Greetings and welcome to the Fastenal 2020 First Quarter Earnings Results Conference Call. At this all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It’s now my pleasure to introduce your host Ellen Stolts. Please go ahead.

Welcome to the Fastenal Company 2019 first quarter earnings conference call. This call will be hosted by Dan Florness, our President and Chief Executive Officer; and Holden Lewis, our Chief Financial Officer. The call will last for up to one hour, and we'll start with a general overview of our quarterly results and operations, with the remainder of the time being open for questions and answers. Today's conference call is a proprietary Fastenal presentation and is being recorded by Fastenal. No recording, reproduction, transmission or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast on the Internet via the Fastenal Investor Relations home page, investor.fastenal.com. A replay of the webcast will be available on the website until June 1, 2020, at midnight Central Time. As a reminder, today's conference call may include statements regarding the company's future plans and prospects. These statements are based on our current expectations, and we undertake no duty to update them. It is important to note that the company's actual results may differ materially from those anticipated. Factors that could cause actual results to differ from anticipated results are contained in the company's latest earnings release and periodic filings with the Securities and Exchange Commission, and we encourage you to review those factors carefully. I would now like to turn the call over to Mr. Dan Florness.

Good morning everybody, and thank you for joining our call today. I thought I'd start by giving a quick recap of the quarter as it rolls out from a chronology perspective and what we learned and actions we took at different points. Back in January – so we operate in 25 countries. We have both a sales organization and a sourcing organization that is based in China, and we have regular conversations with that group, and it was back in January that we learned firsthand from our teams in China, from our leaders in China about COVID-19. At that point in time, we started to lock down and monitor specific SKUs as we had a goal in mind, and that was to maintain a great and reliable supply chain for our customers, particularly our repeat customers where we had a good understanding of their normal usage and had some predictability of what to expect. It was also at that time that we shared with several of our Board members about the potential of a transaction with a company called Apex, who's been our partner in the vending realm for about the last dozen years. On February 6, we sounded the alarm – of the alarm internally. And what I mean by that is, in connection with our sales release, we put a message out to all of our employees throughout the organization of what we were learning from our team in China about COVID-19 about the fact that Chinese New Year was being extended a second week and some of the lessons they were starting to learn in the world that was changing in their eyes, so we could start to prepare our teams as well as marshal our sourcing and supply chain resources to stabilize supply, to better understand…

Great. Thank you, Dan. I'll begin with the business cadence slide on Slide 5. Total sales were up 4.4% and daily sales were up 2.8% in the first quarter of 2020. Daily sales in the first two months of the quarter were up 4.1% with January and February both exceeding seasonal norms and the PMI averaging 50.5. Growth was helped by easier weather and holiday comps with overall business activity was still sluggish, but there were encouraging signs of things stabilizing. March began similarly, but the final eight business days of the month began to reflect COVID-19 related issues. A number of parts of our business highlight that impact. One is the fastener sales, which tend to be more cyclical. After being up 1.4% in January and February fastener daily sales were down 10% in March more telling our non-OEM, non-construction fasteners which represent roughly 30% of the category was down nearly 20%. This group includes fasteners for amusement parks, schools, retail operations, and our cash sales and was heavily impacted by shelter in place and social distancing requirements as well as our decision to restrict public access to our branches. Another area is Onsites, where more than 120 units in North America or around 10% to 11% of our total were closed as a result of customer facility closures. This likely resulted in more than $2.5 million in lost sales in March and there clearly would have been additional lost sales from key account business in our traditional branches. On the other hand, the unique nature of this crisis has produced opportunities. Safety, our second largest product category was up 31% in March as our global sourcing capabilities lined up with the needs of the market. From a customer standpoint, our government business was up 31% in March with…

[Operator Instructions] Our first question today is coming from David Manthey from Baird. Your line is now live.

Hey guys, good morning.

Good morning.

