CHICAGO — Grainger 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.”
Revenue
Sales 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 Margin
Gross 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.
Earnings
For 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 Rate
The third quarter 2024 effective tax rate was 24.8%, compared to 24.4% in the third quarter of 2023.
Cash Flow
During 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.
Guidance
The Company is providing the following updated 2024 guidance, including a narrowed earnings outlook.
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.
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