01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
W.W.
Grainger, Inc. (GWW) reported strong performance in its 2021 fiscal year, demonstrating resilience and growth following the disruptions of the COVID-19 pandemic. The company's strategic focus on its two core segments, High-Touch Solutions N.A. and Endless Assortment, has proven effective. Net sales increased by 10.4% to $13.02 billiona, driven by a recovery in core non-pandemic product sales and positive volume growth.
Operating earnings saw a significant 51.8%b increase, reflecting improved gross profit and disciplined expense management. Grainger's financial position remains robust, supported by strong cash flows from operations and available liquidity.
The company continues to invest in its distribution network and technology enhancements, signaling a commitment to long-term growth and shareholder returns. Despite ongoing macroeconomic challenges like inflation and supply chain disruptions, Grainger's diversified business model and strategic initiatives position it well to navigate the evolving market landscape and maintain its leadership in the MRO distribution sector.
02—Key points
Key Highlights
- Net sales grew 10.4% year-over-year to $13.02 billion, driven by a rebound in core MRO product demand and a favorable product mix.
- Operating earnings increased significantly by 51.8% to $1.55 billion, reflecting strong revenue growth and effective cost management.
- Diluted EPS saw a substantial increase of 55% to $19.84, indicating strong profitability on a per-share basis.
- The High-Touch Solutions N.A. segment experienced a 10.5% increase in net sales, driven by improved core product volumes.
- The Endless Assortment segment demonstrated robust growth with an 18.3% increase in net sales, showcasing strong customer acquisition and expansion.
- Grainger maintained a strong liquidity position with approximately $1.5 billion in available liquidity as of December 31, 2021.
- The company continues to invest in capital expenditures, with planned spending for 2022 focused on distribution networks and IT enhancements.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, W.W. Grainger kept $0.08.
- Revenue$13.02B100.0%
- Cost of revenue−$8.30B63.8%
- Gross profit$4.72B36.2%
- Operating costs−$3.17B24.4%
- Operating income$1.55B11.9%
- Interest, other & tax−$504.0M3.9%
- Net income$1.04B8.0%
Where FY2021 revenue went
$13.02B- Cost of revenue: $8.30B, 64% of revenue
- SG&A: $3.17B, 24% of revenue
- Net income: $1.04B, 8.0% of revenue
- Interest, other & tax: $504.0M, 3.9% of revenue
Kept 8.0% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $13.02B$11.80B | +10.4% |
| Cost of Revenue | $8.30B$7.56B | +9.8% |
| Gross Profit | $4.72B$4.24B | +11.4% |
| SG&A Expenses | $3.17B$3.22B | −1.4% |
| Operating Income | $1.55B$1.02B | +51.8% |
| Net Income | $1.04B$695.00M | +50.1% |
| EPS (Basic) | $19.94$12.88 | +54.8% |
| EPS (Diluted) | $19.84$12.82 | +54.8% |
| Shares Outstanding (Basic) | 51.90M53.50M | −3.0% |
| Shares Outstanding (Diluted) | 52.20M53.70M | −2.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of W.W. Grainger's sales growth in 2021?
Sales growth in 2021 was primarily driven by the recovery in core, non-pandemic related MRO product sales as the product mix reverted to more normalized levels. Improved volume, coupled with strategic pricing actions and growth in both the High-Touch Solutions N.A. and Endless Assortment segments, contributed to the overall 10.4% increase in net sales.
How did the company manage its expenses in 2021?
Selling, General, and Administrative (SG&A) expenses decreased by 1% year-over-year. This was achieved through favorable comparisons to 2020, which included significant impairment charges and losses related to divested businesses. Despite increased investments in wages, variable compensation, and marketing, the company demonstrated disciplined expense management, leading to a substantial increase in operating earnings.
What is the outlook for capital expenditures and investments?
Grainger plans to continue investing in its business, with projected capital expenditures for 2022 in the range of $275 million to $325 million. These investments will focus on enhancing its distribution centers in the U.S. and Japan, as well as IT infrastructure and enhancements. The company expects to fund these expenditures primarily through operating cash flows.
How is W.W. Grainger addressing supply chain and inflation risks?
The company acknowledges risks associated with supply chain disruptions and inflation. It aims to mitigate these by maintaining alternative sourcing plans, passing on commodity-related inflation to customers where possible, and scaling its distribution networks, including transportation infrastructure. Grainger also monitors commodity trends closely to manage these exposures.
06—Continue