Skip to content
AnalystLens

W.W. Grainger Annual Report, Year Ended Dec 31, 1993

Filing Date
Filed March 28, 1994
Period End
December 31, 1993
Security
GWW
In the record · 2016–202610-K1110-Q328-K92

GWW filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 92 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Oct ’17Oct ’17
  2. Leadership change8-K · Jan ’21Jan ’21
  3. Leadership change8-K · Feb ’23Feb ’23
  4. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 28, 1994. Cited figures are marked; the original filing is the authoritative source.

W.W.

Grainger's 1993 Form 10-K shows a company growing steadily through its core Grainger Division and a growing portfolio of smaller distribution businesses. Consolidated net sales rose 11.2% to $2.63 billiona, and net earnings grew 8.2% to $148.4 million, or $2.86 per share. Operating margin was roughly 9.6% of sales, while net earnings as a share of sales slipped to 5.6% from 5.8%, as operating expenses (warehousing, marketing and administrative costs) rose faster than sales.

The Grainger Division, which accounts for most revenue, grew sales 9.3%, driven by a 7.4% volume increase and a 1.8% price increase, and National Accounts sales rose 25%. The balance sheet is conservative. Total assets were $1.38 billionb and shareholders' equity was $942 million.

Debt is minimal, with long-term debt of only $6.2 millionc, and total debt was 7% of equity. Operating cash flow was $162.5 million, which covered $98.4 million of capital spending, mainly for branch expansion, and $36.3 million of dividends. The company also repurchased 1.78 million shares for about $105 million.

Working capital declined year over year, and the current ratio fell to 2.2 from 2.5 as short-term borrowings were used. The main investor considerations are margin pressure from higher operating costs and the cost of building out the newer acquired businesses, including Lab Safety, Allied, Bossert and PCA.

Acquisition-related amortization reduced earnings, and the effective tax rate rose to 40.3%d partly because of the 1993 federal tax rate increase. Management frames the company as a service business and highlights its branch network, distribution centers and catalog-led model as its competitive advantages.

02—Key points

Key Highlights

  1. Net sales rose 11.2% to $2.63 billion, with the Grainger Division up 9.3% (7.4% volume, 1.8% price) and Other Business Units up 22.5%.
  2. Net earnings increased 8.2% to $148.4 million, or $2.86 per share, though the net margin declined to 5.6% from 5.8%.
  3. Operating expenses grew faster than sales, rising 14.5%, which drove the margin compression; the effective tax rate rose to 40.3% from 39.6%.
  4. Operating cash flow was $162.5 million, down from $196.4 million in 1992, and capital expenditures rose to $98.4 million from $49.9 million.
  5. The balance sheet remains very conservative, with long-term debt of only $6.2 million and total debt at 7% of shareholders' equity, but short-term borrowings of $34.3 million were drawn in 1993.
  6. The company repurchased 1.78 million shares for $104.7 million and paid $36.3 million in dividends ($0.705 per share, up 8.5%), with about 3.6 million shares left under the buyback authorization.
  7. The Grainger Division operates 337 branches and has 1.2 million customers, National Accounts grew 25%, and the company continues to expand its network of acquired businesses.

03—Questions

Frequently Asked Questions

  1. How did Grainger perform financially in 1993?

    Net sales rose 11.2% to $2.63 billion and net earnings rose 8.2% to $148.4 million, or $2.86 per share. Earnings grew more slowly than sales because operating costs increased faster, and the tax rate rose following the federal rate increase in the Omnibus Budget Reconciliation Act of 1993.

  2. Is the company financially strong enough to fund its growth and shareholder returns?

    Yes. Operating cash flow of $162.5 million covered $98.4 million of capital spending and $36.3 million of dividends, and the company still had cash left for buybacks. Long-term debt was only $6.2 million, and total debt was 7% of equity at year-end. The company did use $34.3 million of short-term borrowings, and the current ratio fell to 2.2 from 2.5.

  3. What is driving growth at the Grainger Division?

    Growth came from a 7.4% increase in volume and a 1.8% price increase. Volume growth reflected new product additions, branch expansion (more than $60 million was invested in 1993), and a 25% rise in National Accounts sales. The company also launched Zone Distribution Centers to speed up branch replenishment.

  4. What risks or concerns should investors weigh?

    Operating expense growth outpaced sales, with costs at acquired and start-up businesses and higher data processing and handling costs weighing on margins. Acquisition-related goodwill amortization increased, and the effective tax rate rose to 40.3%. Inflation was described as a minor factor, but replacement costs for buildings remain significantly above historical cost. Legal proceedings were described as not material.

  5. How does the company's capital return compare to prior years?

    Share repurchases rose sharply to $104.7 million in 1993 from $38.6 million in 1992, reducing shares outstanding to 50.7 million from 52.4 million. Dividends per share rose to $0.705 from $0.65, a 8.5% increase, and the company stated it is no longer required to retire repurchased shares under Illinois law starting in 1994.

04—Continue

← View all 10-K filings