5 points of price. Okay. All right. Thank you. Then, Dee, maybe you could update us on the pacing of margins through the year. When I look back to last quarter, you said seasonally, gross margin would deviate from its normal pattern. You had LIFO price cost, and the show impacting that. You said that first- half gross margins would be at or slightly below the annual guide and then rebounding in the back half, and operating margins would follow a similar trajectory. I was just wondering if you could give us an update on your view there. Yeah. I would say now we believe it's gonna have more of a U shape. Part of that is because, you know, Q1 performance, we did very well from a price realization perspective, as price continued to build, based upon the changes that we made in 2025, and then, of course, the change we made in January. I believe you heard in prepared remarks that we had expected to sell through more of our private label inventory in Q1, which would have created a drag. You know, not as much sold through. We're starting to see that sell- through already in Q2, so we expect that negative impact to then hit in the second quarter. Then we also have the normal seasonality decline that happens from Q1 to Q2 because we take a larger price increase in January, and that bleeds off through the year. As you also heard us talk about the impact that we have related to fuel, we believe that is going to build. You know, that was not necessarily anticipated in the original guide, so that is, you know, new news here that we've added to the guide. The challenge that we have with the majority of our very large customers have, you know, free parcel shipping. As a result of that, it is more difficult for us to pass on accessorials and other fuel charges to them. That's gonna take us some time. We noted that we're going to have some leakage, and then we're gonna have some timing implications. However, you know, we are confident that we will find a way to work through that, i.e., the U shape. As the year goes on, we will have a means to pass some of that price on to those customers and some of our broader customers while still remaining competitive in the marketplace. That's very clear. Thank you both. Thank you. Your next question comes from Jacob Levinson with Melius Research. Please state your question. Hey, good morning, everyone. Morning. It might be a little too early to really see any impact here. If we look at Japan, I think that's probably a blind spot for a lot of us on this call. Is the team in MonotaRO seeing any anything to be concerned about? Because I know they've certainly borne quite a bit of the energy shock here. You're right that certainly East Asia in particular bears more of the brunt here, given most of their energy, most of their oil and natural gas, frankly, comes through the Strait of Hormuz. What we've seen is some price pressure with some products there. You know, we have seen a little bit of buying in the end of the first quarter, they talked about on their call today of those products that are potentially at risk. It hasn't been material yet, but certainly it could become so depending on how long it goes. Okay. That makes sense. Just on the private label side, I assume no news is good news, but I know that was a potential concern last year. Have you been able to adapt that business to just given the tariff environment? It's, it's kind of hard for us to know what all the moving pieces are there. Yeah. Yeah. It's not a simple challenge either. What I would say is there have been some private label products where the cost spread between it and the national brand products have compressed, and we have seen some impact there and some more buying a national brand versus private brand. Some of that will probably work its way out over time, we think, we'll get back to having an appropriate gap and having very high- quality products at reasonable prices for customers in our private brand. I would also note we're having tremendous success with leveraging the Grainger brand for certain areas of our private brand as well. We're pretty excited about the path there. Overall, we're still very confident in our private brand path, but there has been some impact for sure. Great. Thank you, D.G.. I'll pass it on. Your next question comes from Ryan Merkel with William Blair. Please state your question. Hey, everyone. Nice job this quarter. First question is just on the demand environment. D.G., what was the surprise for you on revenue in the quarter? Was it just better end- market demand, or is the company-specific story also a part of it? Yeah, I think it's a bit of three things. One is the end market demand we did flip. It's been negative for several years now. We think the volume growth in the market, most signals would suggest it turned to slightly positive. That's a benefit for sure. Our price realization has been higher than we had anticipated to start the year, so that's a benefit for sure. You know, our share gain's been strong as well. I think all of that has conspired to create a really strong demand environment for us. Got it. That's great. Okay. Second question's on gross