Good morning. Welcome to Grainger's fourth quarter and full year 2019 earnings call. With me are D.G. Macpherson, Chairman and CEO; and Tom Okray, SVP and CFO.

As a reminder, some of our comments today may be forward-looking. Actual results may differ materially as a result of various risks and uncertainties, including those detailed in our SEC filings. Reconciliations of any non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of the slide presentation and in our Q4 press release, both of which are available on our IR website.

This morning's call will focus on adjusted results for the fourth quarter and full year 2019, which exclude restructuring and other items that are outlined in our earnings press release. Now, I'll turn it over to D.G.

D.G. Macpherson - Chairman and Chief Executive Officer

Thanks, Irene. Good morning. Thank you for joining us. On today's call, I'll talk about our 2019 performance and key accomplishments and discuss our growth priorities for 2020. Tom, will then cover our financial performance for the quarter and the year in detail, as well as our 2020 guidance.

Late last year, we introduced our team members to the Grainger Edge, our new strategic framework that defines who we are, why we exist and how we'll work together to achieve our objectives. At Grainger, our purpose is to keep the world working, whether that means helping a hospital focus on patient care, a manufacturing plant focus on building great product, or a school focus on teaching, the work we do in the background helps keep facilities running, so our customers can focus on what they do best. It's a purpose that we are all very proud of as an organization. The framework also outlines a set of principles that define the behaviors we expect from our team members working with each other, our customers and our supplier partners. We are holding ourselves accountable to these principles and believe they will help us execute our strategy and create value for our shareholders. These are not just words on a page. We are committed to making these principles come to life in everything that we do.

The Grainger Edge provides a foundational framework for our strategies we work to consistently serve our customers and gain share. We gain share through two distinct business models that allow us to leverage our scale and supply chain to support customers with different needs. Our high-touch solution model serves customers that have complex needs and are looking for more tailored solutions. Through this model, we develop powerful customer solutions, deliver a great customer experience and develop deep customer relationships. This all starts with what we call advantaged MRO solutions. That means being able to get a customer the exact product they need to solve a problem quickly, and it means understanding more about our products and customers than anyone in order to help them solve problems and to create value for our customers. This takes the form of intuitive digital solutions, segment-specific solutions and value-added services. We then leverage these solutions to our talented sales and services teams to build deep customer relationships, based on an exceptional customer experience. Our Grainger US, Canada and Mexico operations, as well as our Cromwell and Fabory businesses fit within this model.

In our endless assortment model, we provide less complex customers with an expansive product assortment and easy-to-use website. This business is based on acquiring customers, leveraging our simple and efficient customer experience, to develop and maintain strong customer relationships. Our MonotaRO and Zoro businesses fit within this model. When we execute against these two models, we consistently gain share, we grow profitably and we deliver strong shareholder value. That's our commitment.

Flipping to Slide 5, and before I jump into 2019 highlights, I wanted to touch briefly on what we have done over the last few years to strengthen the business and to position Grainger for success. This work has ensured that both our high-touch solution model and our endless assortment model had the capabilities to win in the marketplace. Most of you are familiar with the pricing reset of our US business back in 2017. This change has allowed us to grow with customer groups we've been losing share with for years, most notably midsize customers. But beyond the pricing actions, we have made important moves. We have verticalized our sales force. Our customers today demand more expertise from our interactions, and this change enables our sales teams to develop domain knowledge and deepen customer relationships. We have added an inside sales group focused on high-value midsize customers. We have centralized our call centers to improve service and scale and help manage cost. We have restructured our KeepStock inventory management program, and we now have begun expanding capabilities for our customers. We have added capacity to our US supply chain. We have made significant improvements to grainger.com to make search easier for our customers. And we've done all this while realizing significant leverage on our cost structure. These changes let us set the stage for what we accomplished in 2019 and will accomplish moving forward.

Outside of the U.S. business, we have reset the foundation for our Canadian operations for what we believe will become a consistently profitable and growing business. We have shed non-core international businesses over the last few years and are now focusing our efforts on places where we can create a meaningful, profitable and competitively advantaged position. Our attention and focus moving forward will be on our high-touch solutions model, primarily in North America, as well as our growing endless assortment model. We continue to evaluate our portfolio to ensure our time, energy and investment is spent where we can add the most value for the long term. Our execution on these efforts over the last few years have laid a strong foundation for profitable growth for the new decade.

Moving to Slide 6, as you've heard from our competitors, suppliers and customers, our market was certainly challenging in 2019 with market growth declining as the year progressed. In the phase of these challenges, the Grainger team delivered solid results for the year, mainly in line with the expectations we outlined back in January 2019. To be clear, we aren't thrilled with the absolute performance in the year, but it was solid on a comparable basis. For the total Company, we drove 3% daily sales growth across the Company on a constant currency basis. From a profitability perspective, we expanded total Company operating margin by 10 basis points in 2019, driven by continued success in leveraging our SG&A. The team did a nice job managing spend in 2019, and we achieved our goal to minimize SG&A growth to less than half the rate of our sales growth. We expect to continue driving leverage as we prudently managed costs, while also growing the business. We generated over $1 billion of cash in 2019 and returned roughly the same amount to shareholders in the form of share repurchases and dividends.

While the absolute numbers were decent, in many ways, 2019 was a strong year on the execution front that, we believe, sets us up well going forward. In the US, we outgrew the MRO market by 150 basis points to 200 basis points in 2019, and our outperformance to the market gained momentum throughout the year. We exited the fourth quarter growing about 300 basis points faster than the market. This performance is driven by our ongoing investments in growth initiatives which support our strategy. We re-merchandised $1.2 billion of products in 2019, more than double any time in our history, and we are on track to complete another $1.6 billion in 2020. These category reviews, along with marketing activities, are driving incremental revenue. We've been testing new strategies and are happy with the results thus far.

Return on ad spend steadily increased over the course of the year. We saw nice improvements in the focus of our sales and services team, particularly around embedding Grainger at our customers through KeepStock and value-added services. We re-energized our large corporate account efforts and won some significant contracts in the second half. Our high-touch offer is unmatched in the market. We believe we will continue to gain share with these important strategic customers.

