CHICAGO — Grainger (NYSE: GWW) today reported results for the first quarter of 2024 with sales of $4.2 billion, up 3.5%, or 4.9% on a daily, organic constant currency basis, and diluted EPS of $9.62, up 0.1% compared to the first quarter of 2023.
First Quarter Highlights
- Delivered sales of $4.2 billion, up 3.5%, or 4.9% on a daily, organic constant currency basis
- Achieved operating margin of 15.8%, down 80 basis points
- Increased diluted EPS by $0.01 to $9.62
- Generated $661 million in operating cash flow and returned $360 million to Grainger shareholders through dividends and share repurchases
- Announced dividend increase of 10%
- Refreshed repurchase authorization for up to 5 million shares of common stock
- Reaffirming FY 2024 guidance
“Our 2024 performance so far shows that the team is focusing on what matters and living our purpose—We Keep the World Working®. We’ve produced solid results amidst a slow, but steady demand environment,” said D.G. Macpherson, Chairman and CEO. “Looking to the remainder of the year, we are well-positioned to achieve our guidance outlook as we work to provide a flawless experience and deliver tangible value for our customers.” 12024
First Quarter Financial Summary
Revenue
Sales in the quarter, on a reported and daily basis, increased 3.5% compared to the first quarter of 2023. Normalizing for the impact of 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 4.9% compared to the first quarter of 2023.
In the High-Touch Solutions – N.A. segment, daily sales were up 3.4% compared to the first quarter of 2023, with growth in all geographies. In the Endless Assortment segment, daily sales were up 3.7%, or 10.0% on a daily, constant currency basis, compared to the first quarter of 2023. Revenue growth for the segment was driven by core customers at Zoro and enterprise customers at MonotaRO, partially offset by the continued decrease in non-core customers at Zoro.
Gross Profit Margin
Gross profit margin for the first quarter of 2024 was 39.4%, a 50-basis point decline from the first quarter of 2023. The decrease was driven by declines in both segments.
In the High-Touch Solutions – N.A. segment, gross profit margin decreased by 60 basis points over the first quarter of 2023 due primarily to negative price / cost spread partially offset by sustained freight and supply chain efficiencies. In the Endless Assortment segment, gross profit margin declined by 30 basis points from the first quarter of 2023 as continued freight efficiencies at MonotaRO were offset by unfavorable product mix at Zoro. 2
Earnings
Operating earnings for the first quarter of 2024 were $669 million, down 1.6% compared to the first quarter of 2023. Operating margin in the quarter was 15.8%, an 80-basis point decrease from the first quarter of 2023 as continued investment in demand generating activities in the High-Touch Solutions – N.A. segment was partially offset by operating efficiencies at MonotaRO.
Diluted earnings per share of $9.62 in the first quarter of 2024, increased 0.1% compared to the first quarter of 2023. The decline in operating earnings was offset by a lower share count in the current year period.
Tax Rate
The first quarter 2024 effective tax rate was 24.2%, compared to 23.3% in the first quarter of 2023. The increase in the effective tax rate was primarily due to decreased stock compensation tax benefit.
Cash Flow
During the first quarter of 2024, the Company generated $661 million of cash flow from operating activities, as solid net earnings were further aided by the favorable timing of working capital. The Company invested $119 million in capital expenditures, resulting in free cash flow of $542 million. During the quarter, the Company returned $360 million to Grainger shareholders through dividends and share repurchases. 3
Guidance
The company is reaffirming the following guidance ranges as previously announced on February 2, 2024.
