W.W. Grainger, Inc. (NYSE:GWW) Q3 2023 Earnings Call Transcript

Dee Merriwether: Yes. So I think when you look at our results quarter-over-quarter, there are some timing things that happen. We continue to invest in demand generation to help us ensure that we can drive specifically in the U.S. long-term market outgrowth. When you look at prior year quarter, we had a number of things happen. I think you recall, in Q4, we had a LIFO benefit last year that we will all be cycling. But just zooming out a little bit, if you go back to our framework, over time, we want to outgrow the market in the U.S. by 400 to 500 basis points. D.G. talked a little bit about the fact that we are — while we are looking to invest in long-term growth, we also look to gain leverage. And if you really looked into how we’re doing that, most of our SG&A investments are really targeted towards high-return demand-generating investments.

And a lot of the SG&A productivity are leverage. We are gaining in our noncore SG&A expenses and we accomplished that through really continuous improvement. So we’re really targeting things that help us with achieving an improved customer experience, but also assist us with operating more efficiently and effectively. Our intent is to continue to invest in demand gen but also look to offset as much of that as we can — reasonably can do through continuous improvement activities. If you look at that algorithm that we laid out for Investor Day, it talks about driving double-digit EPS growth over the cycle. And so we still expect to do that.

Operator: There are no further questions at this time. I’ll hand the floor back to D.G. Macpherson for closing remarks.

D.G. Macpherson: All right. Thanks, everyone. We recognize that today is a very busy day for all of you in terms of the number of people that are releasing results, and I appreciate you spending time with us. Yes, I would just reiterate that we feel really good about the way the year has played out. It’s played out pretty similar to what we expected. We continue to invest in the business to drive profitable share gain. That is our primary focus, and we continue to invest not only that, but in our team and in making sure that our customers are successful. So appreciate you joining us. I hope you have a great day. Thank you.

Operator: Thank you. This concludes today’s conference. All participants may disconnect.