In our endless assortment model, we grew revenue 19% in 2019, driven by strong growth at both MonotaRO and Zoro. We invested to enhance our Zoro offering in 2019, including the addition of roughly 1.5 million SKUs to the assortment, pushing the total SKU count to about 3.5 million products. We made significant enhancements to Zoro's technology capabilities, including the launch of a new product information system and a customer analytics platform, allowing Zoro to be less reliant on Grainger's infrastructure. We also improved our marketing capabilities in Zoro, which should help us gain share profitably moving forward.

In our Grainger Canada business, we saw revenue stabilize and customer feedback improve significantly throughout 2019. We expect to return to growth in the business in the back half of 2020 and are confident the platform we have in Canada will prove to be sustainable and profitable in the future. Even when our results were poor, we made progress.

Specifically, our Cromwell business in the UK had a very challenging financial year. For context, adjusted total Company operating margin in 2019 would have been 12.7% without Cromwell, or a 60 basis point improvement. Further, we took a non-cash impairment charge in the fourth quarter to write off substantially all of the intangible assets, including trade names and customer list. That said, the business made great strides in service, and our customers are now talking about growing with Cromwell moving forward. We also took action in the fourth quarter to take GBP10 million of administration costs out of the business. This team has great clarity and understands the urgency required to improve the performance of the business going forward.

So, while 2019 was certainly challenging, we are proud of the work we completed to position us for success moving forward.

Turning to 2020, we plan to continue investing to support our strategy. Our expectation is that we will consistently outgrow the market, including a target of 300 basis points to 400 basis points of outperformance in our core high-touch business in the US. Historically, we've grown approximately 150 basis points faster than the market. Our actions and investments over the last several years provide confidence that we can grow at a more accelerated rate. In 2020, we are focused on several initiatives to support that growth.

We will continue to work - the work we began in 2019 to re-merchandise our assortment to ensure we have the right products to serve the needs of our customers. For 2020, this includes re-merchandising $1.6 billion of product, including selective SKU additions to enhance our assortment. We expect to continue to learn and improve upon the way we execute our marketing activities. We learned a lot over the last couple of years, including analytics-focused evaluations around our investments in search and display, radio, catalog and direct marketing. We expect improved share gain from both incremental marketing investments and from more effective marketing in 2020. We remain focused on bolstering our expertise in digital and technology solutions in order to serve a more sophisticated and tech-enabled customer base. We recently went live with the first version of our new product information system and have made great improvements with our customer information. Both support our merchandising and marketing efforts.

We will invest to enhance our customer experience and strengthen our world-class customer service backbone through network capacity and utilization investments. With our Louisville DC coming online soon, we are at a point where focused investments in DC capacity will add [Phonetic] significant service benefits without as much capital outlays we've seen in the recent past. We're also planning to selectively add sellers to be more relevant in certain segments and geographies. And we will equip our sales organization with the right tool set to ensure they can serve our customers most effectively. We have developed improved processes with large multi-site customers and continue to be aggressive in helping these customers consolidate with Grainger. We will continue to embed our solutions with our more complex customers through our inventory management offerings.

Finally, we remain committed to the ongoing turnaround efforts in Canada and with our Cromwell business in the UK. In Canada, the business was slightly profitable in 2019. And as Tom will explain, we expect to roughly break even again in 2020. This business is now structured to run as an extension of our core US operations. This will help us make the needed strides to return the business to meaningful profitability over the course of the next couple of years by demonstrating a consistent uptick in revenue and margins. For Cromwell, I mentioned our struggles in 2019. This is a business that is at a crossroads right now. We need to start seeing progress over the next 12 to 18 months to assess whether the business can run profitably. We've made great improvements in service, which are expected to translate into revenue and profitability. Our team will be evaluating this closely in 2020. Successful execution of these initiatives will position us to consistently and profitably outperform the market in 2020 and beyond.

Now, let's talk about our endless assortment business. First and foremost, we are pleased to have announced earlier this morning that Masaya Suzuki, the current CEO of MonotaRO, will now lead the combined endless assortment business across Grainger. I am personally very excited about this. Masaya was part of the founding team at MonotaRO and has been instrumental in the tremendously profitable growth of this business since we first launched 20 years ago. He has also played a critical role in the launch of Zoro in 2011. Under Masaya's leadership, we expect to continue the strong growth and profitability of our endless assortment businesses.

In the US, we plan to accelerate Zoro's adoption of the MonotaRO playbook in order to capture growth and implement best practices. Specifically, we plan to continue to rapidly expand Zoro's assortment beyond the $130 billion industrial MRO market. This will allow us to tap into markets and customers that aren't served through other Grainger channels. Our goal is to have 10 million SKUs in the Zoro portfolio in the next three to five years, utilizing third-party suppliers with direct fulfillment capabilities. This has worked well for MonotaRO, which has 20 million SKUs, and we are confident it will work for Zoro as well. We're also continuing to develop and improve our marketing and customer segmentation tools at Zoro. We made most of these investments in 2019 and expect to start to see the results here in 2020.

For Zoro UK, we will continue to leverage the Cromwell supply chain and execute our strategy to grow the business and drive profitability. These efforts include expanding assortments, enhancing website functionality and launching effective marketing and customer acquisition campaigns to create a vibrant marketplace. The Zoro UK business continues to grow very quickly, and the economics of this business look to be quite attractive. We expect this business to be profitable in 2021.

And for MonotaRO, Masaya and his team will continue to execute their successful growth strategy, including additions to the assortment and network enhancements to improve reliability and speed. This business has produced impressive and profitable growth year in and year out, and we expect that to continue. Our endless assortment business has been a great asset for Grainger and we see the opportunity for tremendous growth moving forward.

With that, I'll turn it over to Tom for detail on our 2019 performance and 2020 guidance.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Thanks D.G. I'll start with a recap of our 2019 total Company adjusted results, then move forward to the fourth quarter results by segment. Overall, we are pleased with our 2019 performance, despite a challenging environment. Sales were up 3% on a constant currency basis, driven by 2.5% from volume and price favorability of 0.5%. FX had a negative 0.5% impact. It should be noted that our core US and endless assortment business combined grew at 5% in the full year.

