MSC Industrial Direct (MSM) 27 Oct 202020 Q4 Earnings call transcript

Good morning. And welcome to the MSC Industrial Supply 2020 Fourth Quarter and Full Year Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. to of conference Investor like Chironna, to now President Vice Relations would turn over the John I and Treasurer. ahead. Go

Officer; Constantino, with call you, our Financial and morning, are Kristen Executive Officer everyone. Chief Actis-Grande, on me. Thank both our Erik good Chief the Gershwind,

on call, As with all bear we remote, we were if difficulties. we are so us encounter our last any technical

our the comments, refer section During various financial the as in we as data our accompany will on to statistics, which presentation call, of of that today’s management slides found both can operational well and our be website. Relations Investor

presentation. Let Reform Harbor Act Safe which statement Litigation a XXXX, Private accompanying summary of Securities two me reference of slide is under our on the the of

XX-K report Form statements Risk reliance The forward-looking risk our and these not Investors filings. the expectations expected These plans, profitability. well meaning statements. of update on and are Information actual on to as no these cautioned the operations, of the potential differ statements. on about U.S. with statements those statements. and MD&A Our supplemental the factors place and obligation financial latest and these could impact of strategic current on call, in the of assumes in impact as our on These Factors investment risks comments uncertainties providing including and initiatives business on information the undue well the contain results growth by and these include are that the materially annual future this forward-looking our within COVID-XX forward-looking SEC from operations condition, about to website of to COVID-XX. and on future as risks anticipated press as cause expected release Securities statements Laws, our the are the is company statements earnings we comments based other other noted sections and SEC, involve forward-looking results benefits expected our filed from results, our

we financial measures most to this to GAAP comparable financial the in call are presentation, the addition, of over adjusted adjusted the refer Please GAAP reconciliation refer measures. reconciliations versus non-GAAP our non-GAAP the may to In which certain the I’ll now during contain which directly Erik. call, results, to measures. turn

Thank you, John. Good everybody. morning,

remains Let me healthy. everyone start hope saying safe by I that and

will you. to and over she a the are next of journey. can the brief going with to have next agenda review financials am going to a packed morning, to the After will right with fourth look to going are our pretty to discuss we get forward what forward is years our so We overview this into that Kristen, it it. then begin stage of turn and I fiscal three so we transformation quarter I we look

is so our our stakeholders. It’s the turn We Mission market I shortly, some and improving Mission company-wide lot than have and but organization customers focused coming are are strategy to is highlights serving of reflects as three. transformation Critical will we a accelerating of a share on completed calling plant the a that accelerating capture name. our effort is this also and our now with Critical force. heavy provided lifting for slide capture and just reflective share partner profitability. and that it first on Critical on on fact This quarter profitability their Critical. of our improving and to Mission the doing A we’ve And more more urgency sales project is And market Mission forces business

basis, year. XX.X% to as the XX.X% continued gross on period margin down prior versus in overall daily down sales tough to prior year the fourth Our solid or were basis X.X%, sales in was points a financial and margin execution operating results was quarter XX.X% compared fiscal reflect an XX environment, average

margin Excluding for all due in operating cost XX.X%, just implementing one-time the from controls. XX.X% adjustments, the to earnings in resulted our down effective quarter. solid points was This XX prior year, basis

our As sequentially non-janitorial roughly we the growth on sales janitorial average release, products the noted of also sales non-safety continued with Sales for growing quarter. of in August continued have and month each our XX% to lines of and quarter. product improve year-over-year and through safety

state more in up in both type, sales XX%, partially offsetting and the government national that’s mid-teen to declines types. our and customer safety while federal the other and at large customers was low-double our Looking accounts due CCSG customer down were slightly significantly, declined digits, core than performance janitorial surge and the by declined in the orders,

you benefited As October in earlier seen our have sales operational orders. this sales our some X.X% morning, and from released average daily and declined declined September may statistics estimated X.X% large

a seen still rate All in markets, opposed the the sales of past lift as shows the national they two Many Most have in the of soft. running improvement over slight showing this months. are to manufacturing to continued and shift are have were three of one quarter, while pre-pandemic. that accounts shifts, couple or improvements increase and sequential levels running

and have the in smaller uncertainty. well spending job given revenues. reflected in cautious much sentiment for in as reached role business our as Should neutral remain in It customers These recent this burning this. normal this translate improvement COVID-XX the actually territory of Our about a continued potential the continued couple future would into caution certainly bode should over on and inventory all machine which and backlogs. and remains months of such September. than lift a and of carrying average. is continue? persistence shop they’re playing And XX-month MBI, indices surges past shop rolling readings said, is its possible, off for sequential The as negative continue That improved our customers

broad aerospace, and such There gas. suppress. was in demand pockets based, some of but not in are terms certain core areas, end with remains markets, weakness centric of our markets end metalworking which In heavily industrial acute oil as softness in strength in markets, end the

to suffering continue local weak market we’re on and the coming that more capitalizing opportunities are persist, pressure hear longer that focused share they’re create on to conditions capture them. distributors continues the and under. This the We

