Grainger Reports 3rd Quarter Results
CHICAGO, Oct. 28, 2022 — Grainger (NYSE: GWW) today reported results for the third quarter of 2022 with sales of $3.9 billion, up 16.9% on a reported and daily basis, and up 20.3% on a daily, constant currency basis, compared to the third quarter 2021, driven by strong performance in both the High-Touch Solutions N.A. and Endless Assortment segments.
“The third quarter performance reflects our focused execution against our long-term strategy and ability to serve customers well in this demand environment,” said D.G. Macpherson, Chairman and CEO. “Our teams are driving impressive results across both business segments and, after another quarter of strong performance, we are increasing our 2022 full year guidance. We remain on track to deliver an exceptional year.”
2022 Third Quarter Financial Summary
|($ in millions)||Q3 2022 (1)||Q3 2021 (1)||Q3|
|Fav. (Unfav.) vs. Prior|
|Net Sales||$3,942||$3,372||16.9 %|
|Gross Profit||$1,519||$1,250||21.5 %|
|Operating Earnings||$603||$438||37.6 %|
|Net Earnings Attributable to|
W.W. Grainger, Inc.
|Diluted Earnings Per Share||$8.27||$5.65||46.4 %|
|Gross Profit Margin||38.5 %||37.1 %||145 bps|
|Operating Margin||15.3 %||13.0 %||230 bps|
|Tax Rate||24.7 %||25.5 %||80 bps|
|(1) Neither Q3 2022 nor Q3 2021 results contained any adjusting items, therefore separate adjusted results are not presented above.|
Sales in the quarter, on a reported and daily basis, increased 16.9% as compared to the third quarter of 2021. Excluding the unfavorable foreign exchange impact of 3.4%, sales on a daily, constant currency basis were up 20.3% compared to the third quarter of 2021 which normalizes for the significant impact of the depreciating Japanese yen.
In the High-Touch Solutions N.A. segment, daily sales were up 19.4% compared to the third quarter of 2021, due to both strong price realization and continued volume growth across all geographies. In the Endless Assortment segment, daily sales were up 8.6% versus the third quarter of 2021 and up 23.7% on a daily, constant currency basis. Revenue growth was driven by strong new customer acquisition and repeat business for the segment, as well as enterprise customer growth at MonotaRO.
Gross Profit Margin
Gross profit margin for the third quarter of 2022 was 38.5%, a 145 basis point increase compared to the third quarter of 2021. The increase was driven by favorability in both segments.
In the High-Touch Solutions N.A. segment, gross margin expanded by 125 basis points over the prior year third quarter primarily due to improved product mix and favorable price/cost spread due largely to timing. This was partially offset by freight inflation. In the Endless Assortment segment, gross margin expanded by 130 basis points versus the prior year third quarter driven largely by freight efficiencies and favorable business unit mix.
Operating earnings for the third quarter of 2022 of $603 million were up 37.6% versus the third quarter of 2021. Operating margin in the quarter of 15.3% increased 230 basis points over the third quarter of 2021 on stronger gross margins in both segments combined with 85 basis points of SG&A leverage gained on strong top-line growth.
Diluted earnings per share of $8.27 in the third quarter of 2022 increased 46.4% compared to the third quarter of 2021 due primarily to the strong operating performance.
The third quarter 2022 tax rate was 24.7%, compared to 25.5% in the third quarter of 2021. The decrease in the rate was primarily due to our mix of foreign earnings and an increased tax benefit from stock compensation.
Operating cash flow for the third quarter of 2022 was $380 million, an increase of $219 million over the third quarter of 2021. The increase was largely driven by the higher net earnings as well as favorable net working capital in the current year period. During the quarter, the Company distributed $286 million to shareholders through dividends and share repurchases.
Given the strong third quarter results, the Company is raising its 2022 full year guidance expectations.
|Total Company (1)||Previous 2022 Guidance Range |
(as of September 21. 2022)
|Updated 2022 Guidance Range |
(as of October 28, 2022)
|Net Sales||$15.0 – $15.2 billion||$15.1 – $15.2 billion|
|Daily Growth||14.5% – 16.5%||15.5% – 16.5%|
|Gross Profit Margin||37.2% – 37.5%||38.0% – 38.1%|
|Operating Margin||13.6% – 14.0%||14.3% – 14.4%|
|Diluted Earnings per Share||$27.25 – $28.75||$29.10 – $29.70|
|Operating Cash Flow||$1.25 – $1.35 billion||$1.25 – $1.35 billion|
|CapEx (cash basis)||$300 – $325 million||$275 – $300 million|
|Share Repurchase||$600 – $700 million||$600 – $625 million|
|Segment Operating Margin|
|High-Touch Solutions N.A.||15.4% – 15.8%||16.2% – 16.3%|
|Endless Assortment||7.7% – 8.2%||8.0% – 8.2%|
|(1) Guidance provided is on an adjusted basis|
The Company will conduct a live conference call and webcast at 11:00 a.m. ET on Friday, October 28, 2022, to discuss the third quarter results. The webcast will be hosted by D.G. 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.
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 third quarter results. Additional Company information can be found on the Grainger Investor Relations website which includes our Company Snapshot and ESG report.
Safe Harbor Statement
All statements in this communication, other than those relating to historical facts, are “forward-looking statements.” Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will,” or “would,” and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. 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, 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. Forward-looking statements are given only as of the date of this communication and the Company undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Republished from the Grainger corporate news webpage as first published by /PRNewswire/