margin, I guess for Dee. You did 40%. I think you thought it would be 39%. Is all of the beat sort of this mix timing? I guess my question is: What drove the mix timing? Can you unpack, you know, why in the second quarter the cost increase in the private label is a negative? Thank you. Sure. Let me start with the first part of that, which is, you know, why we, my words, over-made, you know, versus where we thought we would be in the first quarter. D.G. talked about some of this, but we did achieve better price realization in the first quarter than what we had anticipated, based upon some of the SKUs that customers were purchasing. You know, that was very helpful to us. The other part, or the other side of that, relates to the private label inventory. We had assumed that with some of this growth, we would be selling through much more of our lower-cost private-label inventory and have that impact in Q1. We sold through a whole lot less of that than what we anticipated. When we now move to the second part of your question related to Q2, that negative impact, we can start seeing it come through already in our April results, will hit in the second quarter. That's the difference between those two pieces of that. In the second quarter, as you know, we have a normal seasonality with gross margin because of the price increase that we take, of course, in January, that normally subsides as we go through the year and into second quarter. We're planning for that to continue to occur as well. I think the other thing to just clarify is while we are mostly on LIFO, our private brand inventory is on FIFO. It adds a complexity here to that, to things. That has always been the case. It's just obviously in the last year, it's all that's become more clear and necessary to talk about. That's what we're talking about on the private brand. We didn't sell through layers yet, and now we are, that are higher cost. All right. Very helpful. I'll pass it on. Thanks. Your next question comes from Chris Snyder with Morgan Stanley. Please state your question. Thank you. I appreciate the question. Could you just maybe talk about the impact that the leading on the price cost, I guess primarily on the private brands? You know, how much of an impact did that have to Q1 gross margin? About 20 basis points in the first quarter. Thank you. I really appreciate that. If I could just maybe follow up on some of the price conversation, just to make sure I'm understanding all of that right. It sounds like you guys did the typical January start of the year price increase. It sounds like there's was another round that came in May, you said, Dee. I guess just in response to all the inflation we're seeing now, between, you know, metal, freight, tariffs, everything. I just wanna make sure I have that right. If you could provide any relative sizing for either of those two, just to help us calibrate the models. Thank you. Hey, Chris, just to be clear. January 1, May 1, and September 1 are our normal price cycles. The May 1 wasn't in response to anything in particular. We just happened to ponder some of the things going on in that price cycle. Yeah, that's the timing at which we can take it. I'll point you to slide 11, but I'll talk a little bit more about it. Again, as you noted, you know, January incorporated, you know, any lag we had from being able to take tariff actions from 2025, plus what we were negotiating late in the year that would impact us in 2026. That was the January price, and that was a slightly positive. Sorry, my voice, I'm losing it on this call. Slightly positive pricing action that we took because it was also net of certain Chinese tariff changes that were announced, basically rollbacks in November. As you and D.G. were just noting, in May, which is a normal time where we can take pricing actions, we did, and that was really a net neutral price for corrections or things like that we might need to take as related to January. Also, it incorporated Section 122 actions, and it was offset by IEEPA rollback for our private label products that we directly source because we know what those standard price changes should be, and that was net neutral. Thank you. Your next question comes from Christopher Glynn with Oppenheimer. Please state your question. Thanks, good morning. Morning. You've talked about in the past few quarters, kind of an elevated backdrop for a chunkier contract cycle. Just curious what pace you're seeing those kind of rolling into the outgrowth and the length of the tail of, you know, I guess, what we're calling a more elevated cycle for chunkier wallet share pickup? I'm not sure, I'm not sure I would describe it necessarily as chunkier, a lot chunkier than the past. I think our contract business has been net positive to start the year. We've had a number of successes in implementations. I think we are seeing a lot of customer demand to serve them on-site in ways that are really important to them. I think, you know, secularly, I think there's just less labor with many of our customers, and so we're getting asked to do more things, and we are doing more things on-site with our customers and providing