Summary
W.W. Grainger, Inc. reported a net sales increase of 2% for the second quarter and first six months of 2017 compared to the prior year, reaching $2.62 billion and $5.16 billion, respectively. Despite sales growth, net earnings attributable to W.W. Grainger, Inc. saw a significant decline of 43% in Q2 and 24% for the six-month period. This decline is largely attributed to increased operating expenses, including substantial restructuring charges related to US and Canada initiatives and the wind-down of operations in Colombia. Gross profit margins also experienced pressure due to customer response to pricing actions in the U.S. Key operational shifts include a growing reliance on eCommerce, which now represents 52% of total sales in Q2 2017, up from 46% in Q2 2016. The company continues to execute strategic initiatives, including cost-reduction efforts and streamlining operations in Canada. Despite the earnings decline, the company reiterated its 2017 sales growth guidance of 1-4% and adjusted EPS guidance of $10.00-$11.30, indicating management's confidence in its strategic direction.
Financial Highlights
52 data points| Revenue | $2.62B |
| Cost of Revenue | $1.57B |
| Gross Profit | $1.04B |
| SG&A Expenses | $811.00M |
| Operating Income | $229.00M |
| Interest Expense | $22.47M |
| Net Income | $98.00M |
| EPS (Basic) | $1.68 |
| EPS (Diluted) | $1.67 |
| Shares Outstanding (Basic) | 58.01M |
| Shares Outstanding (Diluted) | 58.29M |
Key Highlights
- 1Net sales increased by 2% to $2.62 billion for the three months ended June 30, 2017, and by 2% to $5.16 billion for the six months ended June 30, 2017.
- 2Net earnings attributable to W.W. Grainger, Inc. decreased significantly by 43% to $97.9 million in Q2 2017 and by 24% to $272.7 million for the six months ended June 30, 2017.
- 3Operating expenses increased by 10% in Q2 and 5% in the first six months, heavily influenced by restructuring charges in the US, Canada, and the wind-down of operations in Colombia.
- 4Gross profit margin declined by 0.8 percentage points in Q2 and 1.2 percentage points for the six months, primarily due to customer responses to U.S. pricing actions.
- 5eCommerce sales continued to grow, representing 52% of total sales in Q2 2017, up from 46% in Q2 2016.
- 6The company issued $400 million in 4.20% Senior Notes in May 2017, increasing its long-term debt.
- 7The Canadian segment reported an operating loss of $27.7 million in Q2 and $44.5 million for the first six months, though it saw improvements in gross profit margin and reduced operating expenses excluding restructuring costs.