Moving fronts. now pleased I remain margins, to pricing gross well In with performance. the executing the cost our both on we’re purchase particular, and

line. benefit supplier We’re continuing seeing increase strong purchase from price we’re realization from on and our annual programs cost the to

this will the our margins note mix headwind of recent mixed was are September You’ll trending, margin have continued underlying fourth price PPE was related and strictly the sale the our the the well, but decline. gross seasonal we quarter to quarter in stability. pressure side fourth maintained in Absent from first gross particular cost that third PPE skews. drop the higher the sequential that typical This of similar continued of quarter. and result in performing likely margin quarter of in October to and gross size our on

first allowed the as PPE strong quarter, we at Looking noise, quarter to past of repeat move mix expect flow remain year. our significant margins beyond and amount related remains the pay us a levels Cash to in gross we at to the debt. prior close

Kristen, thank the over COVID the interim exceptional particularly for I to team. Greg turn the few during our finance to team did of his past months, moment leadership job want crisis. Clark, I And it Before take over a to an

work, to continue to course, and be for of Kristen, grateful, Welcome and welcome your of We’re Greg, future you thrilled our an earnings you. first part efforts. have hard call to And integral aboard. your we’re

you. over it with to I will that, turn So,

It’s Erik. the to us. great Thanks, and to be am I looking here forward ahead of work

hopefully, months, already, that those I be an I’ll coming have on the probably of course. virtual, to meet phone although of you the Over haven’t opportunity who met will

you’ll full find reported going four key this on the quarter our a numbers quickly and for quarter results be adjusted we’ll Critical. through As fourth will the metrics us On Erik Mission my the to the of for and time fiscal focus five morning. comments of devote reflects slide mentioned, Slide run fourth and fiscal primary to discussing then those basis. presentation, year I’m

of versus a were million, the sales quarter $XXX same Our fourth year. last decline quarter XX.X%

daily last the XX.X% basis decrease fiscal average Our a $XX.X ADS of million, quarter an versus were in the fourth sales year. same quarter on

XX.X% Our period same compared to was in operating last the year. X.X%, margin

other on the touched operating XX.X% margin adjusted adjusted the basis an XX.X% profits, which Excluding gross prior impacting operating below year. our in severance versus our Erik, was our items margin, points costs, prior or and the year. XX XX.X% Within was

on mentioned the million costs in of calls. and little now Total expenses a of $XXX review or $XXX related the sales were our operating also our or million the XX.X% includes severance go versus about fourth operating I’ll This of So year. $XX.X prior sales quarter operating into in model million expenses. of to deeper XX.X% previous

This will our is structural total see the million in and company drop the the a cost severance sizable the our $X.X explains headcount statistics. to of -- were was our this $XX.XX of costs result in You initiative which in quarter, actions tied million. operating

XX.X% also a to severance, year, Excluding excluding related sales the of were of costs, in expenses those were million operating costs expenses as prior $X.X sales. percent XX.X% operating of

now all temporary we temporary for freeze but COVID-XX, of virus implemented the these our temporary containment management and We’ve hiring cost variable including hours, results quarter XXXK the restrictions. to and related reductions Our salaries, executive match, swift due and some not a measures reflect suspension actions. in travel reversed

we quarter, our XXXK first For example, our match. restored in fiscal

of per share was $X.XX, this other of earnings share per $X.XX. earnings All for adjusted and resulted in costs severance

on of $XX maintains in a last typical Turning that the slide $XXX capture. quarter. seven, million. reflects in free to This strong to achieved contraction fourth share flow environment, decrease in balance also support the $XXX but soft driver cash the inventory million from A was levels key quarter million sheet we

large from We also benefited a in reduction receivables.

in well debt. paid $XX maturing very of manage stabilizing our revolving $XXX as to continue environment million we closely, our million credit private over placement liquidity August, down the facility given of We as

our million, as and borrowings. of $XX $XXX fixed equivalents turn Erik. to so Cash were Our of balance remain deployed paying the net and October, $XXX In million the sheet of strong cash fourth and our facility, total I’ll million end credit revolving our $XXX fixed quarter comprised Overall, rate liquidity balance of now our and was debt $XXX of million, you primarily by debt. a revolving healthy. cash long-term of a we borrowings million was million. $XXX back short-term million it another very on down $XXX debt rate September flow