So you noted that there's no official reduction in force mandate, but my question is related to FTE headcount. Back in 2008 your FTEs were about 12,000 and you dropped that by about 15% or 1,800 FTEs with nearly a 1,000 FTEs coming out in the first quarter of 2008 alone. You've got about 19,000 today, I'm just trying to gauge is 15% via attrition and reduction of part time hours? If needed, is that something that would be in the ballpark, 3,000 FTEs? And if so, I'm just trying to get a gauge on how quickly you could move on that. Is half of the ultimate reduction or maybe 1,500 FTEs reasonable as you flex down hire -- flex down your part time hours and freeze hiring.

So I'll answer that in pieces. First off, the 2008, 2009 timeframe, if you recall, our business from October to January dropped about 18%, and then we dropped another 15% between January and April. I remember those numbers quite well, I didn't have to look those up and the economy froze up. We took steps to mechanically alter some of our bonus programs to conserve cash, but with one goal being we wanted to maintain as much employment as we could to maintain our talent pool and that's true also today. We took deeper steps because the prospect of this being longer in duration was greater. At this point Dave we just don't know. The message that I've given our team is, is with shelter in place orders, you see a bunch of customers, a bunch of businesses that are shut down, Holden touched on that in some of his information. You also see examples where our business is operating, and I believe the bias right now towards pieces of the economy turning back on is stronger today than it would've been a couple of weeks ago. And I've said to our team, we actually prepared for elements of the economy turning back on as we get into May. I don't know if that's going to happen, Dave, but elements of our economy turning back on, so I wouldn't see the drop-off being as acute as you saw back in 2009. We do have a hiring freeze in place. We have pulled back part time hours. We are letting attrition happen. I don't know what attrition will look like in this environment versus 2008, 2009, and Holden maybe you can chime in if you have any insight.

I mean, the only thing I might add to that, Dave, is we have to remember relative to 2009 too there are opportunities in this market. We touched on the opportunities to be more involved with safety and PPE and janitorial and sanitation products. I mean, demand for those is very strong. That was not the case in 2009. So, there opportunities for us, the market has not quite as turned off as I recall, 2009 being. Having spoken to a few of the EVPs about what they expect from a headcount standpoint, their expectation is that full time headcount will decline as the field manages their P&Ls. But I would tell you that they aren’t looking for declines at this stage in the order of magnitude that you were sort of alluding to. So, I think that you'll see in all of our regions some decline of full-time headcount. You'll certainly see a decline of part-time headcount and hours will go down. But right now with the opportunities that are present and with the uncertainties that are out there, it's not on an order of magnitude that you're referring to.

Okay, fair enough. And just a point of clarification. Is there anything different about the business today that if you needed to or if this was longer than expected that a 10% or 15% flex down just via the tools that we mentioned in FTEs specifically would be possible or is it different this time?

I don't believe it's different Dave. Our headcount per branch, so if you go back to the 2008, 2009 timeframe, our average branch was doing somewhere in the $80,000 to $90,000 a month category. And now we're in that, I don't know what we did last month, probably in the $130,000, $140,000 category. So there's more employees per branch, which gives you some flexibility there. In distribution, the picking activity drives it. Our relative labor to pick is a little bit different than it was a decade ago, because there's more automation in our system. But I don't believe our business is different now that we couldn't flex it.

Great. All right. Thanks very much guys.

Thanks.

Thanks. The next question is coming from Josh Pokrzywinski from Morgan Stanley. Your line is now live.

Hey, good morning guys.

Good morning.

Holden by the way of a [Audio Dip] I think yours is the last hand I shook back in early March when we were in London or the last time anybody got out.

I appreciate you not making me sick.

Just couple of questions. I don't think I would have been to blame at that point. You were on another continent. I guess a couple of questions. First to appreciate and I know that the – last quarter you kind of broke the -- broke your track of talking about current quarter in it [Audio Dip] running down this far in April, would you mind kind of sharing where we're at this point?

