The paragraph introduces the W.W. Grainger Second Quarter 2024 Earnings Conference Call and provides information about the participants, including the Chairman and CEO and the Senior Vice President and CFO. It also mentions that the call will focus on adjusted results and includes a disclaimer about forward-looking statements. The paragraph also mentions the divestiture of a sales subsidiary and provides information about a daily organic constant currency sales growth metric. The results of MonotaRO, a public company, will also be shared, but may differ from their public statements due to following Japanese GAAP. The paragraph concludes with the CEO thanking the participants for joining the call.

The team at Grainger continues to provide excellent service to customers, and one of the ways they do so is by simplifying purchasing processes and helping customers save time and money. They recently helped a customer by streamlining their procurement systems and moving transactions to a digital channel, resulting in significant cost savings. This is just one example of how the team works to understand and meet the needs of their customers. In the second quarter, Grainger delivered strong results despite a slow demand environment.

The third paragraph of the article discusses the company's sales, performance, and profitability for the second quarter. Total company sales were up 3.1% or 5.1% on a daily organic constant currency basis, with positive contributions from both segments. The High-Touch Solutions segment had a solid performance, while the Endless Assortment business saw growth in new customers and repeat purchases. Operating margin was strong at 15.4%, but down slightly from the previous year. The company also achieved a high return on invested capital and returned a significant amount to shareholders. However, there were still some challenges, such as yen devaluation and demand softness in the US market. As a result, the company has adjusted its earnings guidance for the year.

The High-Touch Solutions segment had a strong quarter with sales up 3.1% on a reported basis or 3.7% daily organic constant currency basis. This was driven by volume growth and moderate price contribution across all geographies, with the U.S. showing the largest gains in warehousing, contractors, and healthcare customers. Gross profit margin remained flat at 41.7%, with an unfavorable lap from the previous year offset by small tailwinds. SG&A de-levered due to increased DC capacity and investments in demand-generating activities. The U.S. MRO market grew between 2.5% and 3%, with price contributing most of the growth. The High-Touch Solutions U.S. business outgrew the market by approximately 100 basis points, driven by 300 basis points of volume outgrowth netted against price tailwinds.

The MRO market is difficult to measure accurately, but the company is performing well despite current market dislocation. They are still outpacing the market and generating strong returns on their investments. In the Endless Assortment segment, sales increased thanks to growth in core B2B customers and the unwind of non-core businesses. B2C headwinds are expected to continue to decrease throughout the year.

Sales at MonotaRO were strong due to growth with enterprise customers and repeat purchases from small and midsized businesses. However, foreign exchange rate pressures and lower gross margins resulted in a decline in operating margins. The company is encouraged by the progress and expects to finish the year on a positive note. The updated outlook for the remainder of 2024 reflects continued market softness and macroeconomic uncertainties, with expected organic constant currency sales growth of 4-6%. This translates to a reported sales range of $17-17.3 billion and an EPS range of $38-39.50. The company remains focused on managing expenses and investing in growth engines for long-term share gain.

The company remains committed to growing SG&A slower than sales, with increased operating cash flow and share repurchase expectations. They expect normal sequential growth in the second half of the year and have faced some external factors impacting July sales. Despite macroeconomic uncertainties, the company is focused on meeting customer needs and has been recognized for its strong culture.

The speaker is confident that Grainger will continue to be recognized as an employer of choice due to their emphasis on living their principles, such as starting with the customer. They believe this will lead to great results for all stakeholders in the future. The speaker also discusses the growth of their High-Touch business, attributing it mostly to share gain rather than other factors. They believe their digital capabilities and customer relationships are driving this growth. The speaker also mentions corrective price actions planned for early May in response to sticky inflation.

The speaker, Donald Macpherson, believes that the company will reach price cost neutrality by the end of the year. He mentions that the pricing actions taken on May 1st have been as expected and that gross profit remains strong. A question is asked about June average daily sales, to which Deidra Merriwether responds that it is around $7 million, with July currently at 2% but potentially higher if normalized for project-related service revenue. The speaker also mentions that the small drag on overall profitability from other international operations is primarily from Cromwell, and provides an update on the company's targets for these operations in the medium-term.

The Cromwell business has been working towards profitability and expects to end the year profitable. Despite some challenges with gross margin, the business has outgrown the market in the last six quarters. Due to Brexit and other challenges, strategic plans have been delayed. Pricing for 2024 is expected to be modest with adjustments made in May and September. The second half outlook has been lowered, with factors such as Brexit and customer feedback influencing this decision.

The speaker discusses the current demand environment, noting that while it is slow, there is no panic. They mention certain industries, such as automotive, that have faced challenges this year. They expected volume to be flat but now anticipate a 1% decrease. The next question is about marketing investment and whether it would change in a different macro environment. The speaker explains that they base their spending on tests and expected margins, which will not change. The final question is about distribution investments, which were previously discussed at an Analyst Day, and the speaker is asked to provide an update on their progress.

The speaker discusses the utilization rates in their network, stating that it has been busy due to difficulties in building during the pandemic. They have remedied this situation and have plans to build new warehouses in the Northwest and Houston. The speaker also mentions that their Endless Assortment segment has seen strong organic growth, but they do not attribute it to any specific competitor. They believe their success is due to improved repeat rates and acquisition. The speaker then briefly mentions the guidance for the company, stating that they are turning towards the high end.

In paragraph 13, the speaker asks for clarification on the factors that led to the trimming of guidance, specifically the percentages of macro and yen devaluation. The response is that the majority of the impact is due to the weaker macro environment, with about two-thirds attributed to that and one-third to yen devaluation. In the next question, the speaker asks about the double-digit growth in certain verticals for HTs, and the response is that there are some in-year impacts and comparisons to last year that are driving those numbers. They also mention that Zoro's path to margins is not discussed.

The demand generation for B2B is going well, but margins are at a low single-digit. The company expects to see improved margins in the second half of the year due to consistent growth rates. There were external factors that impacted July's growth rate, such as weather-related issues, an IT outage, and holiday softness. However, the last week of the month showed strong performance.

The speaker discusses their expectations for sequential sales and profitability in the upcoming quarters. They also mention a recent restructuring that focused on continuous improvement and driving productivity, but state that it was a one-time event. The company plans to continue investing in demand generation while gaining scale on non-demand generating expenses. The conference then comes to a close.

The speaker acknowledges that it has been a busy day and thanks the listeners for joining the call. They express confidence in the company's current position and plans to invest in core capabilities and increase productivity. The speaker wishes the listeners a good summer and thanks them for participating in the call. The conference call ends.

This summary was generated with AI and may contain some inaccuracies.