Patrick Baumann

CFO provided detailed bridge: ~100bps gross margin decline (60bps seasonality, 20bps private label, remainder fuel leakage), plus normal SG&A seasonality from stock comp and merit.

CEO confirmed 0-1% volume growth assumption and price moderating from ~5% in Q1 to ~4% for the full year.

DG estimated MRO market volume down 2% in Q3. Grainger volume grew 1-2%. Confirmed seeing significant returns on growth investments.

DG confirmed tariff costs are tagged for potential unwinding; would see benefit from lower cost inventory flowing through if tariffs reversed.

DG said no contract cancellations; non-military federal struggling, military good, state/local mixed. 70% state/local, 30% federal.

Both Dee and DG indicated 2026 gross margin recovery to ~39% is very likely barring further dramatic changes.

DG explained economics vary by SKU; modest cost advantage products would be underwater quickly at high tariffs but gross margin gap isn't huge.

DG said mid-single-digit growth drives margin expansion; lower single digits makes it challenging.

DG disclosed 60-70% of global sourcing from China; moved some to Vietnam and India. Would try to pass on costs maintaining same margins.

Marc quantified 70% of $20B backlog convertible within 12 months. Remaining challenged by power/electrical infrastructure constraints for data center customers pushing some deliveries beyond 18 months.

Marc noted EMEA margins improving ~100bps for the year. Q3 may see slight pressure before Q4 recovery. Long-term, EMEA operates 300-400bps below regional peers and has room to close that gap.

Amort decline from impairments and portfolio actions, not restructuring. Decline is sustainable. Further reduction possible if contemplated divestitures proceed.

Confirmed orders can grow off the tough Q1 comp. Pipeline health continues improving. Pointing efforts at faster-growing market segments.

Max confirmed high-20s incremental margin guidance from last quarter is unchanged. Cited structural SG&A efficiencies and gross margin mitigation actions. Short and direct confirmation.

Dan gave a brief, definitive no. No competitive distortion observed from Section 232 tariff compliance issues.

Dan said price/cost gets more challenging in H2 as higher-cost inventory flows through COGS. Currently slightly ahead, goal is to stay with it, could end up 5-10bps behind. Fastener expansion initiative is the main gross margin support.

Patrick confirmed high single-digit RLC pricing math. Dave clarified they raised prices across the entire RLC portfolio rather than selectively, to avoid disproportionate impact on certain products.

Dave noted execution risk in H2 ramp is the reason for maintaining the $1.5B target despite bookings supporting upside. Confirmed data center margins are accretive to overall CHVAC margins.

Rich cautioned against stuffing Q1 bookings into Q2 revenue expectations; some businesses booking into Q3 now; will get as much out as possible but capacity constrains near-term conversion.

Rich confirmed 1.5-2% price expectation unchanged; inventory buffers any input cost changes from impacting margins until well into next year.

Double-digit Q4 volumes not reflected in guidance. Volumes ramp through year with easier Q4 comps, while price contributes steadily incrementally.

Approximately 50bps full-year margin expansion confirmed. Electrical expansion likely above that rate, Utility below. Both segments impacted by FIFO transition effects.