Kristen. Thanks,

years of a eight, of slide many plant to you from a know spot to of our hard the past last customers. Critical supplier the over Mission to that partner on couple we’ve industrial been floor buy working Turning MSC reposition

same the implementing over Critical that in We I’ll change three market so nine. Our step Mission a sense start to on which the and demonstrated focus urgency do profitability capture market of years. to during with capture, improving pandemic. share next now with is to turns deliver reaccelerated the plan slide reaccelerating share we

to is indexed we over in growth This or points target index. least outgrow capture at Production Industrial basis which by compete XXX market Our the IP is the the share markets cycle. against

of sentiment They not share markets. our mean or and capture, are the as service. growth since rates outgrowth are. purely gauge But indicators non-core primary shorter longer This over Our indices well. no our shown to with state over the a us does sentiment analysis correlated they’re that to gives our indicative us. MBI remain perfect less of as includes market some our better use growth Competitor supplier of good such not they’re our in for line measure is IP and IP markets the performance forward is IP we for it gauge is, outgrowth of cycle we Nonetheless, a relative believe, relevant, the it end above of product it’s different XX. opportunity also of cycle result and end to growth going IP and highly in as Spread we’re rate for the as best over market proxy This levels going index shows markets on timeframes, differences performance slide our the markets. the as over but end aggregate exposure is time. benchmark, that important of each a that serve. health

extended Looking over time, is growth average X% to X% range. periods in of IP the

Adjusting growth mid-single so goal from growth taking There measurable cycle. outperformance into a headwind actions can that recently, surprise we for So you that these calendar fiscal this it would we’re But near-term our fiscal into IP. expect of the the over are for growing our to to At above still the be aligned face near the and market this now future, you to work exit that should X% the deliver XXX though, is discussion for time, would forecasts begin assuming each during believe market XXXX. and IP investments that that we’ve down to basis those actions growth quarter. previously. none at are returns. fiscal single-digit is indicate mean taken fiscal fourth within implies think the we ‘XX, five this and the slightly of digits positive should I’ve of we’re as the to least in these XXXX that level they’re about time. with specific well the take our that this and taking low away that that points build spoken roughly fiscal be would over a given MSC and produce return at Most will accurate, details we over What same X% making account quarter. to in and and forecasts will above primarily that that the outgrow priorities We we third the PPE growth full our in calendar

me one. Let moment a on spend each

leadership core is we the our a where can we widen where have we is our lead. think business, and of today metalworking. First This position

and is on industry to product We -- year. team will our to metalworking very on their importantly, value-added introduce and add We’ve to of response our continue more MillMax, in that training. customers machine just begun data uses services exclusive machining our metalworking tap adding team we’ll and to portfolio customer a also MSC effort proprietary as the an by to a hiring building plan analytics brought about and to to we product that such been It’s do the specialist this earnest over improvements our specialists a MSC supplier operations. -- leading delivering and through optimize We’ll about about Early this add course XX% to technology and operations. of our market. has with MillMax to talented customers good, simple

to of it all our now making available customers. We’re

the in programs. lever, This cross-selling and in business, selling supplier C or second results with who The Consumables it have recently Class MSC those the leveraging stepped of programs from invested that portfolio. investing partners CCSG our that leveraging put encompasses place strength up the with our and we’ve

-- are those each converting Our dimensions funnels and growing of new are along business. opportunity joint these on nicely we focused into business

includes lever, The in vending, expanding our plant our solutions and VMI and solutions growing that third footprint program.

higher solutions that We’re value. better lifetime and finding bringing these to our customers retention produces growth, consistently stronger rates

As a we’re each them result, our of into we’re and raising expectations. investments increasing performance

Our three goal them double sales is the plant solutions over to years. in for next program

is ours of lever our XX% strength long today. has sales E-commerce a fourth of roughly Our represents been digital. and

customers. ourselves we’re However, raising better standing an and still not so and a is bar for the to experience our option produce

that new other deep to We team expertise. our have hired digital customers and website with include new on end is experience on a search new engine. information our diversified tools This and system, digital new user front-end new engine, build fifth staffing focus and new of a levels The leader will us loyalty bring the and a Their will product transactional be lever a who closer markets. higher retention. customer is a

a which that While of still also the this. secret areas and some no that on cyclical business the our We have our selling we’re seeing plan leverage form scale by is focused to building a the durable we’re are of good to that counter of this growth there momentum. of rates, metal Government COVID been payoff years the accelerated of cutting our we on rebuild building aided into we’ve course core in back, and It’s strengths. of couple relief. other is had manufacturers, worked continue many team and issues example business, execution hard in

invested assumes ROIC, all on and hunter high-teens earlier Towards of cost high-teens. This three that return would the an operational summarized at IP margins digits and the the to I launched growth capital deliver next roles end, it imply ranges that now government. the To grows of on. adding to in XXXX. fiscal on imply this back goal be turn this incremental our just goal to years. are high-single on in that XX. the profit specific I’ll Again, slide initiative We second we’ll within deliver that in least mentioned also would productivity in as

As you’ve the define years. over sales runway. ratio heard to initiative cost give the basis me an expense will to our now operating three down next points you actions who going I’m mentioned, this to about we more on that to expect deliver Kristen things will XXX details over basis productivity on turn in

Erik As programs going sales. The as come takeouts is program of significant a separate to -- an part percent assorted three the Mission assortment Critical reduce tracks. expenses to mentioned, operating aligned of a from cost of to

is is the first is initiatives. third second general and costs. Erik and supply service the So the of administrative sales sales some and covered service, chain, and

a the on So and G&A elaborate will chain little more tracks. bit supply I

first me we them Let from the of several already are a comes say with that projects each announced or productivity of even and tracking closely number executed.

