10-QPeriod: Q1 FY2024

W.W. GRAINGER, INC. Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 25, 2024For Securities:GWW

Summary

W.W. Grainger, Inc. reported mixed results for the first quarter of 2024. While net sales saw a modest increase of 3.5% year-over-year to $4.24 billion, driven by growth in both its High-Touch Solutions N.A. and Endless Assortment segments, net earnings attributable to the company declined by 2.0% to $478 million. This decline was primarily due to a higher cost of goods sold and increased selling, general, and administrative expenses, which more than offset the growth in gross profit. Diluted earnings per share remained relatively flat at $9.62 compared to $9.61 in the prior year. Despite the slight dip in profitability, the company demonstrated strong operating cash flow generation, increasing to $661 million from $454 million in the prior year, largely attributed to improved working capital management. The company also continued its commitment to returning capital to shareholders, with significant outflows for share repurchases and dividends. Grainger maintains a solid liquidity position and investment-grade credit ratings, indicating financial stability amidst ongoing macroeconomic uncertainties.

Financial Highlights

50 data points
Beta

Revenue

$4.24B

39.4% Gross Margin

Net Income

$478.00M

11.3% Net Margin

EPS (Diluted)

$9.62

Total Assets

$8.40B

Cash & Equivalents

$804.00M

Free Cash Flow

$542.00M

Financial Statements
Beta
Revenue$4.24B
Cost of Revenue$2.57B
Gross Profit$1.67B
SG&A Expenses$999.00M
Operating Income$669.00M
Net Income$478.00M
EPS (Basic)$9.65
EPS (Diluted)$9.62
Shares Outstanding (Basic)49.20M
Shares Outstanding (Diluted)49.40M

Key Highlights

  • 1Net sales increased by 3.5% to $4.24 billion for Q1 2024, driven by growth in both High-Touch Solutions N.A. and Endless Assortment segments.
  • 2Net earnings attributable to W.W. Grainger, Inc. decreased by 2.0% to $478 million, impacted by higher cost of goods sold and SG&A expenses.
  • 3Diluted EPS was $9.62, a slight increase from $9.61 in the prior year's comparable quarter.
  • 4Operating cash flow saw a substantial increase, rising to $661 million from $454 million in Q1 2023, driven by favorable working capital changes.
  • 5The company repurchased approximately $268 million of treasury stock and paid $105 million in cash dividends during the quarter.
  • 6Inventory levels decreased year-over-year, contributing positively to working capital management.
  • 7The company maintained its investment-grade credit ratings from Moody's and S&P.

Frequently Asked Questions

While net sales increased, net earnings attributable to W.W. Grainger, Inc. decreased by 2.0% due to a higher cost of goods sold (up 4.5%) and an increase in selling, general, and administrative expenses (up 4.7%). These increases collectively outweighed the 2.1% rise in gross profit, leading to a 1.6% decrease in operating earnings.

The company generated strong operating cash flow, increasing to $661 million from $454 million in the prior year. This improvement was primarily driven by favorable working capital changes, including effective inventory management and timing of cash payments. Grainger ended the quarter with $804 million in cash and cash equivalents and maintains approximately $2.1 billion in available liquidity, indicating a strong position to meet its obligations.

Grainger acknowledges the volatile macroeconomic environment, including inflation and geopolitical events, which may continue to affect its business. However, the company historically benefits from the nondiscretionary nature of its MRO products and its broad customer base, which have provided resilience during economic downturns. The company continues to monitor conditions and implement strategies to mitigate adverse effects while remaining competitive.

W.W. Grainger, Inc. actively returns capital to shareholders through share repurchases and cash dividends. In the first quarter of 2024, the company repurchased approximately $268 million of treasury stock and paid $105 million in cash dividends. On April 24, 2024, the Board of Directors declared a quarterly dividend of $2.05 per share.