10-KPeriod: FY2013

W.W. GRAINGER, INC. Annual Report, Year Ended Dec 31, 2013

Filed February 27, 2014For Securities:GWW

Summary

W.W. Grainger, Inc. (GWW) reported solid performance for the fiscal year ending December 30, 2013, with net sales increasing by 5.4% to $9.44 billion and net earnings attributable to the company rising by 15.5% to $797 million, or $11.13 per diluted share. This growth was primarily driven by the United States segment, which saw a 7% increase in net sales, supported by volume increases and strategic acquisitions. The company continued to invest in its multichannel strategy, emphasizing eCommerce growth, with Grainger.com revenues up 16% to $2.5 billion, and expanding its sales force to cater to diverse customer needs. Despite facing a challenging economic environment and competitive pressures, Grainger demonstrated resilience through effective cost management and strategic initiatives. The company made targeted acquisitions, including E&R Industrial Sales and Safety Solutions, to bolster its offerings, while also divesting non-core direct marketing brands. Grainger is also focused on supply chain enhancements, including the opening of a new highly automated distribution center in the Chicago area. Looking ahead, the company guided for continued sales and earnings growth in 2014, albeit with some downward revisions due to foreign exchange impacts and recent divestitures.

Financial Highlights

54 data points
Beta

Revenue

$9.44B

43.8% Gross Margin

Net Income

$797.04M

8.4% Net Margin

EPS (Diluted)

$11.13

Total Assets

$5.27B

Cash & Equivalents

$430.64M

Free Cash Flow

$714.35M

Financial Statements
Beta
Revenue$9.44B
Cost of Revenue$5.30B
Gross Profit$4.14B
SG&A Expenses$2.84B
Operating Income$1.30B
Interest Expense$13.22M
Net Income$797.04M
EPS (Basic)$11.31
EPS (Diluted)$11.13
Shares Outstanding (Basic)69.46M
Shares Outstanding (Diluted)70.58M

Key Highlights

  • 1Net sales increased 5.4% to $9.44 billion in 2013, driven by volume and strategic acquisitions.
  • 2Net earnings grew 15.5% to $797 million, or $11.13 per diluted share.
  • 3eCommerce revenue (Grainger.com) saw a significant 16% increase, reaching $2.5 billion.
  • 4The company completed strategic acquisitions (E&R Industrial Sales, Safety Solutions) and divested four direct marketing brands.
  • 5Significant investment in supply chain infrastructure, including a new automated distribution center in Chicago.
  • 6Declared and paid a total of $3.59 per share in dividends, an increase from $3.06 in 2012.
  • 7Share repurchases continued, with $438 million spent in 2013.

Frequently Asked Questions

In 2013, W.W. Grainger reported a 5.4% increase in net sales, reaching $9.44 billion, and a 15.5% rise in net earnings to $797 million, or $11.13 per diluted share. The company showed strong operational execution, particularly in its US segment, and benefited from strategic acquisitions and growth in its eCommerce channel.

Grainger's eCommerce channel, primarily through Grainger.com, demonstrated robust growth, with revenues increasing by 16% to $2.5 billion in 2013. The company also launched a new web platform, a Spanish language website, and mobile applications to further enhance its online customer experience.

In 2013, Grainger made strategic acquisitions by purchasing E&R Industrial Sales, Inc. and Safety Solutions, Inc. to expand its product offerings and market reach, particularly within the manufacturing sector. Concurrently, the company divested four direct marketing brands: Gempler's, Ben Meadows, AW Direct, and McFeely's.

Key risks highlighted include the potential negative impact of economic weakness on sales growth, intense competition within the fragmented facilities maintenance industry, volatility in commodity prices affecting operating margins, supply chain disruptions, and the inherent risks associated with acquisitions. Additionally, the company noted risks related to information systems security and potential breaches.