more services than we have historically. I don't think it's necessarily a significant departure from the past, but I do think that we've had some success in terms of growing our large customer volume in the last six months. Okay. Just curious, what now you're seeing in terms of the most productive use cases for AI? Yeah, I mean, you know, I think there's many use cases. I would highlight a few. I think I would put them in a couple of categories. There are AI use cases that we have that are implemented in areas that drive productivity in the business. We have AI use cases in customer service that are working with our agents to our customer service reps to make sure we provide great service and do it faster and easier. There's a lot of work in finance in the back office that we've put in AI solutions. We're putting AI solutions in our supply chain to drive more one- piece flow in our warehouses, for example. There's a lot of things going on with AI. I think there's a number of use cases around the customer experience that are absolutely critical for us for long-term success. Investing in improving search, investing in improving merchandising capabilities are examples of that. I would say it's pervasive in terms of where we're using it and will become more so. You know, I think pointing at the right things is really critical and making sure we create advantage through the efforts in addition to driving productivity is really important. Thanks. If I could sneak in one more, and might build off that prior answer, but from Zoro you talked about website functionality as a driver, so just kinda curious what the, you know, it sounds like maybe early days talking about that, but as that normalizes the implications for margin and outgrowth from Zoro with the website work. Yeah. You know, implementing the lessons learned. Yeah. You know, I think that the website changes and improvements are in process. We probably haven't seen too much benefit yet from those. We've seen a lot of benefit from getting repeat business with customers, improving the quality of our acquisitions, and the business improve both margins and growth rate as a result of those things. The website improvements will be fast off that and drive a lot of benefit, we think, too. We're excited about what they're doing. Great. Thank you. Your next question comes from Andrew Obin with Bank of America. Please state your question. Andrew? Yeah. Can you hear me? Yes, we can. Okay, excellent. Just a question in terms of guidance range. It seems that a lot of debate on the stock has been about your ability to push pricing, and I think gross margin this quarter reflects, you know, quite a bit of success in doing that. At the same time, you know, most of the raise reflects the beat in the quarter, and maybe I appreciate some of the headwinds in the second half. How should we think about sort of sustainability of this pricing momentum into the second half? The way I describe it is that debate has not been happening internally. It's been happening with others and correctly. The reality is, we always said as we went through the tariffs that we would lag in terms of getting to price cost neutrality. We did it. You see that in the first quarter. Now there's some things that may cause us to as these go through a U shape do it again. Generally, the fundamental, and that's partly because we're on LIFO. The fundamental of price cost is perfectly strong with the business and very stable. It has been for some time. What about not flowing through for the second half of the year? Is it just being conservative? No, it's the things we talked about. It's, you know, it's potential fuel cost, it's the PL, the private brand cost coming through. Yep. It's just, it's just the basics, basically and some seasonality. Really, there's nothing there that isn't very explainable. You could argue whether we're being conservative or not on increased fuel cost. There's just so much uncertainty with that one, right? Who knows? Obviously, if the conflict ended today and the strait opened up next week, which is unlikely to happen, that would be great. We'd love for that to happen. You know, what we're forecasting now is some challenge with fuel, and that's just the reality. Just a question. Could you just size the LIFO impact this quarter relative to other quarters, just directionally? Yeah. LIFO, as we kind of talked about, never goes down, right? It kind of normalizes and subsides. When we went from Q4 to here for at the total company level in Q1, we think it's about 70 basis points on the total company. Well, terrific, and I hope you get your voice back. I appreciate you doing this. Thanks. I'll try to answer what I can. Sorry. Your next question comes from Stephen Volkmann with Jefferies. Please state your question. Great. Good morning, everybody. I'll ask a couple of growth questions and maybe save Dee's voice a little as well. I'm curious, you know, your slide 19, where you kind of show the various end markets, you know, pretty nice inflection in a lot of these. Would you say, D.G., that any of these were sort of specifically benefiting from share gains or, you know, more