Dallas under example, that we we the service chain, closing network. smaller to will distribution of remainder recently distribution of For located be moving one supply our our and the centers in announced

acquisition customer value-added our improve fulfillment to expanded now our and in of are also centers allow process reduced a freight to stepping Harrisburg greater significant us our cost. we perform is three and comes at This fourth was a will in in services. at last and savings G&A talent associates of it robotics over productivity quarter, use years. to function. which talent up being and pace These find resulted faster We This will is also outsourcing fiscal for automation redesign realize several Elkhart. allowing that to our and of When completed renegotiated year We’ve next function, the contracts started our we moves packaging. our

Voluntary our is drop Retirement headcount by To the significant program in Another we quarter. our the offered fourth was in is Program example up evidenced on quarter. the fourth very good, fiscal take as

become overall reinvest we’re such savings. will kind cost produce of that cost significant an from we earlier, from of permanent. In see will will of the reduction We’ve initiatives associated about the portion savings contracts sales. also dollars. Stepping just temporary million. costs And likely travel thinking for some time operating five the slightly finally, cost our reduction. While growth we with policy temporary over Erik meaningful a ‘XX mentioned these still program this the that we’ll lower travel ‘XX, where the revised into COVID-related of offsets indirect spend opportunity operating renegotiating savings the fiscal in examples, fiscal $XXX of back In roughly reduction costs further the add-back overall measures expense expenses reported variable cost

expect be And by in million. the XXXX. we’ve would already of are this means includes $XX in sales all an investment that in in that approximately be if million Mission of by Critical we be million program, Mission way, that’ll down down achieved more XXXX operating $XX than the and total flat which this of range the savings Erik expenses XXXX. to our together Critical first to ‘XX. slightly offset As is to range will This mentioned, growth of savings structural in slightly is $XX year about fiscal addition growth Putting in the that

level. more to XX year-over-year. supplement on mentioned GAAP naturally we gross operating shown adjusted we will basis flat expect basis, down XX.X% in the over If Erik If be bit minus adjusted to let’s margin would range to XX flat, full margins we to slightly into points. of turn in the XX sales what slightly in the be of points. basis on we on an An a figures. up, be the XX XXXX And margin earlier vary margin you if Erik. line. slide would dig points or down On plus growth or year Now on I’ll based sales or minus to XX.X% range plus would margin, operating of are for Operating operating to framework is expect and the sales for basis plus And the points. sales expect are XX.X% margin XX expect to finally, back XX minus it basis operating be range little are

again, Thanks Kristen.

up here. brief things summary open we close questions, a Before for just I’ll with

the capture will we equation believe years, share and are profitability. improve change three Over accelerate a implementing next we that market

XXX by basis On the side described cycle we’re over targeting earlier. growth five I growth points equation, of rates above market in growth least that the investing of the levers at

will the returns us costs out to grow This the be and profits into by on to funded of taken enable business investments capital than being we’re sales. improve invested looking Our will faster high-teens.

this overnight, plant given spot results All to supplier with buy with work customers. by our COVID-XX. aligned of that will partner the being Mission a of a driven to MSC particularly the is industrial not on Critical ongoing floor dealing our reposition come The uncertainty still from we’re

some more However, fiscal in come. early to quarter being you fourth saw actions taken the and

putting fiscal XXXX XXXX, also course ahead with customers about and business a over year into to right is be doing investment of funded the a first, uncertain humble, to press differences, cost year transforming, values, delivering change be action savings. more the thing, is As environment, through going going a recommitting This It be year of be urgency. to will the being the measurable investment, being taking going than we’re will to importantly, this long-term. most transparent, of we move despite embracing that our results. our to

open now questions. will We for line up the

Instructions] Bank. from Marek The go Please with comes question the of first line ahead. Deutsche [Operator Kevin

morning. Good Hi.

morning, How are Good Kevin. you?

Hi.

morning, Good Kevin.

Good. Good.

was noted wondering about you the -- nicely? forward, I’m sure, you beyond markets expand government some big that you You can if like end customers where I of operation a feel talk operationally could going as focus capture.

has capture foremost, into are look thing say Yeah. first the reinvesting Sure, our first five we And core levers is to formula or business. the laid think it. out look, share and I -- I Kevin. we I’ll algorithm that

supplier about reinforcing That’s talked That’s key who programs about. core. and the of I all invested the That’s metalworking. that’s business the CCSG have our some that with solutions really us. partners So

we the One a of markets, diversified do with full court the talked it. on We’ve about We highlighted the Certainly, the competitive and some those reasons, in be business of onto I’ll end We’ve of within today be markets. look, that is press what today. about fall sort ones will the harder. which would have five nice but fit are do thing and ones. have that it pleased couple is performance opaque our about and it biggest the industrial But putting say, outside where But I some eye we metalworking one outside areas mentioned was it’s I eye we profile, there more. our scale have be our of for to of on government, umbrella been pressing be our of so would to-date within us of encouraging core would that others. a government.

