Summary
W.W. Grainger, Inc. reported a decline in net sales and net earnings for the second quarter and the first half of 2020 compared to the prior year, primarily impacted by the COVID-19 pandemic. Net sales decreased by 1.9% in Q2 2020 and increased by 2.6% in the first half of 2020. Net earnings attributable to W.W. Grainger, Inc. saw a significant drop of 56.3% in Q2 and 44.1% in the first half, largely due to the impact of the pandemic on sales volumes and product mix, as well as a notable loss from the divestiture of the Fabory business. The company experienced increased demand for pandemic-related products like PPE and safety supplies, particularly from government and healthcare sectors, which helped offset declines in other industries. However, this shift in product mix, combined with lower-margin sales from its endless assortment businesses, negatively impacted gross profit margins. The company took proactive measures to preserve liquidity, including drawing down on its credit facility and pausing share repurchases, ending the quarter with a strong cash position.
Financial Highlights
51 data points| Revenue | $2.84B |
| Cost of Revenue | $1.82B |
| Gross Profit | $1.02B |
| SG&A Expenses | $811.00M |
| Operating Income | $205.00M |
| Net Income | $114.00M |
| EPS (Basic) | $2.11 |
| EPS (Diluted) | $2.10 |
| Shares Outstanding (Basic) | 53.50M |
| Shares Outstanding (Diluted) | 53.70M |
Key Highlights
- 1Net sales for Q2 2020 decreased by 1.9% to $2.837 billion compared to $2.893 billion in Q2 2019.
- 2Net earnings attributable to W.W. Grainger, Inc. for Q2 2020 decreased by 56.3% to $114 million ($2.10 per diluted share) compared to $260 million ($4.67 per diluted share) in Q2 2019.
- 3The company recognized a loss of approximately $109 million related to the divestiture of its Fabory business in Europe on June 30, 2020.
- 4Cash and cash equivalents significantly increased to $1.603 billion as of June 30, 2020, up from $360 million as of December 31, 2019, bolstered by a $1 billion drawdown from its credit facility.
- 5Operating earnings for Q2 2020 decreased by 45.9% to $205 million, impacted by lower gross profit and higher SG&A expenses, partly due to the Fabory divestiture.
- 6Sales in the Canada segment saw a significant decrease of 21.7% in Q2 2020, largely due to market share declines and the impact of low oil prices on the oil industry-dependent customer base.
- 7The company maintained a strong liquidity position, ending Q2 2020 with approximately $1.9 billion in available liquidity, including $1.6 billion in cash.