10-QPeriod: Q1 FY2013

W.W. GRAINGER, INC. Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 25, 2013For Securities:GWW

Summary

W.W. Grainger, Inc. reported solid first-quarter results for 2013, demonstrating growth in net sales and operating earnings. Net sales increased by 4% to $2.28 billion, with a 6% increase on a daily basis, indicating positive momentum driven by volume, price, and business acquisitions. The company saw improved gross profit margins, largely due to price increases outpacing product cost increases. Operating earnings saw a significant 13% increase to $343 million, attributed to higher sales, improved margins, and operating expense leverage. Net earnings attributable to W.W. Grainger, Inc. grew by 13% to $211.8 million, leading to a 14% increase in diluted earnings per share to $2.94. The company also announced a 16% increase in its quarterly dividend, signaling confidence in its financial performance and commitment to shareholder returns. The outlook for 2013 was also revised upwards, with updated sales and EPS guidance reflecting the strong start to the year.

Financial Highlights

50 data points
Beta

Revenue

$2.28B

45.2% Gross Margin

Net Income

$211.84M

9.3% Net Margin

EPS (Diluted)

$2.94

Total Assets

$5.01B

Cash & Equivalents

$485.52M

Free Cash Flow

$133.46M

Financial Statements
Beta
Revenue$2.28B
Cost of Revenue$1.25B
Gross Profit$1.03B
SG&A Expenses$688.43M
Operating Income$343.31M
Interest Expense$3.17M
Net Income$211.84M
EPS (Basic)$2.99
EPS (Diluted)$2.94
Shares Outstanding (Basic)69.56M
Shares Outstanding (Diluted)70.77M

Key Highlights

  • 1Net sales increased by 4% to $2.28 billion for the first quarter of 2013, with daily sales up 6%.
  • 2Operating earnings rose by 13% to $343 million, driven by increased sales, improved gross profit margins, and operating expense leverage.
  • 3Net earnings attributable to W.W. Grainger, Inc. increased 13% to $211.8 million.
  • 4Diluted earnings per share grew 14% to $2.94 from $2.57 in the prior year period.
  • 5The company announced a 16% increase in its quarterly dividend to $0.93 per share.
  • 6Grainger raised its 2013 sales growth guidance to a range of 5-9% and its EPS guidance to $11.30-$12.00.
  • 7Gross profit margin improved by 0.8 percentage points year-over-year, primarily due to price increases exceeding product cost increases.

Frequently Asked Questions

Sales growth was driven by a combination of factors including volume, price increases, and contributions from business acquisitions. The company specifically noted growth in sales to light manufacturing, contractor, and heavy manufacturing customer end-markets.

Profitability improved significantly. Gross profit margin increased by 0.8 percentage points due to price increases exceeding product cost increases. Operating earnings grew 13% and net earnings attributable to W.W. Grainger, Inc. also increased by 13%, leading to a 14% rise in diluted EPS.

Grainger revised its full-year 2013 guidance upwards on April 16, 2013. The company now expects sales growth between 5% and 9%, an increase from the previously stated 3% to 9%. Earnings per share guidance was also raised to a range of $11.30 to $12.00, up from $10.85 to $12.00.

Yes, the company paid cash dividends and repurchased shares. The quarterly dividend increased by 16% to $0.93 per share, and the company purchased approximately 291,954 shares as part of its ongoing share repurchase program during the first quarter.