Hey Josh. Josh, I'm not sure if we'll be able to answer your question because right now we're getting about every other word. I think you asked – I think in my, my prepared remarks, I referred to a sort of our monthly or April-to-date not being down on the order of magnitude of 15% plus. I think you're asking to give some color as to what that order of magnitude is. Is that right?

Correct.

We're probably running between 10% and 15% down right now. Now, the one thing to bear in mind is, the timing of months matters, right? I mean, given how much of our business is National Accounts and Onsites and vending and things like that, that does tend to create a little bit more movement towards the latter part of a month than the earlier part of the month. So there's still a lot that we don't know Josh, but based on where we are today in April, to this point we've been down probably between 10% and 15% as opposed to 15% plus.

I appreciate that.

I'll add one element to that. And that is despite the fact that we weren't able to celebrate it in a way that was maybe normal for most of us, or at least for me. Last weekend was Easter weekend, which meant last Friday was Good Friday. So that does impact our business every year, the placement of Good Friday. But as of Saturday morning, when I looked at the numbers, we were down about 10.5%. That was, again, probably a little bit worse because of Good Friday, but that was looking at where we were month-to-date.

Got it. That's really helpful color Dan. Then just one extra one, obviously, an impact from customer shutdowns, you called that out in Onsite, but if you had to think about the totality of customers, even just anecdotally from the regions, any sense for how much of the drag is just customers literally not having their doors open?

I think the fact that, over 10% of our Onsites were closed at the end of March and is probably a good, a pretty good proxy from the standpoint of what we're seeing in the marketplace. And the only thing that could influence that would be our Onsites tend to be more manufacturing. Although there are Onsites that are construction there are Onsites that are education and the likes but I think that, that's probably a pretty good indicator and the fact that the first week of the month or the first week and a half of the month being down a little over 10% probably plays out intuitively that way, where we're seeing greater drop is in some of the industries that Holden touched on. Smaller pieces of our business, but they're down more. And then obviously the flip side of that is government and healthcare and first responders while a small piece of our business is up dramatically.

And I might add a little color to that only in the sense that, nine days before the month ended, we kind of expected our growth to be more in the 2.5% range. And so over eight days to go from 2.5% to flat would imply that we’re probably over the course of eight days lost $10 million to $11 million in revenues that we might have otherwise expected to have gotten several days previous. And that includes with the surge in safety and government things like that, which gives you a sense of sort of the manufacturing side of things, the construction side of things and the kind of a very short order of magnitude impact that we're having in those core markets.

Got it. That's great color. Stay safe and sane guys. Appreciate it.

Thank you.

Thanks. Our next question today is coming from Chris Dankert from Longbow Research. Your line is now live.

Hey, morning guys. Let me state the question. I guess first off, could we kind of dig in on Apex a little bit, very exciting news, but I guess is this more about, locking in a strategic technology and capability and kind of keeping it out of competitor hands? Or is this more about vertically integrating or is it – where are the real opportunities in bringing Apex just kind of into the fold here?

So first off we did have from a strategic standpoint, a good lack of the technology previously because our, when we expanded our relationship back in 2010 with this technology platform we did line up in exclusivity for the industrial MRO marketplace. So we did have a great spot there, which probably drove some of our competitors crazy over the last decade. But what it really did is, over time the technology platform became a deeper and deeper part of our business. And so today that vending platform represents roughly 20% of our revenue goes through that vending platform. And then we have another 10% of our revenue that goes to what we call our bin stock platform. So about 30% of our business goes through some type of distribution mechanism that goes right into the customer's facility and is a repetitive order cycle. And we see that piece over time expanding dramatically as we become more supply chain linked with our customer and would as a percentage of our business, I wouldn't be surprised to see that 30%, we have today more than double when we doubled in size and double as a percentage of our business. And so from that standpoint, the Apex transaction was very much about bringing the technology closer to us so that the technology development of the platform is more aligned with where we want to take it. Because our partner, great partner for the last 12 years they are as much interested about expanding outside of industrial distribution as they are within industrial distribution. And sometimes that means what's prioritized from a technology development doesn't always harmonize with what we're thinking. And so it provided us the ability to do that. It also provided us the ability to blur the lines a little bit between what is vending, what is bin stock, what is automated replenishment because it gave us more flexibility in what can go through the supply chain. It also gives us more flexibility in how we deploy assets. And so very much see it as making the technology part of our umbrella and having access to the supply chain ultimately will lower the cost for us over time of the platform.

