Q1 2023 WW Grainger Inc Earnings Call
Hello, and welcome to the W. W. Grainger first quarter 2023 earnings conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad.
And answer session will follow the formal presentation. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Kyle Bland, Vice President of Investor Relations. Please go ahead Kyle.
Good morning, welcome to <unk> first quarter 2023 earnings call with me are D. G Macpherson, chairman and CEO and Dean Meriwether Senior Vice President and CFO .
As a reminder, some of our comments today may include forward looking statements actual results may differ materially as a result of various risks and uncertainties, including those detailed in our SEC filings reconciliations.
Reconciliations of any non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our Q1 earnings release, both of which are available on our IR website.
This morning's call will focus on our first quarter 2023 results, which are consistent on both the reported and adjusted basis for all periods presented we will also share results related to monitor them. Please remember that monitor was a public company and felt Japanese GAAP, which differs from U S GAAP and as reported in our results one month in arrears as.
The result, the numbers disclosed will differ somewhat from monitoring public statements now ill turn it over to D. G.
Thanks, Kyle good morning, and thank you for joining us.
Today I'll provide an overview of our first quarter performance and then pass it to <unk> to walk through the financials in detail.
<unk> started 2023 focused on what matters, most providing our customers with the products and services they need through exceptional service.
We remain closely embedded with our customers finding ways to help them manage their inventory reduce cost, which either ESG objectives and successfully run their operations to.
Two weeks ago, I had the opportunity to visit with several customers in the manufacturing space.
My favorite Midwest cities, I heard very clearly how well our teams have served in the last few years, giving us great opportunity to grow with these customers in the future we win when we serve our customers exceptionally well and my interactions with our teams and customers. This quarter had been a great example of how we are winning each day.
Many customers, especially those in the industrial space continued to see solid end market demand for their products. However, we do see some customers with more consumer facing exposure heading into a softer demand cycle.
No matter, what economic uncertainties, our customers are facing we remain committed to our overall focus of helping our customers keep their operations running and their people safe.
This consistent approach and relentless focus on the customer rallied our team and fuels our results.
As you can see we again delivered a strong quarter of performance to start the year as demand remains resilient and as we continue to execute well.
We are making progress on our strategic growth engines, and our high touch model as we further our merchandising efforts continue to make smart marketing investments expand our inventory management capabilities for customers and build out tools to better equip our sellers.
This assortment business continues to execute their strategy as they add skus at zoro expand with enterprise customers at Mortara and at a healthy clip of new registered users each quarter.
Our momentum is further supported by a world class supply chain and distribution network, which benefited from an uptick in product availability of supplier lead times improved.
This resulted in a sharp improvement in our service metrics to near pre pandemic levels.
Faster than we had in it and had anticipated at the start of the year.
With the Swift improvement, we were able to meaningfully reduce D.
Decrease frictional costs within the network.
Using average shipping distance and minimizing handling costs, all while delivering a higher percentage of orders complete and next day. This improvement as a reminder of just how much unusual and extraordinary activity, we did to get products to customers through the pandemic and subsequent availability challenges the returned to more normal supply chain performance is great news for our custom.
And our supply chain team.
The progress made across all of these fronts helped drive great financial results for the first quarter. We finished with sales growth of 12, 2% or 14, 5% on a daily constant currency basis.
Results again were driven by solid performance in both segments, most notably within the high touch solutions segment, which I'll speak outpaced the broader MRO market by approximately 750 basis points in the U S.
Total company operating margins were 16, 6% an increase of 200 basis points over the prior year period on improved gross margin performance due primarily to the supply chain efficiencies just discussed combined with a strong top line growth, we delivered EPS of $9 61 per share and a strong ROIC of 45, 6%.
During the quarter, we produced record operating cash flow of $454 million, the free cash flow of $356 million and we returned a combined 229 million to green to shareholders through dividends and share repurchases.
And yesterday, we were pleased to announce a $1.86 quarterly dividend, which represented 8% increase this marks our 52nd year of consecutive dividend increases a track record that we are proud of.
Finally based on the strong start to the year and continued support of trends in April we are raising our full year 2023 guidance, which Dave will outline in just a bit.
With that I'll turn it over to D to take us through more detail on the quarter.
Thanks D G I like to Echo <unk> sentiment execution on our growth strategy and improved service from a return to more normal supply chain performance helped drive excellent results in the quarter.
Starting on slide seven.
