Grainger Reports 1st Quarter Results
CHICAGO, April 28, 2022 — Grainger (NYSE: GWW) today reported results for the first quarter of 2022 with sales of $3.6 billion, up 18.2%, or 17.9% on a daily, constant currency basis compared to the first quarter 2021, driven by strong performance in both the High-Touch Solutions N.A. and Endless Assortment segments.
“The Grainger team performed extremely well in the first quarter, with strong financial results supported by a robust demand environment. We continued to execute against our key growth initiatives, drive operational excellence and strengthen our culture,” said DG Macpherson, Chairman and CEO. “Despite the ongoing inflationary and supply chain challenges, we are well positioned for a successful year.”
2022 First Quarter Financial Summary
| ($ in millions) | Q1 2022 (1) | Q1 2021 (1) | Q1 |
| Fav. (Unfav.) vs. Prior | |||
| Net Sales | $3,647 | $3,084 | 18% |
| Gross Profit | $1,383 | $1,093 | 27% |
| Operating Earnings | $534 | $358 | 49% |
| Net Earnings Attributable to W.W. Grainger, Inc. | $366 | $238 | 54% |
| Diluted Earnings Per Share | $7.07 | $4.48 | 58% |
| Gross Margin | 37.9% | 35.5% | 245 bps |
| Operating Margin | 14.6% | 11.6% | 305 bps |
| Tax Rate | 25.5% | 25.8% | 30 bps |
| (1) Neither Q1 2022, nor Q1 2021 results contained any adjusting items, therefore separate adjusted results are not presented above. |
Revenue
Sales in the quarter increased 18.2%, or 16.4% on a daily basis, as compared to the first quarter of 2021, which had one less selling day. Daily sales on a constant currency basis were 17.9% which excludes the unfavorable foreign exchange impact of 1.5% during the first quarter of 2022.
In the High-Touch Solutions N.A. segment, daily sales were up 18.2% versus the prior year first quarter due primarily to solid price realization and strong growth with both midsize and large customers across all end markets. In the Endless Assortment segment, daily sales were up 10.4%, versus the first quarter of 2021, or up 17.4% on a daily, constant currency basis, reflecting the impact of the depreciating value of the Japanese Yen on sales in the quarter. Segment revenue growth was driven by acquiring new customers and increasing share of wallet with existing customers.
Gross Margin
Gross margin for the first quarter of 2022 was 37.9%, a 245 basis point increase compared to the first quarter of 2021 due primarily to lapping the prior year pandemic product inventory adjustment as well as favorable product and customer mix.
In the High-Touch Solutions N.A. segment, the Company lapped the $55 million pre-tax pandemic product inventory adjustment that occurred in the first quarter of 2021, which contributed significantly to the 310 basis point increase in the High-Touch Solutions N.A. segment over the prior year quarter. Given timing, price / cost spread was slightly positive, however largely neutral net of freight inflation. Product mix was also favorable in the quarter. In the Endless Assortment segment, gross margin expanded by 10 basis points versus the prior year first quarter.
Earnings
Operating earnings for the first quarter of 2022 of $534 million were up 49% versus the first quarter of 2021. Operating margin in the quarter of 14.6% increased 305 basis points over the first quarter of 2021 on stronger gross margins in both segments combined with SG&A leverage gained on revenue growth.
Earnings per share of $7.07 in the first quarter of 2022 increased 57.8% compared to the first quarter of 2021. The increase in earnings per share was due primarily to higher operating earnings.
Tax Rate
The first quarter 2022 tax rate was 25.5%, compared to 25.8% in the first quarter of 2021.
Cash Flow
Operating cash flow for the first quarter of 2022 was $343 million, up $49 million over the prior year quarter. The increase was driven by higher net earnings which were partially offset by unfavorable working capital. In the quarter, both accounts receivable and inventory increased as a result of strong demand. This was slightly offset by the timing of trade accounts payable activity. During the quarter, the company distributed $163 million to shareholders through dividends and share repurchases.