than the others? Is it sort of a more broad-based approach? You know, I think that it's more broad-based in terms of share gains. Share gain for us typically are providing great service, helping customers make sure they can find the right product, providing on-site support for inventory management. It's a set of core things that we do. Generally, those things impact most segments at the same time if we're performing well. I think that's really what's reflected here. Okay. Any potential that you saw some customers kind of buying a little extra inventory, given all the uncertainty around price, and availability and so forth? Not in the U.S. We have not seen that in the U.S. We've also not seen customers stop projects given the uncertainty, really. I think we've seen things just kinda in normal status here in the U.S. We mentioned before that in Japan, at the end of the first quarter, we saw a little bit of maybe buying ahead just to make sure that customers could secure products that are petroleum- based. Not in North America, we haven't seen that. Great. I appreciate that. Finally, just competitively, you know, we hear pockets of sort of availability issues. I'm just wondering, are you seeing any of your competitors do sort of more or less pricing, or, you know, be able to pass through diesel maybe or not, or having issues getting anything? I think it's too early for us to really know that. In North America, we don't anticipate having challenges. You know, the fuel impact, if there were challenges, it would be things going on in Southeast Asia that we're all procuring, and we'd all be procuring the same things. Generally, that's what we've seen in the past, but so far we haven't seen trouble getting product in the U.S., and we haven't seen any unusual kinds of competitor behavior. Super. Thank you. I'll pass it on. Your next question comes from Deane Dray with RBC Capital Markets. Please state your question. Thank you. Good morning, everyone. Good morning. Good morning. Dee, I'm not sure you gave this data point yet, but what was the benefit to margin in the quarter for the two European exits, and what would be the benefit for the year? I'll start with the last part of it, which is about the same as the total, but year-over-year is about 45 basis points, equally split between gross margin and SG&A. As it relates to top line, of course, Cromwell sales, that's about a 210 basis point impact on total company and a 110 basis point impact on EA Zoro U.K. exit. Got it. All right. For D.G., just is this free shipping on the partial shipments, is that a non-negotiable? You know, is that just part of the service that you need to offer free shipping on that? What is that impact? Is that on your total fuel cost? Is this a small sliver or is it meaningful? It's a meaningful portion of the total. It's very common to build free partial shipping into contracts with large customers in our space. That's not an unusual thing to do. We would face similar things. You know, we have the ability to do certain things to mitigate this, and will over time, depending on how long this goes. We're not concerned about it. It's just in the short term, it creates a headwind. You know, part of the issue with large customers is their average order value is significantly higher, parcel costs are as a portion of the overall is pretty small relative to smaller customers. Got it. Thank you. Your next question comes from Guy Hardwick with Barclays. Please state your question. Hi. Good morning. Excellent results. Congratulations. Thank you. Just one for D.G. and then just kind of a quick aside for Dee. You've probably had like six months now to include April of better, good trading, maybe better than expected, and you're guiding to double-digit organic growth this year. D.G., does that give you a little bit of room for maybe investing more for organic growth in terms of market share gains? Or do the inflationary pressures that you guys alluded to kind of preclude that? You set your marketing budget or your investment for this year, and it's probably not gonna move upwards or is that subject to change? I would say if we, if we have the ability to invest profitably for growth, we will do it. We don't have a cash problem. I don't expect our budgets this year to change all that much, given, we set our budgets based on what we've seen from a cause and effect basis in areas like marketing and sales force coverage and things like that. In general, I don't think that our added growth means we will invest more. And in difficult times, you often won't see us investing much less either, because if something's worth doing for the long term, we will go ahead and do it to be successful through any cycle. Just for Dee, on the SG&A growth 6%, is that a sensible number to use for the rest of the year, that sort of growth rate? Yeah, 5.5%, I think, is kinda what we kinda look at, 5.5%- 6%. I think for the rest of the year that's a fair number. Yeah. Thank you. A reminder, to ask a question, press star one on your phone. Your next question comes from Patrick Baumann with JP Morgan. Please state your question. Hi, good morning. Sorry, Dee, this