wonder you’ve really color more time I willingness updated of before you it reorder customers them those with that found you’ve government one one-time pass of pandemic, otherwise, of if buyers? kind on. then just kind are some whether And of you us or and whether to could I opportunistic on seen Thanks. Great. the give or an most customers over show during

where some those the we Kevin, you’re referring of PPE provided customers? You into to mean, PPE so

others maybe update even the if an the of you the on kind just that Yeah. Yeah. of outside pandemic, kind That because couldn’t kind them saw during you, service PPE, depths dynamic? to of of or customers come

companies, normally would our were some Yeah. long been going didn’t which lot where focus who that customers for which cases a have Look, of our helping Kevin, us say us. help long-term there served was to business we our is we out lot do though, time. where I means most likely have on, core we with certainly, majority, of were of a -- customers where relationships. with and able the we where longstanding that a the there’s organizations both Certainly, to was say,

it pass That’s great. Thank on. you. I’ll

Kevin. Thanks,

from is question the Please next Mazari of go Hamzah The line ahead. Jefferies. with

Hi. This filling for in is Mario Hamzah. Cortellacci

a capture. Just your How obviously, sales that productivity forward and relative your with give to share idea guess productivity expect today? or But we’re optimization, to that I us of about, do action you given those you force changed productivity how sales measurements has reductions? maybe market you’re in your reaccelerate -- is ask just then wanted have on history, and measurable that in question headcount the XXXX? talked your an going measuring And for force your -- reach to how and to track you change that Corona also goals could

We Yeah. you so raised enumerated good point. five a levers. Mario, growth

areas you the force. really into of Investments force sales of into five. which One the that us each are in see will investing is the enabler the sales an underpin

think force I you per back, And so, sales the look at productivity if is sales the obviously, -- and headcount. from highest of levels, easiest way to

the sales our build came to a part diversion it considerably the up with two may remains headcount lost really back for what were a COVID, as I that if determined of ability think pretty Head down And about under Eddie, We we hunter saw index And COVID, you Sales, quarters. pretty you pre tricky farmers say over remember, to plan had hunters. pretty years that, the had hire of deceiving it’s over the happened past quarters, because and of what’s earnest here, right plan plan. think where little metric. was you to to now, population, three and we index in who’s our by there I couple and expanding that that

I sales more lot be just getting granular are it We in a to terms performance of tell back head. than -- is it’s What per going you getting would hiring. right to how is, we’re measuring looking now at

tracking those five. along that are down I the scorecards levers and for the sales Eddie to MSA five of the of level, management building So performance what and are mentioned, team each each

to won’t just sort it going us, And optimize really a hit we in the the investing. level. which us certain of that to hitting be look for it’s sales we’re in is about head, So, grassroots do allow at a programs per to sales performance be got

going it’s throttle allow years as throttle we is, unfolds so up the thing do be and down levers where and that, other change to three things beyond or seeing us performance. the to The another three years realize to based on we’re there’ll

then And I’ll one it just turn and over. Great. more

for had that you you contracts. any savings also, margin think Kristen on do to if expecting again, renegotiating could impact few the quantify going your outlook freight heading think inflation I mean, to you your I that’s you’re detail freight your mentioned know able how provide are then, I next just line, you Are you what’s to guys your over And want of towards that. years? more the on targets? Just and gross

Yeah.

as you our freight can carriers. shipping overnight day with of imagine, logistics The majority Mario, a our centralized costs model, large next are is So, given model. which

what with And you all really of chain, so able getting both carriers the too detailed, areas tell arrangements. work but or our I -- in but supply programs been specific particularly we’re win-win out without would it’s around improvements to where

go I think deeper that. I probably So than won’t

last our in part the add would that mind in margin, of XX-K I SG&A. and you our freight of bulk that’s our freight gross the in just that us reporting, to Mario’s John, comment. in Keep this see very not Erik, for out that’s

So just on that. clear be to

Got it.

And…

I appreciate it. helpful. That’s

the of analytics, a kind of a kind Mario, freight will with on look was is Critical the Mission deeper this work thing other using mention part look done of deeper is and where sophisticated into with I one line analytic, business. that this the

freight an things to did order was renegotiations see, in addition just opportunity we patterns to that of customers. our with optimize and One the

bring customer could whole the two for orders, to meaning Zs, we sort as opposed by shipping of freight out us Zs the on So aggregating and shrink costs one down. pie [ph],

within is program. was Kristen the another of footprint describing what So, that

you so Great. much. Thank

line Baird. Our David of the from next go question comes ahead. with Manthey Please

can’t you we Dave, you’re hear there. if

be may You muted.

Mr. Manthey, question Moving us? can of line the ahead. Please to we on go hear. you with can’t Manthey, you Wells question, Michael McGinn hear Can hear comes Fargo. Mr. the the from next next us?

Hey, guys. Good morning.

morning, Good Mike.