Consistent with our guide, our gross profit margin was down 50 basis points versus the prior year. The decline was primarily driven by our lower-margin endless assortment business, which is growing at a faster rate than the rest of the Company. Contributing to the decline, both MonotaRO and Zoro had lower gross margin. MonotaRO faced freight headwinds in Japan, and Zoro's lower gross margin was driven by unfavorable product mix and promotional activities. Elsewhere, slightly lower gross profit margins in the US were offset by higher gross margins in Canada, driven by supply chain favorability.

Despite meaningful investments in advertising, technology and Zoro, we drove SG&A leverage, driven by continued cost management actions. SG&A as a percentage of sales improved 60 basis points year-over-year as our SG&A spend remained flat to 2018. As a result, total Company operating margin for the year increased 10 basis points, with a 20 basis point improvement in the US. Incremental margin for the total Company was 17%, aided by 22% US incremental margin.

We generated operating cash flow of over $1 billion, which we used to invest in the business and return capital to shareholders, returning north of $1 billion through dividends and share repurchases. We did this while maintaining a debt to adjusted EBITDA ratio of 1.4 times. Operating cash flow was 116% of net earnings. Our return on invested capital was 29.3%, or 80 basis points favorable to the prior year. All in, considering the choppy market, we are pleased with the results.

Looking at the quarter, daily sales increased 3%, including 3.5% from volume, partially offset by 0.5% unfavorable price. Gross profit margin for the quarter was down 50 basis points due to business unit mix, as well as mix shift headwinds within our large customer group in the US. These impacts were partially offset by favorable supply chain improvements in Canada.

SG&A cost increased 3% but slightly less than sales growth, driven by marketing and technology spend in the US segment and investments to support Zoro's growth. We could have dialed back spend in the quarter to achieve a better short-term profitability outcome, but we are focused on driving sustainable value over the long term, and continued investment in the business supports this effort. Operating margin declined 40 basis points in the quarter as SG&A leverage was more than offset by the decline in gross profit margin versus the prior year. Earnings per share decreased 2% in the quarter due to a higher tax rate, as we lap the prior-year benefit from our clean energy investments.

Looking at our performance in the US, I'll start with sales for our large and midsize customers. The US MRO market, in line with macroeconomic indicators, declined throughout the year. We estimate that the US MRO market was flat to down 1% in the fourth quarter and was up 0.5% to 1% for the full year. In the fourth quarter, our US large customer business grew 3%, or 350 basis points faster than the market. Outperformance to the market for our large customers accelerated sequentially as our growth initiatives began to take hold. Our US midsize customer business grew 5%, or approximately 550 basis points faster than the market. It's important to note that our growth with these two customer groups remained stable despite slower market conditions in the quarter. Overall, US segment daily sales grew 2.5% in the quarter, or about 300 basis points faster than the market. Sales growth in the quarter included 3% from volume, partially offset by unfavorable price of 1%. Inter-Company sales provided a 0.5% positive impact in the quarter.

As noted in our last call, balancing market-based pricing with cost inflation and share gain led to a choppy result - choppy price result throughout the year. Having said that, we finished the full year with favorable price of 0.5%. While gross profit margin was up 50 basis points sequentially, we were down 100 basis points year-over-year, driven by a few factors, including the growth of inter-Company sales and lower margins, the lapping of prior year supplier rebates, and a mix shift within our large customer subgroup. We've gotten more aggressive in helping large multi-site customers consolidate spend with Grainger. This includes pursuing new customers, where we won a few significant contracts in the second half of 2019, as well as deepening and broadening relationships with our current customers. This large customer growth can create a drag on gross margins in the short-to-medium term, while we demonstrate our value proposition and expand share of wallet with these customers. However, this is absolutely the right strategy to drive long-term profitable growth. As we add and expand customer relationships, we are gaining share and more deeply embedding Grainger into what our customers do each and every day.

Given the lumpiness of our pricing actions in 2019, we think looking at gross margin on the full year is more meaningful. In this regard, our full-year margins were down 30 basis points, reflecting the remaining impact of contract re-negotiations and large customer mix headwinds. Ultimately, we remain confident in our ability to pass along inflationary cost increases.

SG&A costs were flat on 2% sales growth, and was favorable 60 basis points to the prior year. Operating margin declined 40 basis points in the quarter as the decline in gross profit margin was only partially offset by strong SG&A leverage. Looking at op margin for the full year, the US segment operating margin was 15.8%, which is in line with the guidance we set in January of last year, and represents an expansion of 20 basis points.

Moving on to other businesses, daily sales increased 9.5%, including 7.5% from volume and 2% from favorable FX. Growth was driven by continued expansion of our endless assortment business, which is up a combined 18% between Zoro and MonotaRO. Gross profit margin declined 10 basis points in the quarter, driven by negative mix resulting from faster growth in endless assortment. Operating margin declined 140 basis points, driven primarily by investments in Zoro and performance at Cromwell. Cromwell generated an operating loss of $35 million for the full year. Further, while not reflected in our adjusted results, we took an impairment charge in the quarter to write off substantially all of the remaining intangible assets in our Cromwell business.

Turning to Slide 16, daily sales decreased 11.5%, including 10% related to volume decline and 1.5% related to unfavorable price. Price was driven by discounts and mix as we began to win back large customer business. As we finished the year, daily sales stabilized and we are beginning to see volume growth from new and existing customers. Gross profit margin increased 595 basis points over the prior year, primarily driven by supply chain efficiencies. While a sizable portion of this benefit is non-recurring, we expect some benefit will continue moving forward. SG&A dollars were 10% lower than prior year, but the rate was unfavorable 50 basis points due to volume. Operating margin increased 545 basis points over the prior year, driven by the increase in gross margin.

Now, let's take a look at 2020 guidance. Consistent with last year, we will provide guidance at the beginning of the year and only plan to make updates if we expect results to fall materially outside the guided range. With that, we expect to deliver another year of solid growth for the Company in 2020, as we execute upon our growth priorities and continue to support our customers. For the total Company, we expect top line growth of 3.5% to 6.5%, driven by outperformance to the market in the US and continued expansion of our endless assortment business.

In the US, we expect the MRO market will remain consistent with where we exited 2019, hovering around flat to slightly negative. Even with this static market, we remain confident that our industry know-how, deep customer relationships and scale, coupled with our growth priorities, position us to continue to capture share. For 2020, we expect to outgrow the broader MRO market by approximately 300 basis points. This is a step toward our stated long-term target to consistently achieve 300 basis points to 400 basis points of outgrowth each and every year. We expect to continue growing our endless assortment business at around 20% in 2020, as the MonotaRO team delivers consistently strong results and as we rapidly add SKUs and leverage our 2019 investments at Zoro.