You can see the high level results, including strong sales growth of 14, 5% and daily constant currency driven by double digit growth locally in both segments.
Although year over year growth rates decelerated as we moved through the quarter on tougher comps.
Daily sales dollars remained strong and were reasonably in line with historical sequential growth trend.
Total company operating margin was up 200 basis point is expanded gross margins in both segments dropped to the bottom line.
SG&A margin was flat year over year as investments in headcount marketing and technology were offset by revenue growth.
In total we delivered diluted EPS in the quarter of <unk>.
$9 61.
36% versus the first quarter of 2022.
Diving into segment level detail.
The first quarter, we continued to see strong results within our high Tech segment with daily sales at 14.5% fueled by revenue growth in all geographies.
Customer demand was generally in line with expectations for the quarter and continues to remain resilient as a whole despite certain areas of softness.
In the U S. We are seeing broad based strength across most of the manufacturing with contractors and government customers to name a few.
Retail on warehousing are slowing the moat, but still up high single digits.
In Canada, the economy remains stable and we are seeing good results across most end markets with Canadian daily sales up 11% and local days in local currency.
Well this segment GP margin finished the quarter at 42, 4% up.
195 basis points versus the prior year.
This expansion was largely driven by freight and supply chain efficiencies as well as product mix favorability.
As D. G mentioned improved product availability and shorter supplier lead times drove improved stocking positions in our D C.
This availability improvement resulted in more efficient shipping route which helped reduce freight expense and Laura are handling costs.
Freight expense was further aided by a one time adjustment, which drove 20 basis points of improvement in the period.
Product mix was also a tailwind partially due to improved product availability and partially from lapping the pandemic fuel spike in safety sales from last year's Omicron variant.
For the quarter price cost spread was neutral and trend it largely as anticipated.
<unk> cost favorability, we captured in 2022 began to online and offset the structural timing benefit and you typically see as we pass price early in the first quarter each year.
The operating margin line, we saw an improvement of 215 basis points year over year.
Just around the gross margin in the quarter was fully aided by 20 basis points of SG&A leverage as marketing and head count investments were more than offset by revenue growth.
Overall was a very strong quarter for the high Tech solutions North American segment.
Looking at market outgrowth on slide nine we estimate that the U S. MRO market grew between 7% to 8%.
Indicating that we achieved roughly 750 basis points of outgrowth in the quarter.
As we continued to be strong partnerships and make progress with our growth engine. Our customers continued to turn to grainger to help them solve their MRO challenges.
Couple this with our supply chain service advantage, we continue to have a high degree of confidence in delivering against our goal to consistently outgrow the U S. MRO market by four to 500 basis points in any economic cycle.
Moving to the endless assortment segment.
<unk> increased three 8% or 14% on a daily constant currency basis, which adjusts for the impact of the depreciated Japanese yen.
So U S was up 13, 5%, while Minotaur, all achieved 12% growth in local state and local currency.
Well the world generated solid growth, they're off to a slower start than anticipated predominantly due to noncore BDC business, which was down in the mid teens year over year.
For small b to B customers.
Pick up a majority of their own business were up nicely in the first quarter, but are softening a bit in April and the girl more diversified end market customer mix outside of the industrial economy.
Not entitle sales were impacted by adverse weather as well as slower return to work patterns with the new year holidays falling mid week.
Sales have ramped back over the last several weeks and we expect results to be more in line with our expectations for the balance of the year.
From a profitability perspective gross margin for the segment expanded 140 basis points versus the prior year due to strong price realization and continued freight efficiencies across both businesses as well as favorable.
<unk> business unit mix for the segment.
Operating margins expanded by 15 basis points year over year to eight 1%, primarily due to gross margin favorability offsetting investment in marketing and head count to drive customer acquisition and assortment expansion.
On slide 11, we continue to see positive results with our key endless assortment operating metrics.
Total registered users are tracking nicely with zoro and monetize combined up 16% over the prior year.
On the right show the continued growth in Zoro, SKU portfolio, which grew by 900000 Skus in Q1 and stand at around $12 million in total.
We are well on our way to achieving an annual goal of 2 million SKU additions in 2023.
Now looking forward to the rest of the year.
Given the unexpected sharp improvement in profitability and continued resilient demand environment. We are updating our total company guidance for 2023.
And our revised outlook, we're holding top line expectation with daily sales expected to be up 7% to 11% for the total company.