is one for you probably. When you're looking at the sequential move in margin into the, I guess, 15% range for the second quarter, is all of that decline coming from the gross margin sequentially? If you could piece for us like the, or bridge for us kind of the drivers there between, you know, seasonal versus all the things you've talked about, private label costs or fuel costs or Grainger meeting timing, et cetera. I don't know. Any pieces you could help bridge that 150 basis point decline sequentially would be helpful. Sure. I'll talk about some of the numbers I've. You know, we've talked about already. It's about a point difference on gross margin. We've talked about the 60 basis points, which is what we believe is normal seasonality. We've also talked about the increased costs related to the private label inventory moving from Q1 to Q2, being about 20 basis points. You just have a little bit left from that, which is really the leakage that we expect that we're gonna experience on this increased fuel cost. Really, you know, some of that is timing because fuel's gonna hit and, you know, we're not in a pricing cycle right now to go after that. It may be the next pricing cycle that we start to recruit some of that back. That gets you to about a point of the difference between the 40% gross margin and about the 39%. When you move that down to operating margin, we have normal seasonality there as well as it relates to merit and stock comp, where we de-lever as we move from Q1 to Q2, and that gets you about there. That would imply that your SG&A growth goes from kinda 6% to kinda high single digits. I think you just said you expect it to stay kinda 5.5%-6%. What's the difference there? That was for the year. As we continue to grow, we still have investments that we're making through the year. That's why the last caller, when they said, I think he said 6% or 5.5%, I said 5.5%- 6%, in that range, on average. Got it. Okay. Then what's embedded now for the guide for the year in terms of market outlook and for price? That's all I have. Thank you. Yeah. Market outlook is 0 to 1-ish somewhere in there. We think it's gonna be positive for the year for volume growth. Price probably moderates and goes down from maybe five in the first quarter to four for the year. Yep. Thank you. Your next question comes from Tommy Moll with Stephens. Please state your question. Morning, and thank you for taking my questions. Morning. D.G., you made some comments at the annual shareholder meeting last week I wanted to follow up on. First was just on the sales force adds. I think you added 110 last year across the two geographies. Two-part question. Is that a gross or a net add number? What do you have baked in for this year? Net. That's a net number. We've been adding fairly consistently over the last several years, probably between 60 and 120 every year, and we expect this year to be in the same general area. You know, we've been. Some of the value we've had from having better data, better customer data in particular, has allowed us to identify places we can fill in coverage. We've been doing it region by region. Really, by next year, we should be done with those changes, is the expectation. 2027, we should be done by the end of 2027 mostly. We're well into that. Yeah, those are net adds and, you know, we've been adding probably 3%-4% to the sales force every year. A related point on your distribution network. Last week, you just commented on the progress in Houston and in the Northwest facility. Looking ahead, are there other big geographies where you're contemplating a greenfield opportunity or a substantial increase in an existing footprint? Yeah. Portland is going live this year. It's ramping up as we speak, and that already exists. Houston will go live in 2028. It's a very big building which expands our capacity in the Texas market, which is important. I would say as we go forward, based on our growth, there may be other areas where we add to existing positions or scale from mid-size to much larger positions. We aren't really missing geographies at this point. It's, you know, there'll still be investments we make, but they won't be kind of fully new greenfield that we make. You know, move a building from one location to another, expand capacity or find ways to expand capacity in these markets. It's more likely. Thank you, D.G. That's all I've got. I'll turn it back. Thank you. Appreciate it. Thank you. There are no further questions at this time, I'll hand the floor back to management for any final remarks. I'll just say thank you for joining the call. Really appreciate your time. You know, we feel good about the way things are going. You know, obviously, there's a bunch of uncertainty in the world, but our job is to perform through that uncertainty and to make sure we're building for the future. We are focused on doing those things, and we feel like, you know, we're a business that is very resilient and we're in good shape. We're pretty optimistic about where we're headed. Thanks again, and hope you have a great rest of the week. Thank you. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.