10-QPeriod: Q1 FY2014

W.W. GRAINGER, INC. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 1, 2014For Securities:GWW

Summary

W.W. Grainger, Inc. (GWW) reported solid first-quarter 2014 results, demonstrating continued top-line growth and profitability. Net sales increased by 4.6% to $2.39 billion, driven primarily by volume and strategic business acquisitions, with the United States segment showing particularly strong performance. The company's diluted earnings per share (EPS) rose by 4.3% to $3.07, reflecting both increased earnings and a reduction in weighted average shares outstanding. While the overall results were positive, there were some regional variations. The Canadian segment experienced a sales decline of 10% due to unfavorable economic conditions and foreign exchange impacts, though this was partially offset by growth in 'Other Businesses.' Management reiterated its full-year guidance for sales growth between 5% and 9% and EPS between $12.10 and $12.85, indicating confidence in continued performance despite some macroeconomic headwinds.

Financial Highlights

50 data points
Beta

Revenue

$2.39B

45.1% Gross Margin

Net Income

$216.65M

9.1% Net Margin

EPS (Diluted)

$3.07

Total Assets

$5.23B

Cash & Equivalents

$375.56M

Free Cash Flow

$101.85M

Financial Statements
Beta
Revenue$2.39B
Cost of Revenue$1.31B
Gross Profit$1.08B
SG&A Expenses$721.63M
Operating Income$354.34M
Interest Expense$2.86M
Net Income$216.65M
EPS (Basic)$3.11
EPS (Diluted)$3.07
Shares Outstanding (Basic)68.70M
Shares Outstanding (Diluted)69.68M

Key Highlights

  • 1Net sales increased 4.6% to $2.39 billion, driven by volume and acquisitions.
  • 2Diluted EPS grew 4.3% to $3.07, benefiting from higher earnings and fewer outstanding shares.
  • 3The United States segment reported a 7% increase in net sales, outpacing overall company growth.
  • 4The Canadian segment saw a 10% decrease in net sales, negatively impacted by foreign exchange and sector-specific weakness.
  • 5Gross profit margin slightly decreased by 0.1 percentage point due to acquisition impacts and customer mix.
  • 6Operating earnings increased by 3.2%, reflecting higher sales partially offset by margin pressure and increased operating expenses.
  • 7The company reiterated its full-year 2014 guidance for sales growth (5-9%) and EPS ($12.10-$12.85).

Frequently Asked Questions

W.W. Grainger, Inc. reported a 4.6% increase in net sales for the first quarter of 2014, reaching $2.39 billion, up from $2.28 billion in the same period of 2013. This growth was primarily driven by an increase in sales volume and contributions from recent business acquisitions.

Profitability was supported by higher sales volume, which increased operating earnings by 3.2%. Diluted earnings per share (EPS) rose by 4.3% to $3.07. However, gross profit margin saw a slight decrease of 0.1 percentage points due to the impact of newly acquired businesses and a shift towards lower-margin customers, which was partially offset by price inflation exceeding cost inflation.

The United States segment was a strong performer, with net sales increasing by 7%. In contrast, the Canadian segment experienced a 10% decrease in net sales, largely due to foreign exchange impacts and a slowdown in key customer end-markets like natural resources. 'Other Businesses' saw an 11% increase in net sales.

W.W. Grainger reiterated its full-year guidance, expecting sales growth to be between 5% and 9%, and projecting diluted earnings per share to be in the range of $12.10 to $12.85.