From a profitability perspective, total Company gross profit margin is expected to be down roughly 110 basis points to 50 basis points in 2020. This is driven by business unit mix with the higher growth of our lower-margin endless assortment business, as well as mixed headwinds within our US large multi-site customer subgroup as we focus on consolidating MRO spend for large corporate customers. As it relates to price, our intention is to remain market competitive, while growing share and offsetting cost inflation. Having said that, price is difficult to predict, given the muted and uncertain economic environment. We will stay nimble. As it relates to tariffs, our guidance assumes a status quo environment. Any changes will be evaluated if and when they occur.

Total Company operating margins are expected to remain consistent at the midpoint, as we anticipate significant SG&A leverage as we grow the top line, while remaining prudent on cost. These top line and profitability targets, as well as continued execution of our share repurchase program, are expected to produce earnings per share of $17.75 to $19.25, or 3% to 11% growth.

From a quarterly timing perspective, we do anticipate that both top and bottom line performance will improve in the back half of the year as our growth priorities take hold and we lap tougher comps at the GP level in the first half. Recall that we increased prices in Q1 2019, which were subsequently dialed back in the second and third quarters. In addition, the full impact of tariff cost increases were not realized until later in 2019.

Continuing with guidance on Slide 20, at a segment level, we expect operating profit margins in each of our business units to remain relatively stable. In the US, operating margin is expected to be between 15.6% to 16% with the midpoint in line with 2019 performance. As discussed, gross profit margins in the US are facing headwinds, primarily related to our pursuit of large customer contracts to help grow share and deepen relationships in this choppy market environment. We expect these GP headwinds will be offset by continued SG&A leverage.

For other businesses, we expect 4% to 6% operating margin. After a year of significant investments in our endless assortment model and lower-than-expected results at Cromwell, we expect our actions in 2019 to produce improved 2020 results. As we have discussed throughout 2019, we expect operating margin at Zoro will trend favorably in 2020 and return to mid-single digit profitability by 2021.

In Canada, we expect to roughly break even again in 2020, as revenue growth builds sequentially in response to our improved service level and profitability begins to reflect our cost base reset. As noted earlier, we will lap some non-recurring supply chain efficiencies in the fourth quarter, which will be a headwind to operating margins in the new year.

From a cash flow perspective, we expect operating cash flow to be between $1.1 billion and $1.2 billion. We plan capital expenditures of about $250 million. The large majority of investment this year will center around our US segment and endless assortment business in order to continue our growth in these areas. We expect the balance of our cash to be used to fund our quarterly dividend and continue executing against our share repurchase authorization. For 2020, we are expecting between $600 million to $700 million of repurchases, which continues to reflect our confidence to successfully execute our strategy and growth priorities.

With that, I will turn it back to D.G. for closing remarks.

D.G. Macpherson - Chairman and Chief Executive Officer

Thanks Tom. As I look forward to 2020 and beyond, I'm excited about the opportunities that we have in front of us, and I want to thank the Grainger team for their hard work and dedication. We are well positioned to continue to gain share in the US, to continue to drive 20% growth profitably in the endless assortment model and to improve the rest of our portfolio. I'm confident in our ability to drive long-term value for all stakeholders, and I'm confident that we're going to continue to extend our lead in the industry.

So with that, I will open it up for questions.

Question & Answers

Operator

[Operator Instructions] Our first question comes from Ryan Merkel with William Blair. Please state your question.

Ryan Merkel - William Blair & Company, LLC - Analyst

Hey, thanks. So first off, I'm a little surprised by the 2020 gross margin guide, down about 80 basis points at the midpoint. I have thought that after the price reset, you were thinking that gross margins would start to stabilize. So I'm trying to figure out for 2020, is the big change the focus on the large account? Or what's really changing?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Well, Ryan, there's really two things happening. One, it's just the algebra [Phonetic] of our endless assortment business unit getting much larger and growing at 20% and the gross profit profile that that business has. So that's a very big portion of it, which is getting bigger, obviously. And then one of our key growth initiatives is going after the large customers. And maybe just to unpack that with a little example, right now, we've been heavily focused on a location-by-location basis. As we've stated, as part of our growth initiatives, we're working more with the C-suite to try to get a broader range of locations in terms of going after a bigger piece of the Company's pie. And with that, initially, you'll have to do some sort of write-down usually to gross margin, as it relates to product mix, as it relates to your offer. But then over time, there's plenty of levers to increase that gross margin, whether it'd be with product substitution, standardization, reducing overall buy. So we're confident over time that we will improve the gross margin with those customers. But for 2020, we're being prudent in putting that in the guide.

Ryan Merkel - William Blair & Company, LLC - Analyst

Okay. It makes sense. I guess for my follow-up, sort of related, I'm thinking about the long-term growth algorithm. And so maybe you can help us - should we be assuming that gross margins are down sort of 50 basis points, 60 basis points structurally because of this mix, but then you offset that with SG&A? So should we think about EBIT growth equaling sales growth? And then, if you do better than mid-single digits, you probably do EBIT growth a little bit better, is that about right?

D.G. Macpherson - Chairman and Chief Executive Officer

So, Ryan, I guess - this is D.G. So, in the US business, let's start there, our assumption is that we gain share 300 basis points to 400 basis points faster than the markets. So if the market grows 2% through recycle, we'd be at 5% to 6%. At that - so what you see this coming year is a projection of market down 0.5%. At that, you see operating margins flat for the US business year-over-year, so 2.5% growth, flat operating margins. At 5% through cycle, we'd expect to get a little more leverage than the slight pressure on GP over time and see some expanding margins in the US. So, I think it's a good - this is a good sort of guide on the economics of the business. At 2%, 2.5%, 3%, you're probably flat on operating margin in the US. If you get more growth, then you're probably positive.

Operator

Thank you. Our next question comes from David Manthey with Baird. Please state your question.