Got it. That's really helpful. And optimizations sounds kind of like the way forward there. And I guess just a follow up from me here. Safety has been a really nice offset to the slower OEM demand in 1Q. But I guess my assumption is a lot of those products are now kind of on allocation safety, 20% of sales I guess is that, how much of that being on allocation is an impediment to sales growth as we move into kind of 2Q here. Any comments on product availability would be really helpful.

We're not alone in that neighborhood and you see it every night on the news. Demand has surged, grown by multiples in a matter of weeks, days and weeks. And as I mentioned earlier in my comments, we put a bunch of effort in place back in February and March to expand our own supply chain, to broaden our access. We do have, which is unique for Fastenal somewhat of a backlog and they're not all going through safety, through the vending platform. A lot of it we're delivering pallets of product to customers because we are a source they can rely on. We're also a source that they know the quality of what they're getting, as given our history in fasteners one of our Achilles deal with vetting new suppliers is we are incredibly picky when it comes to who we’ll do business with, not only from the standpoint of how they operate their business but their supply chain and the quality of their own product because we peer beyond them when we're understanding the vetting process and the quality of the product, it's not just testing the output, it's testing their supply chain too. And so the 20% is vending, our safety is just slightly below that, historically it's around 17%, historically. Obviously that's grown as a percentage here in the current environment. I suspect that will continue to hold at a higher clip as we go into second and third quarter because I personally believe there will be changes in our customers and in the marketplace on things like safety products and last weekend, I am picking up some groceries and everybody in that facility, well 80% of the people in that facility and I don't mean people working there, I mean people shopping were wearing masks and I think that's going to be a greater part of our world included in manufacturing settings.

I would probably add a couple of things as well. The timing of how COVID-19 has sort of rolled through the map if you will has been beneficial in the sense that as our U.S. suppliers perhaps had their production diverted to very specific needs and start putting on allocations, the Chinese suppliers were beginning to open up. And I think this is really the value in having 200 some odd professionals on the ground, over in Asia, communicating with product professionals, domestically and that they really are able to go out and find alternative uses or alternative sources of product and make sure that that product is of a sufficient quality and is going to deliver or achieve the needs of the customer. And so I think that we've done a really good job being able to find alternative sources of product as we've gone on. And I think we're built to be able to do that. So I think that the timing of things has certainly been advantageous as well. And again, I think these are the folks in product and international procurement all that deserve a lot of credit for continuing to keep our supply chain of PPE product pretty filled. And as Dan indicated, right now we still have product that we're going to be working through delivering throughout most of April at this point.

Got it. Thanks so much the color guys. Stay safe and best of luck out there.

Thanks.

Thanks Chris.

And our next question is coming from Ryan Merkel from William Blair. Your line is now live.

Hey, thanks. Good morning. So I wanted to dig in. I want to dig in on April a little bit more. I'm surprised that it's only down 10% to 15% so far. So, it sounds like the safety is buffering and that's going to continue. But what about the OEM fastener business? And what about the non-res business. I just would've thought with factories shut down and job sites potentially closed, that there might be bigger impacts there. What sort of growth declines are you seeing right now in that part of business.

