Financial Data and Key Metrics Changes - Fiscal first quarter sales were approximately $966 million, representing a 4% year-over-year increase, primarily driven by a 4.2% contribution from price, partially offset by a 30 basis point decline in volumes due to the federal government shutdown [21][11] - Gross margin for the quarter was 40.7%, flat compared to the prior year, while reported operating margin was 7.9% and adjusted operating margin was 8.4%, slightly above the midpoint of expectations [24][15] - GAAP EPS was $0.93 compared to $0.83 in the prior year, and adjusted EPS was $0.99 compared to $0.86, marking a 15% improvement [24] Business Line Data and Key Metrics Changes - Core customer daily sales grew approximately 6% year-over-year, while national accounts improved by 3%, and public sector sales declined by 5% due to the federal government shutdown [22][12] - Daily sales in vending increased by 9% year-over-year, representing 19% of total company sales, and daily sales to customers with an implant program grew by 13%, accounting for approximately 20% of total net sales [22][14] Market Data and Key Metrics Changes - Demand across primary markets was described as stable, with aerospace remaining strong, while automotive and heavy truck showed some softness [16] - Average daily sales for fiscal December improved approximately 2.5% year-over-year, but experienced a month-over-month decline of roughly 20% due to holiday timing and customer shutdowns [17][18] Company Strategy and Development Direction - The company is focused on reconnecting and growing with core customers, optimizing the sales organization, and enhancing the customer experience through improved service models and technology [4][5] - A growth forum is planned to bring together approximately 1,400 associates and suppliers to develop joint strategies for growth, emphasizing collaboration and data-driven decision-making [8][9] Management's Comments on Operating Environment and Future Outlook - Management described the operating environment as stable, with expectations for continued traction on growth initiatives and price stability supporting adjusted incremental operating margins of approximately 20% for the full fiscal year [16][31] - Despite challenges in December, management remains confident in the core customer growth and the effectiveness of ongoing initiatives to capture market share [17][18] Other Important Information - The company reaffirmed its commitment to reducing Scope 1 and 2 greenhouse gas emissions by 15% by 2030 and highlighted its recognition as a best company to work for [10][11] - Free cash flow generated in the quarter was approximately $7.4 million, representing about 14% of net income, with expectations of achieving 90% free cash flow conversion for the fiscal year [25] Q&A Session Summary Question: What drove the 4% price increase and expectations for 2Q? - Management indicated that the price increase was in line with expectations due to prior price actions and ongoing inflation, particularly in metalworking, with further increases anticipated in January [35][39] Question: What is the impact of IEEPA tariffs if ruled invalid? - Management noted that there would be an initial hit from lower inventories, followed by benefits as lower-cost inventory is received [40] Question: Clarification on the mid-single-digit growth and operating leverage opportunities? - Management expressed confidence in outperforming historical seasonal trends due to ongoing growth initiatives and productivity improvements [44][48] Question: How to quantify the net margin impact from public sector sales in 2Q? - Management indicated a mixed headwind of approximately 50 basis points from public sector sales, with expectations of normalization in the back half of the fiscal year [52] Question: Details on cost measures and service model optimization? - Management explained that recent cost measures were aimed at optimizing the service organization to align with sales optimization efforts, resulting in a headcount benefit [60][61] Question: Insights on the supplier event and its goals? - Management emphasized the importance of rebuilding trust with suppliers and the event's focus on joint business planning to drive growth [88][90]