This reflects solid Q1 performance and high touch offsetting a slightly slower start across endless assortment with expected softness to continue for the balance of the year at zoro.
Hi, touch is trending slightly higher than originally expected on a similar 1% to 5% total U S MRO market outlook, which continued strong share gains.
Now lets assortment is trending slightly lower however, we expect daily sales for this segment to be up low double digits, which is a couple of hundred basis points higher when translated to constant currency.
Note that April sales growth for the total company is holding firm with month to date month to date sales up 10% year over year or nearly 11% and daily constant currency.
The largest changes to our guy come on the profitability side.
While improved product availability and the resulting step changes service levels is driving better great dynamic.
More handling costs and improved product mix.
With this we are raising our gross margin range to $39. One to 39, 4% up 70 to 100 basis points year over year.
While we still expect to be price cost negative over the next few quarters as we unwind prior year favorability the supply chain improvement is flowing through our P&L and much faster than anticipated and is fueling the predominance of our revised outlook.
The increase in gross margin largely fall through the op margin improvement, resulting EPS.
Which we now expect to be between $34, 25% and $36 75.
And nearly 20% increase year over year at the midpoint.
We have updated our supplemental guidance, which can be found in the appendix and includes revised segment margins and improved operating cash flow outlook and increased expectation expectations for share repurchases for the year.
Our execution has put us on a great path, we're serving customers well, we're remaining focused on the things that matter and are positioned to continue to take share.
And ended the quarter very confident in our ability to continue to deliver on our commitment to shareholders.
With that I'll turn it back to D. G for some closing remarks.
Thank you D before I open it up for questions I would make just a few comments green who was recently named to the Fortune 100 best companies to work for list for the second year in a row. As you know this is an exclusive recognition one that honors companies with the best cultures workplaces and people.
Along with this list. We have also been named the best places to work for women and the world's most admired companies among others. We view. This recognition is an output of the work we do to create a welcoming culture and a highly motivated team I remain confident in greater and greater ability to create tangible value.
Flawless experience and drive profitable growth over the long haul.
And with that we'll open the floor for questions.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from a Q1 moment. Please while we poll for questions. We ask you. Please ask one quick.
And one follow up then return to the queue.
Our first question today is coming from Chris Snyder from UBS. Your line is now live.
Thank you I wanted to ask on outgrowth in the high touch North American business, just continues to hold firm between 7% and 800 basis points. Despite.
Despite improving.
Product availability I would imagine amongst some of your smaller competitors.
Can you just maybe talk about why you think.
That isn't compressing despite pretty broad indications that supply chains are recovering.
Sure. Thanks, Chris Yeah, we are certainly seeing supply change improve.
I do think that a lot of the work we've done through the pandemic in the last three years has helped build some some stickiness with our customers.
Every customer I go into we've expanded our keep stock operation if they're of any size.
We're filling bins that we're doing more and supporting customers make sure. They have the right inventory in the right place and I think that's been a big part of it we continue to see really good results from merchandising from marketing from from.
From Destocking and from our supply chain performance all those things continue to be.
An advantage for us and they are helping us gain share.
Thanks, I appreciate that and then then on price cost I think Dean mentioned that the guidance assumes price cost negative. The next few quarters on some of the give back after running a bit ahead can you just maybe talk about the level of producer price increases that were kind of pushed through on you guys.
February .
And then just in general any response from customers or any pushback on pricing. Thank you.
So yes, Chris How're, you doing I would talk about the.
The last part of your question I believe first which was you asked about producer price push.
That has.
Of course.
Become less and less over a period of time. So it is basically modest as what we have seen.
Late however, as you know in the first quarter is when we.
Lamented some of those costs are pulled them through to our system.
So for Q1 is traditionally a high watermark for us.
For for price cost and as you noted we expect.
To unwind some of our pricing.
<unk> positivity from 2022 as a result through the next couple of quarters in terms of customer response, what I would say Chris is that.
All of our effectively all of our share gain in the last three years has been on volume not price. So we are priced competitively it until we are.
We are not seeing unusual reactions from customers because we've maintained that competitiveness in our prices.
Thank you. Our next question is coming from Tommy Moll from Stephens. Your line is now live.
Good morning, and thanks for taking my questions.
Morning.
I wanted to stick on the theme of price cost to start here you articulated several of the drivers for the gross margin.
