D.G. Macpherson: Yes. I mean, it’s a great question. So what I would say is that — from our perspective, once we have the product to — when customers get it, that part of the supply chain is all good. We were basically clean every night, barring a storm in Dallas or something that we’ve seen in the last couple of days where people won’t pick up. But in general, the supply chain on the outbound side, both in our buildings and then our freight partners is very, very good. On the inbound side, we still have some elongated supply chains. It’s gotten much better in the past four or five months, and we expect to continue to get better. At normal, I think I’d probably say in quotes now. I do expect it to get closer to 2019 lead times, but maybe not quite all the way there as the year progresses, but we do expect it to continue to get better.
Operator: And our next question comes from Chris Snyder with UBS. Please go ahead.
Chris Snyder: And congrats on a really great year. Market outgrowth for the U.S. High-Touch business has continued to improve despite presumably better product availability across your smaller competitors. So it seems like the strategic initiatives are certainly taking hold. So I guess my question with that, does this change the way you think about the 400 to 500 basis points of outgrowth? And should we think about price as part of that outgrowth? It sounds like a lot of the questioning seems to suggest that you guys are overpricing the market. But it just feels like with the digital divide we’re seeing and the increased importance that brings to customers, I would suspect you guys should be able to outprice the smaller regional competitors who do not offer that.
D.G. Macpherson: Yes. I mean I guess I would say just from a core sort of principle for us, we think of outgrowth in terms of volume, we expect price to be relatively neutral. You’re right, we make it modest benefits over time that can happen. But certainly, what we’re talking about is volume outgrowth. The position from last year, certainly, we got some benefit from supply chain fairly modest. And what we do is we sort of decouple that analytically and look at what our initiatives are doing, and that’s how we came up with the 400 to 500 basis point target at the Analyst Day, we’re still sticking with that. I mean, obviously, we’ve done a little better than that. But for now, we’re not changing that. That’s our expectation going forward.
Chris Snyder: And then for my follow-up, I wanted to talk about the High-Touch favorable mix during the quarter, typically mixed screens as transitory. But on the last call, the Company talked about the mix benefit coming from an increased focus on technical products. And just given the strategic nature of that, it sounds more structural, so just hoping for more color on how to think about mix going forward.
D.G. Macpherson: Yes. So we have a favorable mix. Mix for us generally means product mix here. And so you can imagine during 2020 and 2021, in particular, we had a very negative mix because we had — we were selling any mask in the world we could find, we’re selling it, and that is a lower margin product. I would say we are more back to normal now in terms of the industrial products that we have typically sold, and that’s been a favorable mix for us. And certainly, we are working hard to make sure that we can compete with technical products or industrial products, and that will be a focus for us going forward. But most of the mix benefit has been getting — really getting back to normal is the way I describe it.
Operator: And our next question comes from Jake Levinson with Melius Research. Please go ahead.
Jake Levinson: D.G., are you guys still experiencing any kind of labor issues either at the factory level or otherwise? Just thinking about kind of the mix signals we’re seeing in the labor market. You still got wage inflation at the lower end and seemingly a lot of competition and warehouses and factories and whatnot, but just curious what — how that translates for you guys.
D.G. Macpherson: Yes. Well, I mean — so a couple of things. One is we certainly, we had wage labor challenges 18 months ago, a year ago. We have made adjustments in wages for our team members. I would say we are in a much, much better position. Our churn rates are back to normal basically in most parts of the business. And we are in a much more stable staffing pattern than we’ve been. And I mentioned some of the outbound, our DCs are performing well. Our call centers are performing well. We don’t have as much churn — near as much churn as we did at the peak, and we’re really close to back to normal at this point.
Jake Levinson: That’s helpful. And just switching gears, I guess, as a consumer when you get a lot of inflation, you see people switching from the premium product to the private label brand. Are you seeing that kind of trend in your business where customers that might want to prefer your Grainger brand over some of the marquee brands, if you will.
D.G. Macpherson: You know, not. We aren’t seeing a big shift there. I would say that most customers, when they’re buying industrial products, they need the product for the application they’re using it for. And so if our private brand works that we use it and they always have. But generally, we aren’t seeing certainly a down shift to lower cost products. That’s not what we’re seeing right now.
Operator: And our next question comes from Christopher Glynn with Oppenheimer. Please state your question.
Christopher Glynn: So I think last quarter, another topic that came into the improved mix discussion for HTS was the result of the merchandising initiatives. So drilling into that, is that trend kind of in the input there full throttle now or still ramping up? And is that kind of expected to be a good guide driver for an indefinite number of years?
D.G. Macpherson: Yes, it’s the latter, Chris. So we’ve — we started this initiative three or four years ago. We’ve worked through sort of some initial category reviews. We keep getting better at them. What we’ve discovered is that we’ve learned a ton as we’ve gone, and we’re just getting better and better at it and there’s still a lot of improvement to be made. It will be a consistent benefit for us, we believe, going forward for the foreseeable future, sort of that midterm three- to five-year time frame. We still see a lot of benefit from improving the way we merge. And it’s core to what we do. I mean helping customers have confidence that they found the right product, it’s kind of what we do. So getting better at that seems to have a good result, and we’re going to continue to really push hard on that.
Christopher Glynn: And to be clear, that’s just highlighting higher value-add products within categories for the most part?
D.G. Macpherson: No. We are — I would say we are agnostic to what the — not agnostic to the economics, but agnostic to sort of identifying higher-value products. We’re trying to make it super easy for customers to find what they need. And so it’s really all about, do we have the right assortment, can we present it in a way that makes it really easy for customers to find so they can have a lot of confidence that they’re getting the product that they need to use for the right application.