Yes, I'm not sure that I have a great answer for you from a granular standpoint. We just don't necessarily collect that level on a day-to-day basis. But I think what you're describing has been playing out. I think that you're seeing weakness in the manufacturing side. I had one of our – our leaders in the construction side shared with me yesterday, sort of an e-mail from some of our suppliers about what they're seeing in the marketplace in terms of construction. There's just a lot of states, cities that have shut off construction in many respects. And so Ryan, the environment that you're describing absolutely exists and it's being mitigated to some extent by the need for the PPE products and our government and things of that nature. So, I'm not sure in April exactly what the OEM versus the MRO versus the non or versus the construction fasteners are doing. We don't have that on a day-to-day basis, but I think that the environment you're describing is the environment that exists today. It's just unlike 2009 there are some areas where there's a great need and we're built to be able to define the product to meet that need. And I think that's what you're seeing as an offsetting factor.

Okay, fair enough. Makes sense and then switching to gross margin, I guess a two part question, how much lower are the safety margins to government customers versus the company average? And then hold, and I know you don't want to be in the gross margin guidance game, but any help on the magnitude of gross margin declines in the second quarter would be helpful or maybe just quantify or coming at it a different way. Maybe just quantify the expected mix headwind relative to the typical 30 basis points to 40 basis points in normal times.

I would normally tell you that I don't want to be in the gross margin prediction game. I'll tell you, I can't be in the margin or gross margin prediction game right now. It just, it's really going to depend and I don't know what the second half of April is going to look like versus the first half in terms of where the demand comes from. Right? We've had conversations internally about this is a situation where the world doesn't have enough PPE. Right? But it's also one of those situations where you can see getting to a point at some point where frankly there's too much of it. I don't know if that's April, if that's May, if that's fourth quarter. It's just, it's really hard to answer Ryan. So I don't think I'm going to go down that path. The only perspective I think I can give you is if I look at mix through the course of Q1, in January mix was probably about a 65 basis point drag to the business. And if I look at March, it was closer to 90 basis point drag to the business. And it wasn't necessarily because the customer mix had changed so much. It was because the product mix had changed as dramatically as it had. And what does that mean going into Q2, I honestly don't know where that's going to settle out. I think it's an impossible question at this stage for us to answer, but you could clearly see in a very short window what was impacting mix and we're going to see how that plays out over April and second quarter, just like you are. But I wish I could give you more detail, but we just don't have a lot of ways to understand that right now.

I'll add just one tidbit to that. First off one thing that we is early on in the process, we put in some pretty strict pricing guidelines for our field from the standpoint of there's times where you look at your obligations to society and your obligations to your customer. And - we're probably leaving, there's probably examples where we're leaving some margin on the table because we're more interested in getting through this and getting society through it and getting back to whatever the new normal is. The fact that we closed our front door, not only did that cost us some sales growth, a few percentage points I would guess it also cost us some mix elements to our business. And the real question is for everybody looking at Fastenal or at the market in general. When do you believe elements of regrouping of the economy step into place as long as restaurants and theme parks and things like that are closed, that will hurt a piece of our business and that that small customer in the case of the restaurant is probably a higher margin element and so even that mix comes into play when we look at our MRO fasteners.

And I would say – I would say as well that when you're procuring more products from sources that aren't usually part of your supply chain as we do when we go get fill-in buys to solve customers’ needs at this point in time that tends to come in at a lower margin as well. So, it's not just mix. There are some unusual circumstances that are playing out in the marketplace today that frankly, when this whole thing begins to normalize and stabilize, we expect that most of those sort of near term drags would unwind. So it's a relevant question to 2Q, Ryan. I don't have a great answer for you at this point, but I do believe that the issues that we're seeing are not permanent issues. I think that they exist as long as this situation with COVID-19 exists. And once that goes away and our mix begins to revert back to normal and our supply chain reverts back to normal that then we'll have a more normal pattern reasserting itself on gross margin as well. I don't think there is a long-term issue here.

Perfect, understood. Thanks. I'll pass it up.

Thank you.

Thank you. Your next question today is coming from Adam Uhlman from Cleveland Research. Your line is now live.