Mike. Hi,

Mike. morning, Good

the switch I that cash making. about wondering was I free Hi. if of in and flow terms talk could investments gears you’re

you over sales Can a you’re percentage about CapEx talk Mission Critical, or dollars digital’s to vending of You or a mentioned as three-year drivers one of this the maybe horizon? what component? also for as expecting big be

Yeah. Yeah. Sure.

represents digital split initiatives, is So I’d related million about discussed historic levers $XX our And other an beyond, to increase kind patterns, CapEx ‘XX to half over to for look investment example. can kind of is what the dollars half if the definitely an range. that increase CapEx that ‘XX over to expecting for of into you Erik that described. we growth And say, million run like rates. expect of across historic we’re at kind $XX say, and be I’d of about see things other the solutions, is you

bring So, about. growth see CapEx talked level we sustained online levers will Erik enables few of for helps a years those programs that a higher the that

levels ‘XX the in margin like then you of the it operating framework, a And of we’re flat end your seems terms midpoint kind framework up better year operating on in guys Great. little is sounds put great just of the growth. execution and a And with quarter ‘XX like here.

curious, create is, Just better margin of just high could of at factors then issue level? ins gross outs terms lower stick? why these in You a this in the the in of wouldn’t are cost? just are rate gross the kind tackle curious, And mix or I’m run onsite terms and that operating? a what vending

Sure. Sure.

So with gross me maybe margin. just start let

keeping things think, ‘XX line us if to favorably from I for a flat got mix out margins We’ve So gross ‘XX. of sight perspective. play to

driver down lever expect headwind, about a can the have roughly kind gross see of mix the biggest If we think on. driven. of versus a So I of were margin stay more see to you bit exposure Maybe million. But basis think, points. see I’d headwind, that keeping some margins $XX XX there of that PPE to we your gross if fourth OpEx do of say, kind probably the equation, flat. quarter a mentioned an we we eye did big mix side to the don’t right really point, now the max strong mix down pivoting a prior of We year OpEx we’re is expenses or is

of decline. we XXXX. if then some like picking million And the slowed took the we’re is costs We related them with So that cost related reduction few revenue pieces is about to you discussed. and what that spending break back $XX down savings then the of down actions say, be $X associated of things tied up cost I’d you in about a if just kind temporary from I’ll Critical and About apart half in of XXXX that the generalized just is pick half the variable remainder, we that to the would million other kind of delays. call roughly it upside of Mission of

million we the a in $X what could ‘XX. online it’s and of million in bit figure QX, to comes for like rated about QX indicative little were look a So expect I’d million of $X more run down of that $XX that back

Appreciate the and it. of luck I’ll Got Best it time. along. pass

Thanks.

go question Merkel the Blair. Ryan comes line from ahead. The William of Please with next

Hey, great details. everyone. for Thanks

Hey, Ryan.

Ryan. Hi,

How are you?

Good.

new. the first programs off, growth mentioned So, not you are

that. think, Erik mentioned I you

question to share drive now mainly it important? done a sales gains? the in is is the what onsite or investment that optimization on is my the digital you’re So is equally is Is position in force solutions changed heavy that and structurally lifting

of distracting. went as heavy years convictions. I behind Most the sales of a what you going was out couple why work it. force. things Number of Ryan, couple think, is explain a called that of We last the to you us. on through one, It lifting, Yeah. lot know, lot I and I a more of mean yeah, you reposition over think that got

programs the think conviction I big take seeing growth, for Ryan I’ll what to of So, is I think, structural do out thing terms and having gaining in the some program, in for in two. around Two growth. and cost what these to of call a us past change. Three, they investment one would they is the other cost fund out moving do customer action the be, is

simply productivity. that funding we’re isn’t it on through shareholders, coming backs the the that the but of So investment

increasing you’re to I’ll conviction fund thing execution. a the sales seeing increased what think And it. mechanism inspection add in is has then team the I rigor, level the So with nice is, in done the of of really job terms and programs Eddie last and a

my tell performance, execution table I because is confidence the Ryan, in what greater inspection to between Kristen’s our what standpoint, the driving, the is would be from investing area, the greater. improving you like, I of the into as operating do terms he bringing will So, feel CFO in

out. the Yeah. with take makes Yeah. cost sense. hires That Especially new funding sales

So is million coming costs all costs I in then So $XX questions, that targeting years, that, Kristen think, the out? structural, and let out are XXXX? of about you take over me three ask much two mentioned next secondly, how to

Ryan. Hey, Yeah.

million, the that million I cost $XXX ‘XX, course targeting we’re And savings. of of million $XX to as three cost yes, about takeout characterize for over mission $XX would then the years, related critical. structural to So

Yeah.

Ryan… So,

Okay.

going just realize point, XXX that if of on us basis see one, that on points that improvement. OpEx … for too, we’re to

about We’re the number the you because growth. into of to bigger be the total need right, talking Then reinvestment. to reinvest could cost imagine has

Yeah.

Right.

Exactly. Yeah. Yeah.

those growth in funding As into growth, -- Erik is really investing growth those about investing mentioned, this levers.

on. Okay. Thanks. I’ll Super it helpful. pass

you. Thank

Thanks, Ryan.