David Manthey - Robert W. Baird - Analyst

Hi, good morning, everyone. First question, when I look at Slide 5, you clearly made many meaningful upgrades here. And I'm trying to figure out, how many of these were defensive versus offensive in nature. And essentially, how will we measure the success of all of these changes over the next three to five years? It looks like maybe a little bit of sales outgrowth. But are there other metrics you'll be tracking to see the success of these initiatives?

D.G. Macpherson - Chairman and Chief Executive Officer

Well, I think, these are - to be clear, these initiatives, on the left-hand side, in the US are mostly rearview mirror initiatives in the sense that centralizing the call centers has gotten us improve service and lower costs, and we expect to continue to get lower cost. So that's one that you'll see in the SG&A line. If I looked at our order-to-cash process and customer feedback in the US right now, it is at an all-time high. It got better this year significantly relative to the competition. So some of these moves have been around continue to improve service, and you see that in supply chain capacity. Verticalizing the sales force, we think you're going to see in terms of part [Phonetic] contributing to that 300 basis points to 400 basis point growth faster than the market. And so it's a mix. A lot of these are - have been done already.

When we go forward, we're going to start talking about some of the initiatives that are on Page 7, re-merchandising the assortment. I mentioned we re-merchandised $1.2 billion this last year. That's far more than we've ever done in a single year. We'll do $1.6 billion this year. We see that directly leading to sales growth, and we measure that very tightly. Marketing - both effectiveness of marketing and increased marketing budget, we measure that very, very tightly. We know how much that contributes to growth. The large customer initiatives that Tom talked about, we know how much that's leading to growth and what impact that has. So we are tracking everything. We wanted to put Page 5 together to say there's been a lot of change in the business and we feel like we're in a good position to really drive the growth initiatives we're talking about.

David Manthey - Robert W. Baird - Analyst

Okay. Yeah, that makes sense. As a follow-up, then - and you partially answered this in your answer to the last question. Over the last couple of years, you've clearly grown SG&A at a rate slower than sales growth or even gross profit dollar growth, and your guidance seems to imply more of the same, in line with your targets. As a distributor, there is obviously inherent inflation in some of the areas of your cost stack. Can you talk about the other major areas of expenses that you're keeping flat or reducing in order to keep SG&A in check so well in this lackluster environment? I'm just looking for the big two or three buckets that you think are really the drivers of that performance.

D.G. Macpherson - Chairman and Chief Executive Officer

Yeah. So if you look at the cost structure, and I'll focus on the US gain, there's - there are some big buckets of cost, where our expectation is that we will get productivity on a consistent basis. So, in our distribution centers, we continue to automate, we continue to get process improvements to drive dollars, cost per line down. In our contact centers, we continue to get productivity. We continue to productivity in sales force through revenue per seller increases. Our expectation is that the cost increases that you talk about will be covered by productivity in those areas, and we basically have developed a process and an expectation and a philosophy that we will continue to drive productivity in each of those areas, mostly through continuous improvement, that basically offset those cost increases.

David Manthey - Robert W. Baird - Analyst

All right. Appreciate it. Thanks D.G.

D.G. Macpherson - Chairman and Chief Executive Officer

Thanks Dave.

Operator

Thank you. Our next question comes from Deane Dray with RBC Capital Markets. Please state your question.

Deane Dray - RBC Capital Markets - Analyst

Thank you. Good morning, everyone.

D.G. Macpherson - Chairman and Chief Executive Officer

Good morning.

Deane Dray - RBC Capital Markets - Analyst

Hey, I just upfront want to say I appreciate your level of clarity and context in describing some of the changes here on gross margin. That's really helpful. And just to clarify, in Tom's answer, when you talk about the mix shift to large customers that you'll sacrifice, over the short and medium term, the gross margin. But once you build share with these customers, longer term, you're better positioned for profitable growth. What's the time frame on this? I know you say longer term, but are we talking multiple years? I don't think you mean it takes that long because if you're moving to standardization - okay, so just share with us more of the timing of this because it does make sense. I just - the short term, long term seems a little vague.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yeah. First of all, you've got to remember that we've got a ton of customers. So this initiative is in various stages of development by individual customers. So it's not like you snap the chalk line and you start everything at one time. So, when we're talking about short-to-medium term, we're certainly talking about - lot of it will happen within 2021 time frame. It's really building the trust, embedding with the different large customers, so we can rich [Phonetic] in mix, so we can have products to substitution, so we can have standardization, those types of things. So, I guess, we would look at this as a transition year from 2020 for this initiative.

D.G. Macpherson - Chairman and Chief Executive Officer

And Deane, I guess I would add that when we look at large customers, we track what we call economic earnings, which is a more sort of holistic view of the profitability of customers. And our goal is to make sure that we drive growth and profitable growth through that metric as opposed to just gross profit. So at times, we will take gross profit hit in the short term if we're improving the cost structure elsewhere to provide the ability to consolidate customers and provide value for those customers.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

I think another thing, important part to note is, these are really large multi-site customers. So this is really hitting home runs versus hitting singles and doubles. So this is a very attractive business to get. And just launching off of D.G.'s comments, we can lever our SG&A at about 2.5% growth, so we can afford to take the time to develop these very important customers.

Deane Dray - RBC Capital Markets - Analyst

Great. And then just on a follow-up, could you put this negative price in context? Because what we're hearing elsewhere in the industrial distributors is that not only are there - some of it is delays in getting supplier price increases through, but there is heightened competition within the distributors. How much of that is at play in the negative price that we're seeing?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

I think the important thing when you talk about price is to look at it on a full-year basis. As we said in our prepared remarks, our pricing was very lumpy. You'll recall from previous calls, we were quite aggressive in Q1 and then we dialed that back in Q2 and Q3. We made a conscious decision not to raise price in the back half of the year as to not be disruptive to our customers. When you look at it on an entire basis of the full year, our price-cost was roughly neutral, and we're happy with that.

Operator

Thank you. Our next question comes from Christopher Glynn with Oppenheimer. Please state your question.

Christopher Glynn - Oppenheimer & Company - Analyst

Thanks, good morning. And just kind of following up on Deane's question, is there any defensive component to how are pricing with the large customers? Or is that really all emanating from your tactical execution by customer just for share independent of market dynamics?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

I guess, there's always some tactical, but I would say the majority is the latter. Some of it's product mix within a given customer. Some of it's customer-specific mix.

