CHICAGO — Grainger reported results for the second quarter of 2024 with sales of $4.3 billion, up 3.1%, or 5.1% on a daily, organic constant currency basis, and adjusted diluted EPS of $9.76, up 5.2% compared to the second quarter of 2023.
“I’m proud of our team for providing a flawless experience and creating tangible value for our customers. Amidst the backdrop of a slow, but generally stable demand environment, we focused on what matters and produced another quarter of solid results,” said D.G. Macpherson, Chairman and CEO. “As we look to the second half of the year, I’m confident in our ability to execute well and deliver results for all stakeholders.”
2024 Second Quarter Financial Summary
(1) Results exclude restructuring costs incurred in the second quarter of 2024. See the supplemental information of this release for a reconciliation of adjusted and non-GAAP financial measures.
Revenue
Sales in the quarter, on a reported and daily basis, increased 3.1% compared to the second 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 5.1% compared to the second quarter of 2023.
In the High-Touch Solutions – N.A. segment, sales, on a reported and daily basis, were up 3.1%, or up 3.7% on a daily, organic constant currency basis, compared to the second quarter of 2023. Revenue growth for the segment was driven by increased volume in all geographies and included broad-based gains across most customer end markets. In the Endless Assortment segment, daily sales were up 3.3%, or 11.7% on a daily, constant currency basis, compared to the second 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. This growth was partially offset by the continued decrease in non-core customers at Zoro.
Gross Profit Margin
Gross profit margin of 39.3% in the second quarter of 2024 was flat to the second quarter of 2023.
In the High-Touch Solutions – N.A. segment, 2024 second quarter gross profit margin of 41.7% was flat over the prior year quarter as various factors offset in the period. In the Endless Assortment segment, gross profit margin declined by 20 basis points from the second quarter of 2023 driven primarily by product and customer mix headwinds.
Earnings
For the second quarter of 2024, total company reported operating earnings were $649 million, down 1.8% compared to the second quarter of 2023. Reported operating margin in the quarter was 15.1%, a 70-basis point decrease from the second quarter of 2023. On an adjusted basis, which removes restructuring costs incurred in the period, operating earnings for the quarter were $665 million, up 0.6% over the second quarter of 2023. Adjusted operating margin was 15.4%, a 40 basis point decrease over the second quarter of 2023, driven by continued investment in demand-generating activities and distribution center network expansion.
Diluted earnings per share for the second quarter of 2024 were $9.51 on a reported basis, up 2.5% compared to the second quarter of 2023. On an adjusted basis, diluted earnings per share were $9.76, up 5.2% versus the second quarter of 2023. The increase was driven by sales growth, fewer shares outstanding and a lower tax rate.
Tax Rate
The second quarter 2024 effective tax rate was 22.9%, compared to 24.0% in the second quarter of 2023. The lower effective tax rate was primarily due to an increase in tax credits over the prior year quarter.
Cash Flow
During the second quarter of 2024, the Company generated $411 million of cash flow from operating activities, as solid net earnings were partially offset by unfavorable working capital. The Company invested $76 million in capital expenditures, resulting in free cash flow of $335 million. During the quarter, the Company returned $345 million to Grainger shareholders through dividends and share repurchases.
Guidance
The Company is providing the following updated total company 2024 guidance, including a narrowed earnings outlook.