<unk> high touch specifically is what I'm talking about here in the first quarter and kind of clarified that the price cost dynamic as we go through the year is it still safe to assume though that.
For the full year, you could land above that 40% long term target, even if we trend toward it as the year progresses.
So thanks for the question, obviously, we've had a really strong start to the year and as I noted, we really feel like from a GP specifically in high touch where at a high watermark based upon.
Unwind that we're going to experience with with price cost a lot of the favorability that we experienced this quarter relates to our available availability, improving and some of the friction costs coming out faster and probably a little bit more.
Pronounce than we would expect that is driving our results.
<unk>.
We did have a I'll say a non comparable a freight impact of about 20 bps as you look at the outlook for the rest of the year.
But other than that we feel pretty confident.
And staying at this level based upon what we see right now.
Thank you and as a follow up I wanted to.
Ask about some of the.
Weakness you identified for zoro it sounds like there were some noncore areas, where you saw weakness.
But potentially also just as you as you've rolled everything up to the full year outlook.
There may have been other.
Unfavorable factors there at least versus your original outlook, but anything you could do to unpack what you're seeing there would be helpful. Thank you.
Yes.
So roughly 80% of absorbs business and business to business customers that are small businesses and midsize businesses.
Those while they continue to perform pretty well in the first quarter.
We're seeing sort of across everything smaller businesses.
And consumer facing businesses slowdown relative to certainly large industrial type businesses.
Next year thing Thats going on and then the 20% that does not business to business. Some of that came through the pandemic as you might imagine.
That has that has been down fairly substantially in the first quarter.
So that's been that's been a drag and net net we still expect the endless assortment to be.
Low double digit growth and we expect the segment to perform well during the year, but we do expect Florida to be below what we expected it to be easier.
Thank you. Our next question today is coming from Ryan Merkel from William Blair. Your line is now live.
Hey, everyone nice quarter.
Thanks, Ryan I wanted to start on the freight and supply chain dynamic can you just talk about maybe take us from November December to today.
Talk about how you got surprised by supply chain sort of normalizing and what sort of happened did everyone start to have the lead times improve it and one at one time in the quarter.
Yes, I think there's several things that happened right.
If you went back to the fourth quarter of last year.
We were we were really solid in terms of our own distribution center performance and our own.
Outbound freight at that point inbound freight was getting better and supply supply lead times are starting to get better but still fairly elongated we've seen both supplier lead times domestically and.
We shouldn't trade come in faster than we expected.
And recover faster than we expected. So therefore, we have received a whole bunch of product into the system.
And it's probably it's probably obvious when you think about it but if you went back a year ago.
There were a lot of back ordered items in so a trailer lets say it came into our Greenville D C.
At once of compressors or something everywhere in the network would point to that trailer when it was received and we'd ship at all over the country to get product to customers. Now we have that same product coming into every D. C and so we're shipping shorter distances and that's a big benefit in terms of for US at this point and the other benefit as we're not having to work overtime in our distribution centers.
Where we were a year ago in that part of that goes into gross margin too because that's part of handling costs. So.
That those are that those are the benefits we're seeing in a lot of its supplier lead times are still slightly extended from before the pandemic, but they are getting much much closer and there are fewer outliers than we expected at this time.
Got it Okay. That's clear and then D. G. I wanted to ask your opinion on AI, how do you think that might help grainger and what could the impact beauty industry.
Yeah.
Won't go into too much detail, obviously AI has been a raging topic. If you think about artificial intelligence artificial intelligence machine learning, which is a subset of artificial intelligence deep learning a lot of what's been talked about lately is deep learning.
AI, which you can read at your favorite song.
We have been using machine learning for a long time and things like helping us get search right and effectively I think the challenge here is to figure out where you can drive improvements through AI from customer interactions from operations for back office and we have efforts going in all of those areas and it's like.
Any other technology sort of pointed at the right problem and I think that's probably going to be the most important thing for us to think about it as we as we learn more.
Thank you. Your next question is coming from Jacob Levenson from Melius Research. Your line is now live.
Good morning, everyone.
Morning.
Maybe you can just give us a sense of how things are going north of the border in Canada.
I know the business.
So it's been on a.
A long journey to get back on track, but maybe if you if you put it in our sport.
Perhaps a little more.
There's a lot of good signs I would say in Canada right now I think we're seeing nice nice growth in the business and we continue to see profitability improvements were probably in the fifth or sixth inning, I think of getting to where we want to go.