D.G. Macpherson - Chairman and Chief Executive Officer

I guess, Chris, I think maybe your question underneath the question is, has the competitive environment heightened with large customers. I think it's always been competitive, and we will always be in a situation where we have to be effective in navigating that competitive environment. It doesn't feel like it's changed dramatically, but certainly it's competitive.

Christopher Glynn - Oppenheimer & Company - Analyst

Okay. And then also, I think you talked about how it kind of phases in by customer. Did you suggest that this would be a 2021 process, and then you might open up some gross margin headroom after 2021?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

It's difficult enough to predict 2020, to try to predict 2021. Ideally, 2021, we would get back to a more - a lesser decline in gross margin on a year-over-year basis.

D.G. Macpherson - Chairman and Chief Executive Officer

I would say, Chris, that we have a lot of confidence in the value proposition that we have. Our service is exceptional. Our customers want to do business with us. Over time, we think that we should be in a position to get price as much as anybody and to be able to continue to have very strong operating margins with our customers. So we are confident in what we are doing. In the short term, with trade and with the environment, it's been a little bit lumpy, clearly. But we're pretty confident in the long term ability to improve our margin.

Christopher Glynn - Oppenheimer & Company - Analyst

Yeah. I appreciate the offense component of it. Thank you.

Operator

Our next question comes from Patrick Baumann with J.P. Morgan. Please state your question.

Patrick Baumann - J.P. Morgan - Analyst

Well, thanks. Good morning, D.G. Good morning, Tom. Maybe just start off on the midsize versus large customers. Just wondering, into next year - I guess this year, in 2020, if you'd expect midsize customers to still outpace large? Or does that flip with some of the share gain initiatives you've been talking about for large? And then, somewhat related to that, you described US outgrowth in the quarter as 300 basis points. And then you said large was 350 basis points and midsize was 550 basis points. So I'm just wondering what dragged down the total segment.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Sure. Taking the first part of the question first, yes, definitely, we would expect medium customers to grow faster than large. I guess the way we look at it is, large at about 300 bps faster than the market, midsize about 500 bps faster than the market on the low end. As it relates to the chart that shows large and midsize, there is a service revenue component that is included in the those charts for large and medium, not to get too technical on you, but that is a very important part of our business. That is really embedding with the customer. On the US segment, that is reflected on a net basis, meaning we adjust cost out. So that's the difference between the two numbers, where you're always going to have large and medium be higher than the US segment.

Patrick Baumann - J.P. Morgan - Analyst

Okay. I'd like to follow up on that. After - just one more for me. Just if you could talk about the path forward at Cromwell and what's embedded in your other businesses guidance there in terms of losses for 2020, and then on the same topic, for other businesses, the magnitude of Zoro investments made in 2019 and whether you still expect most of that spending to fall off in 2020?

D.G. Macpherson - Chairman and Chief Executive Officer

Yeah, so let me focus on Zoro and Cromwell, which I think - other than Zoro and Cromwell, we expect continued improvement in the businesses and we see a nice path. Cromwell, we would expect this year to cut the losses roughly in half for this year. That's our expectation. And I would say, there's a couple of things going at Cromwell. One is, certainly, the market has not been great and a portion of it has been related to that. A lot of it has been some service issues we had that we have completely worked through. We are hearing much better things from the marketplace. Our net promoter score has gone from not very good to quite good actually, and the team is pretty excited about what we're doing. We have a new team over there. We're comfortable with the actions that they're taking. Cromwell is interesting. If you remember why we bought Cromwell, it was as a platform for the online business and because we thought it was a good business. Zoro UK is actually doing quite well, and we would expect it to be profitable in 2021. So, really by the end of the year, we should have a view as to whether or not both of those businesses can be successful and profitable. And that's when we'll really sort of evaluate what we think we need to do. As I mentioned in the prepared remarks, we have taken a bunch of cost out of that business. We have seen great service improvement. We have won a few contracts with customers recently that gives us some confidence that things are coming back. But it's still a steep climb to get better.

The investments in Zoro most - a lot of those investments start to come off this year. We made significant investments in the fourth quarter, some systems investments that had a few glitches, but we are through them. We expect improvement this year and then significant improvement again in 2021 with that business. And as I mentioned, we're excited to have Masaya Suzuki lead that business. He has been through this at the same point with MonotaRO, and really feel like he is going to help that business accelerate performance going forward.

Patrick Baumann - J.P. Morgan - Analyst

Thanks a lot.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

There is no reason we can't see the margin profile longer term for Zoro will be consistent with MonotaRO.

Operator

Thank you. Our next question comes from Adam Uhlman with Cleveland Research Company. Please state your question.

Adam Uhlman - Cleveland Research Company - Analyst

Hey guys, good morning. Hey Tom, I guess, could you expand a little bit more about your comments earlier about the cadence of earnings for the year? I'm just wondering, the fourth quarter costs for Zoro were higher than expected. Does that carry into the first quarter here as things were ironed out? And then, are there other moving pieces we should keep in mind like the customer show, other investment spending for Louisville? I'm just trying to get a sense of should we be bracing for larger earnings declines in the first quarter and into the second and then recover in the second half of the year?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Well, if you're talking specifically about SG&A, I'll go back to D.G.'s answer on Zoro. 2019 was an investment year for Zoro where we spent heavily in SG&A related to adding people, technology and advertising. That will be reduced significantly beginning in Q1. So that will be a material impact. The way I would think about SG&A is the way we've talked about it. We plan on growing SG&A at half the rate of sales. We'll continue with the productivity that D.G. talked about in a previous answer. As it relates to gross profit, we see no difference than our normal seasonality. We expect Q1 to be greater gross margin than Q4 of this year, and then we expect it to decline throughout the year with Q4 being a relative uptick to Q3. Does that get at your question?

Adam Uhlman - Cleveland Research Company - Analyst

Yeah, that helps. And then secondly, could you expand a little bit more about what you guys are seeing in the near term from a customer spending and general environment perspective? It looked like most of the end markets - or the sales growth by end market was relatively similar to last quarter. I guess, did anything stand out to you as notable? And then, as we think about the investments that are being made into the sales force and the verticalization efforts from this past year, are there any vertical markets that we should look to see accelerating growth next year as evidence of a paying-off on those investments?