Hi, guys. Good morning. Hope the entire team is healthy. I wanted to continue the discussion on gross margin if we could. Could you tell us what price realization was this quarter? And then, Holden, price cost I guess was expected to moderate or level out. Are we seeing that in the numbers today?

Yes, I would say, the price level that we experienced in Q1 was comparable to what we experienced in Q4. And I would say that, in terms of characterizing price cost, I would still characterize that as not a meaningful factor our gross margin in the period.

Okay, got you. And then I guess could you expand your thoughts a little bit on what the team is doing from a selling standpoint right now? It's got to be a big change of working from home and trying to do remote selling processes rather than in person. Maybe walk through how vending fulfillment is occurring when customers are restricting access to their facilities? Are there creative sales steps that that folks are taking just how the organization is working right now? Thanks.

First off, if you think of our organization in buckets of population, the bulk of our employees work in a branch or onsite. And those folks are going to work every day unless you're in one of those onsites that are closed, then you're probably going to – you might be working at home or you might be working in another facility and doing certain aspects of the business remotely. But most of our folks are going to the customer. I know there are examples of vending machines we're not filling, but I would say it's a relatively small piece of the equation. I have received over – through either our web feedback or through comments whether it's on LinkedIn or other places, pictures of our employees have taken by customers where they're cleaning the vending machine as they're filling the vending machine, now very positively received, I think by our customers. I do believe our customers appreciate the fact that we close the front door to our branches because that way the amount of interaction we have is dramatically reduced from the variety of people. So I feel safer having a Fastenal rep coming to my business, knowing there's not a whole bunch of people walking into our location. And so, we are still fulfilling vending as we have in the past. One element of that fulfillment is slowly changing. That is we've talked in the past about changes to our fulfillment model for vending and the creation what we call LIFT, our local inventory fulfillment terminal. I believe we had two at late last year. I believe right now we're up to seven. So we continue to invest in that. We’re expanding that element. And that's really about how we pick and how we fill the machines and you can fill with a team that can go into a – has more concentrated inventory and can go into a more customer locations with product that's already picked down to the individual machines.

But we're certainly getting asked to make accommodations by our customers. There are some customers who are not comfortable, signing packing slips and maybe we’re dropping off and they're picking up and they're filling their machines where we might have done it before, but – so obviously we accommodate what our customers want from us in this, but we're still providing those services.

Thanks guys.

Thanks, Adam.

Thank you. Our next question is coming from Sam Darkatsh from Raymond James. Your line is now live.

Good morning, Dan. Good morning, Holden. How are you?

Good morning.

Good. Fine, thanks.

So, obviously, with respect to the lack of visibility in terms of onsite signings and openings this year, I'm guessing April will be the low watermark for that. Holden any sense of what you're tracking in terms of onsite signings and openings near-term?

Not a great sense of it to be honest with you, Sam. The – yes, I don't know, Dan, if you've had a more recent conversation on the matter, but…

I haven't. Like I say, I was pleasantly surprised by the level of signings we had in March, because I thought they would have dropped more meaningfully than they did. And that's a testament to the pipeline we already had in place. One side of me says organizations are maybe slower to make decisions. They're going to be looking at how they're operating. Another side of me says we've had the ability in this environment to really demonstrate what our supply chain resources can do. And I've heard more than one example of our sales team talking about comments from customers of I get what your supply chain resources are about more than ever from what I've seen firsthand over the last three weeks. So I don't know if ultimately that helps us sign more. And I talked about that more in the context of onsite versus vending because vending is a different animal and that it's a transactional element. The piece of vending that I'm not sure if it expands or how it expands or how it changes is the idea of where we're delivering to a vending machine, sales that are outside the vending machine. And what I mean by that, historically, the dollars going through the vending machine are products that we put in there that are repetitive. We have seen a meaningful increase. And again, it's on a small basis, but a meaningful increase in where we have a locker at a customer and a few – a door or two are now dedicated to deliveries. And we're seeing more examples of it coming from a relatively small subset of branches and onsites, but we saw that that grow dramatically from February to March. Again, I'm going to qualify it by saying it's on a very small base. And but I would expect over time that might expand as it creates distance and delivery. And with our recent transaction with Apex, our ability to do it is stronger today than it was in the past.

