GRAINGER REPORTS RESULTS FOR THE THIRD QUARTER 2024

Continued strong execution fueling results;Company narrows 2024 earnings outlook

Third Quarter Highlights

Delivered sales of $4.4 billion, up 4.3%, or 4.0% on a daily, organic constant currency basis

Achieved operating margin of 15.6%, down 30 basis points

Generated diluted EPS of $9.87, up 4.7%

Produced $611 million in operating cash flow and returned $328 million to Grainger shareholders through dividends and share repurchases

Narrowing 2024 total Company earnings guidance ranges, including daily, organic constant currency sales growth of 4.5% to 5.25% and adjusted diluted EPS of $38.65 to $39.35

CHICAGO, Oct. 31, 2024 /PRNewswire/ -- Grainger (NYSE:GWW) today reported results for the third quarter of 2024 with sales of $4.4 billion, up 4.3%, or 4.0% on a daily, organic constant currency basis, and diluted EPS of $9.87, up 4.7% compared to the third quarter of 2023.  

"From helping customers respond to natural disasters to supporting their safety needs, the team remains sharply focused on providing a flawless experience. As a result, throughout the third quarter, our customer relationships grew and results remained solid amidst a slow, but steady demand market, " said D.G. Macpherson, Chairman and CEO. "As we close out 2024, we are confident in our ability to execute well, meet our goals and drive results for all stakeholders." 

2024 Third Quarter Financial Summary

($ in millions, except per share amounts)

Q3 2024 (1)

Q3 2023 (1)

Q3'24 vs. Q3'23

Fav. / (Unfav.)

Net Sales

$4,388

$4,208

4.3 %

Gross Profit

$1,720

$1,655

3.9 %

Operating Earnings

$686

$667

2.8 %

Net Earnings Attributable to W.W. Grainger, Inc.

$486

$476

2.1 %

Diluted Earnings Per Share

$9.87

$9.43

4.7 %

Gross Profit Margin

39.2 %

39.3 %

(10) bps

Operating Margin

15.6 %

15.9 %

(30) bps

Effective Tax Rate

24.8 %

24.4 %

(40) bps

(1) Results are consistent on a reported and adjusted basis.

RevenueSales in the quarter increased 4.3% compared to the third quarter of 2023. Normalizing for one more selling day in the current year quarter, foreign currency exchange and the Company's 2023 divestiture of its subsidiary, E & R Industrial Sales, Inc., sales on a daily, organic constant currency basis increased 4.0% compared to the third quarter of 2023.

In the High-Touch Solutions - N.A. segment, sales were up 3.3%, or up 2.5% on a daily, organic constant currency basis, compared to the third quarter of 2023. Increased revenue for the segment was driven by growth in all geographies and included broad-based gains across most customer end markets. In the Endless Assortment segment, sales were up 8.1%, or 11.5% on a daily, constant currency basis, compared to the third quarter of 2023. Revenue growth for the segment was driven by core B2B customers at Zoro and strong performance across MonotaRO, most notably with Enterprise customers.

Gross Profit MarginGross profit margin was 39.2% in the third quarter of 2024, a decline of 10 basis points from the third quarter of 2023. 

In the High-Touch Solutions - N.A. segment, 2024 third quarter gross profit margin was 41.6%, a 10 basis point decline compared the prior year quarter as various factors largely offset. In the Endless Assortment segment, gross profit margin declined by 10 basis points from the third quarter of 2023 driven primarily by product and customer mix headwinds. 

EarningsFor the third quarter of 2024, total company operating earnings were $686 million, up 2.8% compared to the third quarter of 2023. Operating margin in the quarter was 15.6%, a 30-basis point decrease from the third quarter of 2023. Continued investment in demand generating activities, as well as annual merit increases in High-Touch Solutions - N.A., were partially offset by strong leverage across Endless Assortment. 

Diluted earnings per share for the third quarter of 2024 were $9.87, up 4.7% compared to the third quarter of 2023. The increase was driven by sales growth and fewer shares outstanding.

