What is the overall financial performance of W.W. Grainger in Q3 2011?

W.W. Grainger demonstrated strong financial performance in the third quarter of 2011. Net sales increased by 11.3% year-over-year, reaching $2,114.6 million. Operating earnings saw a significant jump of 20.6% to $303.0 million, and net earnings attributable to the company grew by 21.1% to $182.1 million. Diluted earnings per share also increased by 21.8% to $2.51.

What were the key drivers of sales growth in Q3 2011?

Sales growth was driven by multiple factors including an increase in volume (approximately 8 percentage points), price increases (approximately 3 percentage points), and contributions from business acquisitions (approximately 2 percentage points), including the newly acquired Fabory Group. Foreign exchange also provided a slight boost. This growth was partially offset by a decrease related to the prior year's oil spill cleanup products.

What is the status of the legal proceedings related to government contracts?

The company is involved in ongoing discussions with the Department of Justice (DOJ) and the United States Postal Service (USPS) regarding pricing compliance with government contracts. While Grainger maintains its belief in its compliance, it acknowledges that an unfavorable resolution could result in significant payments. However, the company does not expect these matters to have a material adverse effect on its financial position.

How has the acquisition of Fabory Group impacted the company?

The acquisition of Fabory Group, a European distributor, completed on August 31, 2011, significantly boosted the 'Other Businesses' segment, contributing to a 66% increase in net sales for that segment in Q3 2011. This acquisition was a primary reason for Grainger raising its full-year 2011 sales and earnings per share guidance.

GWW 10-Q Quarterly Report Q3 FY2011 — Revenue, Net Income, EPS

Summary

W.W. Grainger, Inc. (GWW) reported a strong third quarter and year-to-date performance for 2011, with significant increases in net sales and net earnings. Net sales grew by 11.3% for the quarter and 12.1% year-to-date, driven by a combination of increased volume, price increases, and strategic business acquisitions, notably the Fabory Group. This sales growth translated into robust operating earnings, which rose 20.6% for the quarter and 28.0% year-to-date. Profitability saw a notable improvement, with gross profit margin expanding due to effective pricing strategies and a favorable sales mix. While operating expenses increased, they grew at a slower pace than sales, further boosting operating income. The company also benefited from a lower effective tax rate. Diluted earnings per share saw a significant uplift of 21.8% for the quarter and 37.8% year-to-date. Grainger raised its full-year 2011 guidance for both sales and earnings per share, reflecting its positive performance and strategic growth initiatives.

Financial Highlights

50 data points

Beta

Revenue

$2.11B

0.4% Gross Margin

Net Income

$182.12M

0.1% Net Margin

EPS (Diluted)

$2.51

Total Assets

$4.55B

Cash & Equivalents

$360.66M

Free Cash Flow

$204.04M

Financial Statements

Beta

Revenue	$2.11B
Cost of Revenue	$1.20B
Gross Profit	$913.00M
SG&A Expenses	$609.96M
Operating Income	$303.04M
Interest Expense	$2.58M
Net Income	$182.12M
EPS (Basic)	$2.56
EPS (Diluted)	$2.51
Shares Outstanding (Basic)	69.85M
Shares Outstanding (Diluted)	71.28M

Key Highlights

1Net sales increased by 11.3% to $2,114.6 million for the third quarter and 12.1% to $6,001.3 million for the nine months ended September 30, 2011, compared to the prior year periods.
2Gross profit margin improved to 43.2% for the quarter and 43.4% year-to-date, up from 41.6% and 41.9% respectively, driven by price increases and a favorable product mix.
3Operating earnings grew by 20.6% to $303.0 million for the quarter and 28.0% to $830.9 million year-to-date.
4Net earnings attributable to W.W. Grainger, Inc. increased by 21.1% to $182.1 million for the quarter and 34.7% to $509.9 million year-to-date.
5Diluted earnings per share rose to $2.51 for the quarter and $7.03 for the nine months, representing year-over-year increases of 21.8% and 37.8%, respectively.
6The company completed the acquisition of the Fabory Group in August 2011, a significant European distributor, which contributed to international segment growth and led to an upward revision of full-year 2011 financial guidance.
7The company reported ongoing discussions with the DOJ and USPS regarding pricing compliance on government contracts, stating they believe they have complied but acknowledging potential for significant payments if unfavorable resolutions occur.

W.W. GRAINGER, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Summary

Financial Highlights

Key Highlights

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