We are on exactly on the path, we expected to be on in terms of growth and profitability at this point. So the team there has done a really nice job of improving that business and working with.
The entire north American team to make sure that we are supporting the business and driving profitable growth. So we feel pretty good about it.
Okay, Great and then just shifting gears on the balance sheet for a settlement.
We have.
We've heard positive commentary from quite a few other companies about.
M&A valuations coming in and maybe being one of the better markets for buyers for a long time.
You've obviously got it.
Maybe even under Levered balance sheet.
But our call Youre talking about it for the first time in quite a while back at the Investor day in the fall.
This is M&A or something that you're sort of factoring in that over the next.
12 months or so.
So great question I would say.
You know with strong cash generation and.
M&A is always something that can be on the table.
We have a small group here that that look for opportunities, mostly in the capability space for us potentially but nothing on the horizon as of yet.
Our history.
Our firm.
Do you is not looking for a roll up of.
You know smaller distributors that don't have a go to market focus that that matches ours, which is selling.
On value and service to customers. So those are a little harder to defer.
Find out I would say.
We do have a team stand that stood up to look at opportunities, but we don't see anything significant in that right.
Thank you as a reminder, that star one to be placed in the question queue. Our next question today is coming from David Manthey from Baird. Your line is not a lot.
Thank you and good morning, everyone in the past Grainger is estimated market growth by Triangulating things like GDP industrial production real business investment in non farm payrolls.
And looking at those factors today pretty.
Pretty much all of the low single digits and moderating ISN is continuing to signal sort of further moderation.
You remind us as you look at 2023, how youre thinking about.
Real MRO volume trends for the industry I know you've talked about pricing and share gains could you talk about how you are thinking about the underlying market.
Sure.
Just the rollout what you said a little bit we really focus on PPI and IP.
As a predictor or outlook of the MRO market and.
And our estimate.
About where it stood as we put together our guide.
Which is showing volume.
<unk> three to flat in the U S.
And price.
<unk> four and 5% so that's where we were at the end of the year as we look at the latest updates of IP and PPI there about there and so underlying a lot of our assumptions as the MRO market growth, including price and volume of about 1% to 5%.
<unk>.
Right. So no change thank you for that.
Yeah.
Second a soft side question here congratulations on a great places to work accolades D G you've been with or working with Grainger for 20 years.
And it seems theres been something of a cultural shift since you've been CEO could you assess the culture at Grainger today, and how that is translating to the results youre seeing lately.
Yeah, I mean, it's it's a it's a real.
Really interesting question, we Grainger has always had a wonderful culture, one where people really wanted to do the right thing for customers.
Very highly ethical company about six years ago, we went through a process to say what needed to change and we outlined a set of principles that we talk about.
At every meeting at every every day basically and say are we leaving those within those principles I think the things that are probably move the most have been making sure we're starting with the customer and making sure we're competing with urgency and making sure we're acting with intent, meaning working on the things that really matter.
I think our culture historically might have not always been as focused a few things that matter and stayed on that as long as needed to make them really great and I think that's been a big focus for us as a leadership team and I think thats probably better.
A shift I mean, the shift is slow to be fair cultures don't change overnight and so we're constantly working on it but I think we've been most focused on that has been a little bit different from the past.
Thank you next question is coming from Steve Volkmann from Jefferies. Your line is now live.
Hi, yes.
Thanks for taking the question this one's a little bit loosely as well, but it feels like on the logistics and freight costs that there's sort of two things going on obviously the cost of those things has come down, but then you're also managing it much better and I guess I'm curious if there's more opportunity as we go forward just in terms of how Ya man.
<unk> to.
To continue to see some gains in that area.
Yes, I mean, I think I think we're I wouldn't so managing it better it's probably relative I think it's quite an amazing job of managing through the pandemic through what was a really difficult time in the supply chain I think it was actually extraordinary looking back I think but I think now it's easier to manage because we actually have the product in the right place.
And so we're able to let our system work the way it's intended to work.
In terms of are there further opportunities there are always further opportunities we have an expectation that we will get better every single year from a productivity and service basis.
Teams are always identifying things to work on that can improve our service to our customers and the productivity will continue to do that.
Great and then my follow up is just your long term kind of EPS targets from the analyst day is it seems like you're already pretty much they're getting close anyway.
How do you think about revisiting those targets over time.
So.
We had incredible progress towards those targets as you can see in this quarter and then in the full year last year, but.