Dankert question next the Research. with Our Chris Please go line ahead. comes Longbow from of

Hey. everyone. Good morning,

Hi Chris.

morning. Good

us plant pretty can three we’re I in the over and next you growth. sales kind for that’s how doubling starting the that where aggressive today is size years mentioned guys just from? guess of You big

what the I steam. number for of number now. a and And of definitely picking years factors, for up that calling say I would is the program think reason is we’re Sure. Yeah. Chris, company it’s change that, it inside the a has been out It’s

it’s of on the doubling to more going company where, proactive of sales investment reactively become done so basis. point case-by-case and or done on basis it’s XX% being built to a opposed it around Yeah, a a So and and a in currently, would case-by-case range X% it’s around over been the mean and program as that three area years. the to difference is has

margin it How high really back then again the really of target the that I are to to some kind and single-digit of capturing growth here, Super Got means providing up not kind guidelines that again growth. ends got or salespeople you’ve rate kind that strong accounts we’re guys. for And ground we difficult that business to generate of over focused assume national return sure just stuff goal, level accretive make getting get helpful. the in of to benchmarks of on? the bringing being a really kind time on

and smarter And we’re think, calories, team around we ways get where and focus of one, but of bringing not and rewards compensation, from growth, we empty he a able I number uses the incentives ensure you words Yeah. -- some would and management been database. the sales to profitable with decisions, the tell power but awareness. intelligence more being we topline And full is, aligning more also pricing revenues, then what Chris, are big we what team, sales Eddie make do make you’re growth raising has I smarter don’t team, topline using around, ways sales have our the our specifically that it. that, several arming in just money not our and training analytics, that

all are that play would sure those is to the growth of dimensions I in say So profitable. make

Got profitable it. a to great? for the just I the benchmarking If tiny far just growth. would bit ground actual be as as the Got Are that color on we on margin dig any margin the incentivizing therefore is it. could sales gross just people

Yeah. specific I get I say, bit what sales sort would sensitive subject. to both a -- won’t comp is of without of little I of say those than a other things. too

for it. thanks Well, so color. Understood. much the Appreciate

Chris. Thanks,

of ahead. question next go the Haskett. with Please The Inch Gordon John comes from line

Lau This in morning, dialing John. for is Karen Hi. everyone. Good

Hi, Karen.

Hi.

competitor took Mission ago for a pillars of pricing I at into Critical? about all any price of about, growth Erik, does some the that wondering key pillars new if relatively at like are How going you Hey. down was play, -- asked, because you your if I your obviously, the And accelerate to initiatives come -- years does or try expanding -- just to talking looking was because in into thinking category, wondering custom growth. new how pricing forward? instance I for

enabling, those company we’re one answers underpin of of it’s I that market it have competitive. there That’s the sort -- with do. mindful being is say, I’d in one, one -- I’ll pricing been cut said. the sure should course, everything the of directions. two first we’re So I Number another of give that what think is making you we different thing And would the of and and competitive

MillMax rewarded that, improving that the market to hand, say On sure We their the saving to we’re way think is getting I’d our value we’re we want We with lot new of are in differentiated. for what one that things productivity. that. example we make pretty a MSC is and other some money, proposition also bringing unique think our of customers

towards so all and There’s to over million lots we’re of selling SKUs very hundreds salesperson of that it’s of time. the thousands price to right customers. for $X end, difficult And there permutations a

So we price how efforts just our more are and we smarter to bolstering to as science gut. to get pricing opposed into use

And to so headwinds prices competitive are. on the one there hand, is certainly always there

of realization be that talked was more the increase lot go by we smarter. a to on to proof been, it strong if go the you the and levels and that summer see remember part pudding fiscal just back, And took being took, On has midyear just ‘XX price there data the the of and we’ve think opportunity aided realization, during are and about that’s science. same other back, hand, leverage I and really the just we in you the we of the we smarter, sophisticated strong. think And we the we said being thing,

Mr. has dropped. been Inch’s line

Moving on of ahead. from Patrick to Please next comes line question, the Baumann with go next JPMorgan. the the question

morning, Good Erik. welcome Kristen. morning, Good and Oh! John,

Hi, Pat.

Hi.

Hi.

this -- getting Just Good on yeah. morning. Congrats to Yeah. wanted out.

trends jan-san Just from October on of I can safety think. and mentioned you Any near-term implication about question, between start business, and monthly wanted with margins about and talk of just the sales large September big and orders difference you October in strategic a the gross that? kind picture something rest the to

more start, the talk Pat. then some So on gross let give me margin, I’ll you and color trends growth

safety year-on-year but a and safety growth growth now, janitorial. XX%-ish the all what for range during nice the was there where it than we’ve Basically territory, on hovering janitorial it other base not so surge, trend, seen back And of what’s roughly say, growth to all other, our the So high last the we little would still a in everything couple in XXs. if down, I is bit of It’s down May were where improving. months, picked the of steadily improvement on ones other gone go been that. up pace the was trough you stayed

all October low-double So September, digits. down other

Okay.

is question the probably And the offer I’d then other for margin. QX QX. the for part gross color Yeah, more what of your margin was you for gross same-ish of with saw

well. there, And move Costs as pricing to do levers continues continue direction so the in to expected. the right

performance. gross we’re with margin the pleased So

one the our saw what quarter. And well. think PPE impact I some as to QX fiscal you we similar lingering it as said headwinds what fourth see thing call do into in the remarks, I in prepared

up like I talking it you’re right? And -- sequentially should step normally it does. step it mean, though, year-over-year,

I similar would more similar say sequentially. we were --

similar quarter sequentially. So quarter fourth Oh! to first

again… And Yeah. Similar.