D.G. Macpherson - Chairman and Chief Executive Officer

Yeah, Adam. So what I would say is that we are privileged to see a very wide swath of the economy with our customers. We have not seen much change over the last eight months, really, I would say. We continue to see a market that is slow growth but not trailing off and anything worse at this point. And the customer end market results that we've seen in the last two quarters, our expectation is that they won't be dissimilar to start the year and that they're likely to get a little better as the year goes along. That would be our expectation at this point; not much better, a little bit better as the year goes along. So I don't - we don't see anything all that unusual in our end markets right now, we haven't over the last couple of quarters.

Adam Uhlman - Cleveland Research Company - Analyst

Okay. Thanks.

Operator

Our next question comes from Chris Dankert with Longbow Research. Please state your question.

Chris Dankert - Longbow Research - Analyst

One question from me. Thanks so much for the update on large customer approach, kind of swinging for the fences on volume there. I guess, if you could give [Phonetic] a brief update on kind of the medium customer strategy? There is still some concern about this being more price-competitive piece of the business. Just how are you balancing digital versus high-touch and what does the go-to-market look like in medium customer in 2020 here?

D.G. Macpherson - Chairman and Chief Executive Officer

Yeah, so midsize customers are actually less price-sensitive, and we continue to see much higher margins with midsize customers. We're trying to build the growth so that can become a more meaningful portion of portfolio. We continue to see the ability under the Grainger brand to acquire new customers. We continue to see growth with our existing customers through our inside sales team and through fairly simple pricing actions. Our service model really sings to midsize customers. We continue to get very loyal customers in through the funnel. We're digital-first in the sense that most of our midsize customer acquisition comes through a digital first touch. And then we do a lot of work to understand who the customer is, what the profile is, and move them through the cycle in some cases to get them to comforts that makes sense for them. That has proven to be fairly successful. And we - as Tom said, we expect to continue to grow faster with midsize customers at higher gross profit than we will with large.

Chris Dankert - Longbow Research - Analyst

Got it. I guess just one sort of follow up on that, the 400 basis points to 500 basis points of above-market in medium customer, anything that helps us get our arms around what informs that or why that's kind of sustainable longer term?

D.G. Macpherson - Chairman and Chief Executive Officer

Well, I think the most obvious is, we lost a lot of that business. If you remember, we were kind of $1.6 billion in that business, went down to 800 something million something, and now we're up over $1 billion again. There is a lot of customers that we continue to re-engage. And a lot of our marketing efforts are proving to be very successful with these customers. And once we get customers back and they realize that we are not - that we're reasonably priced, very high service solution, they are coming back and working with Grainger again.

Chris Dankert - Longbow Research - Analyst

Yeah. Thanks so much for the color, guys.

D.G. Macpherson - Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from John Inch with Gordon Haskett. Please state your question.

Karen Lau - Gordon Haskett - Analyst

Hi, good morning. This is Karen Lau dialing in for John. Thanks for taking the question. So D.G., I think in the past two [Phonetic] years, you had mentioned that given - after the price reset, pricing pressure from large accounts has kind of diminished because your prices are more competitive. It sounded like that is maybe changing a little bit into 2020. Obviously, there is the defense versus often components. But the whole thing is now a little reminiscent of what happened before you did the pricing reset. So, my question is, can you compare the customers' behavior today versus and how they were three years ago and then compare your ability to respond to that versus three years ago before the pricing reset?

D.G. Macpherson - Chairman and Chief Executive Officer

Yeah, so I don't think the situation is at all analogous. Back then, we were losing share dramatically with higher margin customers. We are not doing that now. Large customer business, even back then, was very competitive. Most of it was on custom pricing contracts. That is still the same today. The large customer pricing - the advantage we got through the price change was that some of the tail spend was easier to get large customers to sign up for because if they weren't buying this frequently, then our prices then made sense. That is still the case. We have simpler pricing discussions with our customers now. They are still competitive. They were competitive back then. They are still competitive now.

Karen Lau - Gordon Haskett - Analyst

Okay. Maybe looking at it at sort of a different angle, so midsize obviously has been a focus in the past two years and has been very successful for you guys. I guess, the shift to large accounts and, I guess, de facto [Phonetic], that's kind of de-emphasizing midsize account a little bit. Is it just a function of you have been very successful and done what you could do with those accounts, so it's hard to do more to further accelerate the outgrowth in that market? How are you thinking about that?

D.G. Macpherson - Chairman and Chief Executive Officer

I would say, we are not de-emphasizing midsize customers at all. We still think they will grow faster than large. We are making sure that we are competitive with our large customers. And that's important, obviously, given the size of that customer group for us. That is a bigger lever on growth at this point. And so we need to make sure that we are growing with both, but we are not emphasizing anything. We still think there's a long runway ahead for midsize customer.

Operator

Thank you. Our next question comes from Robert Barry with Buckingham Research. Please state your question.

Robert Barry - Buckingham Research Group - Analyst

Hey, everyone. Good morning.

D.G. Macpherson - Chairman and Chief Executive Officer

Good morning, Robert.

Robert Barry - Buckingham Research Group - Analyst

Good morning. Good afternoon here from the East Coast. Yeah, just a few follow-ups, actually. It looks like price is assumed neutral in the guide. Is that right?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yeah, basically, we're looking at price-cost to be relatively neutral. As we said in the prepared remarks, we've got the three variables that we're trying to balance: share growth, market competitiveness in terms of pricing, as well as passing on inflationary cost. Similar to this year, we're going to balance those three, and we think we will end up somewhere flattish from a price-cost perspective.

Robert Barry - Buckingham Research Group - Analyst

Got it. And I think when you first did the price reset, the goal was to narrow what had become a very large premium to market but to still maintained some modest premium to go-to-market as the premium provider and to price that way. Is that still true? Or it almost sounds like, kind of alluding to the earlier question, that maybe you are getting a little more aggressive, more happy to err actually on the side of under versus over pricing the market.

D.G. Macpherson - Chairman and Chief Executive Officer

We still have a premium with our list prices. We will continue to do that. It's a modest premium, and we'll continue to have that. And then, I think the comment earlier was when you're going after large contracts, on a portion of the volume, you can get pretty aggressive, and we've always done that and we just have to continue to do that.