Guidance
After a strong start to the year, the company is raising its 2022 full year guidance expectations.
| Total Company | Original 2022 Guidance Range | Updated 2022 Guidance Range (1) |
| Net Sales | $14.1 – $14.5 billion | $14.5 – $14.9 billion |
| Daily growth | 7.5% – 10.5% | 11.0% – 14.0% |
| Gross Profit Margin | 36.8% – 37.3% | 36.8% – 37.3% |
| Operating Margin | 12.5% – 13.1% | 13.0% – 13.6% |
| Earnings per Share | $23.50 – $25.50 | $25.00 – $27.00 |
| Operating Cash Flow | $1.1 – $1.3 billion | $1.15 – $1.35 billion |
| CapEx (cash basis) | $275 – $325 million | $275 – $325 million |
| Share Buyback | $600 – $800 million | $600 – $800 million |
| Tax Rate | 24.0% – 25.0% | ~25.0% |
| Segment Operating Margin | ||
| High-Touch Solutions N.A. | 14.4% – 15.0% | 14.9% – 15.5% |
| Endless Assortment | 7.5% – 8.2% | 7.5% – 8.2% |
| (1)Guidance on an adjusted basis as of April 28, 2022 |
Webcast
The Company will conduct a live conference call and webcast at 11:00 a.m. ET on April 28, 2022 to discuss the first quarter results. The webcast will be hosted by DG Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO, and can be accessed at invest.grainger.com. For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com.
About Grainger
W.W. Grainger, Inc., with 2021 sales of $13.0 billion, is a leading broad line distributor with operations primarily in North America, Japan and the United Kingdom. Grainger achieves its purpose, We Keep the World Working®, by serving more than 4.5 million customers worldwide with a wide range of product categories that keep customer operations running and their people safe. The Company also delivers services and solutions, such as technical support and inventory management, to provide tangible value and save customers time and money. Grainger offers more than 2 million maintenance, repair and operating (MRO) products in its High-Touch Solutions assortment and more than 30 million products through its expanding Endless Assortment offering. For more information, visit www.grainger.com.
Visit invest.grainger.com to view information about the company, including a supplement regarding 2022 first quarter results. Additional company information can be found on the Grainger Investor Relations website which includes our Company Snapshot and ESG report.
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Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: the unknown duration and health, economic, operational and financial impacts of the global outbreak of the coronavirus disease 2019 and its variants (COVID-19), as well as the impact of actions taken or contemplated by government authorities to mitigate the spread of COVID-19 (such as vaccine mandates for certain federal contractors, mask mandates, social distancing or other requirements) and to promote economic stability and recovery, on the company’s businesses, its employees, customers and suppliers, including disruption to Grainger’s operations resulting from employee illnesses, the development, availability and usage of effective treatment or vaccines, changes in customers’ product needs, the acquisition of excess inventory leading to additional inventory carrying costs and inventory obsolescence, raw material, inventory and labor shortages, continued strain on global supply chains, and diminished transportation availability and efficiency, disruption caused by business responses to the COVID-19 pandemic, including remote working arrangements, which may create increased vulnerability to cybersecurity incidents, including breaches of information systems security, adaptions to the company’s controls and procedures required by remote working arrangements, which could impact the design or operating effectiveness of such controls or procedures, and global or regional economic downturns or recessions, which could result in a decline in demand for the company’s products; inflation, higher product costs or other expenses, including operational expenses; the impact of Russia’s invasion of Ukraine on the global economy; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in the company’s gross profit margin; the company’s responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, advertising and marketing, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; disruption or breaches of information technology or data security systems involving the company or third parties on which the company depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of the company’s common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; geopolitical events, including war or acts of terrorism; other pandemic diseases or viral contagions; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; competition for, or failure to attract, retain, train, motivate, and develop key employees; loss of key members of management or key employees; changes in effective tax rates; changes in credit ratings or outlook; the company’s incurrence of indebtedness and other factors that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. 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Republished from the Grainger corporate news webpage as first published on /PRNewswire/