That’s okay.

driver … the Otherwise is PPE. the it the same. there was big

or low-double was was was jan-san sorry. was comment that what orders business that the You is I the though? on of it? the -- said, large What rest orders am the the digits, that? safety large What

October, mostly jan-san. In safety Yeah.

as maybe -- question is And there growth growth? it. margin asking I this is period? to Got of is target perspective points if are it. a to basis the think XXX you X% it’s mean, embedded I Got know gains I high-teens about price, rate. curious, get XXXX to this not assume targeting that way and or sales don’t incrementals, on from or investment share then required what Okay. that what an the you of investment. is you the X% another And I of that kind just what’s a that basically I’m like over gross that that is guess,

to want where to we build realized XXX work basis so get the we do XXXX, -- plus from look points. we we’re basically starting, have so

Yeah.

be have that’s saying want the we basically, what so to it’s to markers along is, going by way. And XXXX, we’re and where

see share steady we over terms of at a to So and XXX XXXX the IP plus exit in capture. want climb up

driven if modeled last had under somewhere took our feeling it’s and averages, degradation few think that’s but some we out really and sort our we’d on outperform our similar of XX gross primarily cost, if do points, by I what basis was and year-on-year et of cetera. mix, well we assumption. better that we margins price that sort you do on was year the hopefully, assumption, But can

Yeah.

in is XXXX restructuring me for of Okay. helpful. Super and That you perspective? restructuring be from kind will this makes XXXX? a a or then years kind of one going continued of that this framework a is a and program thing for is multiyear Is a of this the -- earnings to last And number think adjusted lot sense. the

up -- heavier the on but likely now, I’d our of see here in tapering say, in that on the we’ve goal year, of volume the to a of restructuring, Yeah. second kind a pipeline. is the we’re continually things first year and based kind teed year, how third to refresh

We’re three-year a giving ongoing about from really how business we transformation continuing evolve to the but both this is guidance, growth about perspective. cost of think and

of two three. out I’d in So new into of year that the play and never come it’s say year possibility things range

I’ll on. for it Thanks so Okay. luck. and pass of best time much

you, Pat. Thank

Thanks.

Pat. Thanks,

the comes line of from KeyBanc Please question ahead. Steve Capital The with Barger next go Markets.

technical Sounds like difficulties, Steve? some we may have

me? hear you Can Hey.

Steve. hear can We Yeah. Oh! you,

We can, Steve.

Okay.

Sorry. Yeah.

get it’ll I’m markets hiring customers to generalists just vending on solutions? the to in the of you can with more specialists across that hiring logistics how drive type work end push VMI the Is or centralized deeper trying square model plant and more work towards with Just a diversification. understand can more ground. to this

-- are narrowing is focus? or expanding focus we Now,

the do your end fine logistics part think model focus. think going the Mission been it the five, think levers the better do it the a growth I for we’re bit there in five obviously, each say what we for a a that would would time is the -- And I new. are most test it model into or five for fine. of question, pressure of I look, centralized So, and is, would say is diversified pressure and with core business past. and just a to little think, big the Critical, in say there company of are each the part But we first it’s sure your on -- I do We it’s to works big all can solutions, Steve. and we the reinvestment -- of and part, we focused markets the we’re that’s of discrete being we works be here with do the in with fine vending, look, testing the but part of think we fact, of works we plant

Kris, you participate on see I supporting know And able how do its share the this early arm in days you finance And were the Okay. reacceleration? planning focus you, for process? to and new

Yeah. Yeah.

we’re the business, thinking about partnering think business where How mean, in modeling. perspective. was kind really able an the So I to we’re from we’re How programs. the with I as our here tracking but strengthen of where finance a I has the to a months two focus I some participate under that’s priorities my going near-term, opportunity that’s how about to area just drive to planning, engage in great performance. really of is we’re think area what really are that the now, partnering functional an

it? Thanks. Got

Thanks. problem. No

Thank you, Steve.

John back I concludes closing our remarks. This for any Chironna to like session. to conference would turn over question-and-answer the

that January Thank you, XXXX X, quick day A set for XXXX. our quarter reminder earnings now fiscal Constantino. first is

there, conferences be several equity get months. Before the we’ll we coming over at

there. you Bye stay please forward healthy safe. to all I now. and look we want So us today to thank you for to seeing continue for joining and

now The concluded. has you presentation. for conference attending Thank today’s

disconnect. now may You