Tax RateThe third quarter 2024 effective tax rate was 24.8%, compared to 24.4% in the third quarter of 2023.

Cash FlowDuring the third quarter of 2024, the Company generated $611 million of cash flow from operating activities driven by solid net earnings. Working capital in the period had a neutral impact on operating cash flow. The Company invested $88 million in capital expenditures, resulting in free cash flow of $523 million. During the quarter, the Company returned $328 million to Grainger shareholders through dividends and share repurchases.

GuidanceThe Company is providing the following updated 2024 guidance, including a narrowed earnings outlook.  

Total Company(1)

2024 Guidance Range

(as of August 1, 2024)

2024 Guidance Range

(as of October 31, 2024)

Net Sales

$17.0 - $17.3 billion

$17.1 - $17.3 billion

   Sales Growth

3.2% - 5.2%

4.0% - 4.75%

   Daily, organic constant currency sales growth

4.0% - 6.0%

4.5% - 5.25%

Gross Profit Margin

39.2% - 39.4%

39.3% - 39.4%

Operating Margin

15.3% - 15.7%

15.4% - 15.6%

Diluted Earnings per Share

$38.00 - $39.50

$38.65 - $39.35

Operating Cash Flow

$1.95 - $2.15 billion

$2.15 - $2.25 billion

CapEx (cash basis)

$0.4 - $0.475 billion

$0.4 - $0.45 billion

Share Buyback

$1.0 - $1.2 billion

$1.1 - $1.2 billion

Effective Tax Rate

~24.0%

~23.2%

Segment Operating Margin

High-Touch Solutions - N.A.

17.4% - 17.8%

17.5% - 17.6%

Endless Assortment

7.6% - 8.0%

7.8% - 8.1%

(1)

Guidance provided is on an adjusted basis. Daily, organic constant currency sales growth is adjusted for the impact of two additional selling days in 2024 as compared to 2023, the sale of the Company's divested E & R Industrial Sales, Inc. subsidiary completed in the fourth quarter of 2023, and changes in foreign exchange. The Company does not reconcile forward-looking non GAAP financial measures. For further details see the supplemental information of this release.

WebcastThe Company will conduct a live conference call and webcast at 11:00 a.m. ET on Thursday, October 31, 2024, to discuss the third quarter results. The event 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. To access the conference call via phone, please send a request to For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com. 

About GraingerW.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America, Japan and the United Kingdom. At Grainger, We Keep the World Working® by serving more than 4.5 million customers worldwide with products delivered through innovative technology and deep customer relationships. With 2023 sales of $16.5 billion, the Company operates two business models. In the High-Touch Solutions segment, Grainger offers approximately 2 million maintenance, repair and operating (MRO) products and services, including technical support and inventory management. In the Endless Assortment segment, Zoro.com offers customers access to more than 13 million products, and MonotaRO.com offers more than 22 million products. For more information, visit www.grainger.com.

Visit invest.grainger.com to view information about the Company, including a supplement regarding 2024 third quarter results. Additional Company information can be found on the Grainger Investor Relations website which includes the Company Snapshot and ESG report.

Safe Harbor StatementAll 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 "believe," "could," "future," "guidance," "may," "predict," "prospects," "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: inflation, higher product costs or other expenses, including operational and administrative expenses; the impact of macroeconomic pressures and geopolitical trends, changes and events; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third party practices regarding digital advertising; 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, including with respect to Grainger's eCommerce platforms; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger'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, regulations related to advertising, marketing and the Internet, 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; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; foreign currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; outbreaks of pandemic disease or viral contagions; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key employees; loss of key members of management or key employees; loss of operational flexibility and potential for work stoppages or slowdowns if employees unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments; 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 we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

 

 W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In millions of dollars, except for share and per share amounts)

(Unaudited)

Three Months EndedSeptember 30,

Nine Months Ended September 30,

2024