Summary
W.W. Grainger, Inc. (GWW) reported its third-quarter and nine-month results for the period ending September 29, 2009, amidst a challenging economic environment characterized by declining industrial production. For the third quarter, net sales decreased by 13.6% year-over-year, reflecting a significant volume decline partially offset by price increases and foreign exchange impacts. Despite the sales decline, net earnings saw a modest increase of 3.2% due to a substantial one-time, non-cash gain from the remeasurement of an equity investment in MonotaRO Co., Ltd. (MonotaRO) upon gaining controlling interest. The company also experienced a decline in operating earnings, primarily due to lower sales and operating expenses not decreasing at the same pace. The nine-month period showed a similar trend, with net sales down 12.7% year-over-year. Net earnings for the nine months decreased by 9.3%, impacted by the lower sales and operating earnings, though partially mitigated by the same one-time MonotaRO gain. The company strategically managed its expenses, with operating expenses decreasing, partly due to headcount reductions and reduced commissions and bonuses, with a portion expected to be permanent. The company's financial position remained solid, with an increased working capital and a strong cash flow from operations, partly driven by inventory reductions.
Financial Highlights
50 data points| Revenue | $1.59B |
| Cost of Revenue | $929.72M |
| Gross Profit | $659.95M |
| SG&A Expenses | $473.23M |
| Operating Income | $186.72M |
| Interest Expense | $2.20M |
| Net Income | $144.56M |
| EPS (Basic) | $1.91 |
| EPS (Diluted) | $1.88 |
| Shares Outstanding (Basic) | 74.05M |
| Shares Outstanding (Diluted) | 75.20M |
Key Highlights
- 1Net sales for the third quarter of 2009 decreased by 13.6% to $1,589.7 million, reflecting a 17% volume decline, partially offset by a 4% price increase.
- 2Net earnings for the third quarter increased by 3.2% to $144.6 million, largely driven by a $47.4 million pre-tax, non-cash gain from the step-up in the fair value of an investment in MonotaRO Co., Ltd.
- 3Diluted earnings per share (EPS) for the third quarter increased to $1.88, up 6.2% from $1.77 in the prior year, primarily due to the aforementioned MonotaRO gain.
- 4For the nine months ended September 30, 2009, net sales decreased by 12.7% to $4,588.2 million, while net earnings decreased by 9.3% to $333.4 million.
- 5Operating earnings for the third quarter declined 19.3% to $186.7 million, and for the nine-month period, they decreased 17.0% to $499.9 million, impacted by lower sales.
- 6The company managed operating expenses effectively, with a 7.4% decrease in the third quarter and a 7.3% decrease for the nine months, attributed to lower payroll, benefits, commissions, and bonus accruals.
- 7Net cash provided by operating activities for the nine months increased significantly to $509.7 million from $335.3 million in the prior year, driven by reduced inventory levels and lower other current liabilities.