As we all are looking at the environment. The macro environment is still very fluid and it's been incredibly difficult to forecast at least more difficult.
Usual.
With that being said we.
We are doing of course better than our peers.
Performing better than our target if you will.
Extrapolate our performance out.
However, I would like to have a couple more data points.
Underneath my belt and have the macro unfold, a little bit more especially with continued recession looming and predictions of the slowdown and we will revisit those estimates at the right time.
Thank you next question is coming from Pat Baumann from Jpmorgan. Your line is now live.
Hi, good morning, Thanks for taking my questions.
Quickly on the April growth rate, 11%.
At constant currency is that has that been consistent across segments and then from a seasonality perspective, how do you feel about the progression you're seeing from March to April is it is it stable with how things normally have been or have you seen any slowing relative to kind of the first quarter trends.
Yes.
As we built the plan for this year, we knew that our comparison, we get harder as the year went along because we came out of the pandemic and every every month last year, we effectively got better. So I'd say, we're right, where we expect to be right now.
11% is.
Seasonality wise as normal.
And.
The relative growth rate is only down slightly because we continue to improve through the year last year. So we're basically on what we expected to see at this point.
Yeah.
Got it and.
In terms of.
Zero, there was a leadership change there during the quarter.
Curious if there is.
Yeah.
The status quo as you look forward or is there going to be any kind of shifts.
And kind of the way the business is run with with a new leader in place.
Yes so.
The Sciences, who is the CEO of Monitory also leads that business and the person reporting to him are Kevin Wheeler He's been with US for 15 years left to take a CEO job, which is great for him.
And Sandy Madsen, who put officers moved in I don't expect to see big shifts.
Fannie knows the business well and we are.
Continuing to push on the core initiatives.
<unk> is still there's still supporting her and we're supporting her to make sure. We can continue to improve that business and growth.
Thank you. Your next question is coming from Deane Dray from RBC capital markets. Your line is now live.
Hi, This is Tyler on for Deane Dray.
Just looking at slide 21, it looks like the end was fairly broad based across end markets. Maybe you noted a little bit of slowing.
In consumer retail end markets was there anything else that you'd call out where demand is waning, particularly strong.
No I think I think you're hitting on it I think that's right I think consumer facing businesses are selling much more than industrial.
Generally I would say that the pattern is more industrial is doing better.
Less industrial is selling more.
And then bigger bigger companies are generally doing better I'd say than smaller companies are.
Great. That's it for me thank you.
Thank you next question is coming from Katie pleasure from Keybanc capital markets. Your line is now live.
Hi.
Kind of going off of the prior question can you just talk about if you've seen any divergence between your small and medium sized customers versus the national accounts.
We've seen we've seen with the high touch model, we see pretty good growth with midsize customers and width with national accounts for sure I would say the mid sized customers are growing significantly faster than national account had seen.
A couple of years ago. So we do feel like and we see that zoro model to where we're seeing smaller businesses, maybe not grow as fast as <unk>.
As larger businesses, but in general we're still seeing good growth with the high touch across across both national accounts and the dice customers.
Okay.
And then just for my follow up so one of your competitors recently talked about a slowing cadence of manufacturing activity through the month of March.
Just wondering if you've seen any sort of similar dynamic.
Or any.
Demand issues.
Youre concerned about.
I mean, certainly we.
In the fourth quarter, we saw low twenty's growth in manufacturing in the first quarter, we shot.
Mid teens growth with manufacturing so still growing.
Wrong.
A lot of this is sort of looking back at what happened to the pandemic and we saw a huge growth rates coming as we recovered and now we're sort of moderating, but we still see I would say.
It was with some customers I talked about in the opening and all of them.
One of them was probably going to shrink a little bit this year, but that was on huge compares to the two years before so it's not like it's.
Activity is not strong it's just less.
Not growing as much in the other two were going to grow. So I think I think we're still seeing pretty strong manufacturing activity in general at this point.
Thank you we've reached end of our question and answer session I would like to turn the floor back over to D. G for any further closing comments.
Alright, thanks for thanks for joining us I appreciate you hold on I know, it's a busy earnings day.
The world today, so thanks for taking the time.
Finished but I wanted to thank our team for great.
Great work, they're doing to make sure that we continue to gain share continue to serve our customers well and do it the right way.
And with that I'll say goodbye, thanks for joining us.
Yeah.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.