Robert Barry - Buckingham Research Group - Analyst

Got it.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

I think you're making too much about price as it relates to large customers versus just a normal business dynamic where you're going from individual locations to a much bigger piece of the total Company. That's just - there's going to be part of - as D.G. says that you're going to have a certain part of the offer that's going to be priced aggressively to get your foot in the door.

Robert Barry - Buckingham Research Group - Analyst

Got it. And just lastly, Tom, on the gross margin cadence through the year, I understand, in absolute terms, higher in 1Q and then down through the year. But had you alluded earlier to the year-over-year decline in gross margin being larger in 1Q and then moderating as the year progressed? Or did I miss to hear that?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yeah. No, you heard it correctly. The front half of the year is definitely going to be a larger year-over-year decline than the back half. And that just is a lapping consideration where, again, we were heavy on price at the beginning of the year in 2019. The cost didn't kick in until the back half of the year. So, yeah, that's the correct way to model.

Operator

Thank you. Our next question comes from Hamzah Mazari with Jefferies. Please state your question.

Mario Cortellacci - Jefferies - Analyst

Hi, this is, Mario Cortellacci filling in for Hamzah. I know you guys already touched on the Zoro business and the roll-off of the investments. And just curious, I guess, as margins build in that business, do you think that you'll break out Zoro and MonotaRO as a separate segment? Some could argue that your multiple doesn't really represent that business at all, given where other online marketplace assets trade at.

D.G. Macpherson - Chairman and Chief Executive Officer

What I would say is that with Masaya now running this, we think we have a couple of years of real hard work to make sure that we are performing on a path like the MonotaRO business has been in the US and in the UK. That's our entire attention on. We are fully aware of the question. But right now, we're really focused on making sure we get the business to be as successful as possible.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

And as it relates to reportable segments, obviously, will follow all SEC regulations in terms of doing that.

Mario Cortellacci - Jefferies - Analyst

Got you. Okay. And then just one quick follow-up, I think your working capital has been a cash flow drag in 2018 and 2019. I just want to know what your assumptions were for 2020 and maybe just a little color on the reason for the headwind. Is it mostly the endless assortment portion?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

No. You rightly point out that it has been a little bit of a drag in '18 and '19. I would be disappointed if it didn't become more of a tailwind in 2020.

Mario Cortellacci - Jefferies - Analyst

Great. Thank you so much.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Thank you.

Operator

Our next question comes from Michael McGinn with Wells Fargo. Please state your question.

Michael McGinn - Wells Fargo Securities - Analyst

Thanks. If I could lean in on the Zoro and MonotaRO discussion, as your model continues to shift more towards a reseller base, what does the business look like today in terms of sourcing? And along those lines, what kind of ballpark service fee are you targeting relative to similar BDC e-commerce peers? Is it something similar like Alibaba in Europe, around mid-single digits, or higher something like Amazon is charging?

D.G. Macpherson - Chairman and Chief Executive Officer

Sorry, could you - I'm not sure I fully understand the question. So let me just tell you what we're doing and maybe that will help you - help me answer it. We are not creating a marketplace a la Alibaba or a la Amazon. We actually will have supplier relationships that we have - some of them direct ship to customers for Zoro. That's what we've done with MonotaRO. And so the GPs tend to be slightly less there, but not dramatically less when you do that because we don't have big package ship. But it's not like - it's a fee, that's all we're getting. So I think it's a different model than you're describing.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

And it's definitely a win-win for the suppliers that are drop shipping and certainly for us.

Michael McGinn - Wells Fargo Securities - Analyst

Okay. Asked a different way, is MonotaRO currently getting a service fee from Zoro? And does that go up over time as the business expands?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Okay. That's a different question. Yes, there is a variable service fee that Zoro does pay to MonotaRO, and it's based on their profitability.

Michael McGinn - Wells Fargo Securities - Analyst

Sorry. It's based on Zoro's profitability?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yes.

Michael McGinn - Wells Fargo Securities - Analyst

Okay. And what is that currently and what do you expect that to trend to as you build to 10 million SKUs?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yeah. I'm not going to go into those types of details.

D.G. Macpherson - Chairman and Chief Executive Officer

It will get bigger. As they're successful, it will get bigger because it's based on profitability.

Michael McGinn - Wells Fargo Securities - Analyst

All right.

D.G. Macpherson - Chairman and Chief Executive Officer

It's a very small portion.

Operator

Thank you. Our next question comes from Justin Bergner with Gabelli & Company. Please state your question.

Justin Bergner - Gabelli & Company - Analyst

Good morning, D.G. Good morning, Tom.

D.G. Macpherson - Chairman and Chief Executive Officer

Good morning.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Good morning.

Justin Bergner - Gabelli & Company - Analyst

Two quick ones here. Most have been answered. With respect to the Canadian gross margin improvement, is that sustainable? Or was there anything sort of onetime that benefited the fourth quarter?

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Yeah. As we said in our prepared remarks, some of that was [Indecipherable] related to supply chain efficiencies. I guess, if I were to score it roughly, I'd say half of it will continue, half of it will fall off.

Justin Bergner - Gabelli & Company - Analyst

Okay. That's helpful. And then the retail customer segment improved dramatically in the quarter, I guess, to mid-teens growth. Just curious if that's sort of idiosyncratic? Or if there's initiatives there, some underlying backdrop that's favorable?

D.G. Macpherson - Chairman and Chief Executive Officer

Just to be clear, retail for us typically does not mean retail stores. It means warehouses attached to retail. And as you would guess, that has continued to be a growing business in the US, as more stuff shows up at your door. So that's what's driving that growth. That is a growing segment.

Justin Bergner - Gabelli & Company - Analyst

Okay. Thanks so much.

D.G. Macpherson - Chairman and Chief Executive Officer

Thank you.

Thomas B. Okray - Senior Vice President and Chief Financial Officer

Thank you.

D.G. Macpherson - Chairman and Chief Executive Officer

All right, thanks. I appreciate everybody being on the call. I would just reiterate, we are really confident in our path. We feel good about share gain and profitability in the US. We feel really good about the online model, excited to have Masaya lead that and drive strong growth and profitability there. And we will get Canada and Cromwell right. But generally, I would say, we're very excited about where we're going. And I appreciate you listening to the call today. Thanks.

Operator

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