And I just wanted to ask a follow up question on the prior inquiry, which is I just want to make it pretty clear you're not really seeing any increasing instances of your onsite or legacy branch sales people not actually being allowed on customer premises because they're viewed as non-employees. I guess that's the real question a lot of folks have is as if we do see some sort of a seasonal or intermittent restrictions on non-employees site visits, how does that affect the business model? But it would be obviously good if you're not seeing that across the board or even any instances of it.

I mean, I'm sure we're seeing examples of it, but what probably happens there is we make arrangements with that customer where they still need the product and will the product probably gets delivered at their dock as opposed to delivered inside their facility. There are – we're following the protocols of the customer. We have – in addition to procuring safety products for our customers, we have lined up and we now have – and so we have safety products for our employees. And so many customers now for our employee to come into their facility, there are requirements for mass and things like that and you'll see more of that I suspect in the future. And – but absolutely we're seeing examples of reduced access. I would say other partners are probably being impacted more from it than us just because of the intimate relationship of our stocking right to production lines of stocking into vending devices. But by all means, a customer could do that with their own facility – with their own personnel and we will work with them to build some of the tools to do it.

Thank you both and both stay well.

Thank you.

Thanks, Sam. You too.

I think…

Thanks. Your next question today – I do apologize. Go ahead.

Well, go ahead. We have two minutes left.

No, no, it's about four minutes until this just – quite possibly could be our final question for top of the hour from Hamzah Mazari with Jefferies. Your line is now live.

Hey, good morning. Thanks for squeezing me in. Hope you're safe and healthy. Just a question on e-commerce, do you expect that to be a bigger piece of your business model coming out of COVID-19? I know with the fastener mix captive fleet branch network, e-commerce historically has not been a big part of the business model. Do you see that changing at all?

You're right, historically, but in recent – in the last few years, it's really been growing fairly rapidly as we continue to really present to our customers what the possibilities and options are on our e-commerce platform. And so, we do expect that to continue to be the case. Now, we're always going to be a business that wants to be local, wants to be directly engaged with the customer. And so, e-commerce plays a supplemental role to that. But there are customers that want to use e-commerce for certain of their purchasing needs. And that's our – our improvement of that platform over the last three years is a big – and really being able to sort of show that that value to the customer is a big reason why it's growing the way it is. I will say that at least to this point, I don't know – in the Q1 data, I don't know that we see anything they're suggesting that COVID has caused more of our customers to opt to go online versus dealing with us in the way they traditionally do. That isn't evident in the first quarter numbers to me. Is that something that emerges in the second quarter or is this something that emerges sort of longer-term? I don't really know, Hamzah, but I do know that we've had a great growth trajectory in terms of adoption of our e-commerce capabilities among all of our customers, but certainly our larger national account customers as well and we do expect that to continue.

All right, great.

I'll just add to that Hamzah. If you think of what we talked earlier about vending growth over time and bin stock growth over time, in my way of thinking, these are all e-commerce. So if I take vending and add bin stock and add discrete e-commerce, it's a 35% of our business today. And over time I see that being 60%, 70% and 80% of our business simply because it's a more efficient means to procure. And our objective is to be – is to create value for the customer that they know it's a reliable supply chain that I can trust the quality of the product, I can trust the reliability of the supply chain and it's cost effective. And I believe we're positioned really well for that. So, yes, I expect that to grow faster. I don't know if COVID-19 accelerates that or not, but that's a long-term trend.

Great. Thanks so much. I'll take the rest offline. Thank you very much.

Thanks, Hamzah.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Thank you to everybody for participating in our call today. I hope you found it useful in an unusual time and we look forward to some normalcy returning to our lives. Thanks everybody.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.