Distributors

Grainger Provides Strategic Update, Multi-Year Outlook

GraingerCHICAGO — Grainger hosts investors today at the Company’s Northeast Distribution Center in Bordentown, New Jersey. Members of Grainger’s executive team will present an update on the Company’s strategy including new three-year financial targets through 2025.

“We have made significant progress over the last several years by starting with the customer and focusing on what matters to drive strong results,” says Chairman and CEO D.G. Macpherson ahead of the Investor Day event. “With a commitment to provide a flawless experience and tangible value for our customers, we are gaining momentum and remain well-positioned to create significant shareholder value by delivering on our financial targets over the next three years.”

Presenters highlighted the following expectations during the event:

  • In its High-Touch Solutions N.A. segment, due to strong execution on its strategic growth engines, the Company increases its U.S. market outgrowth target to 400 to 500 basis points per year
  • In its Endless Assortment segment, the Company outlines key tenets of its flywheel and expectations for annual high-teens sales growth in local currency for both Zoro and MonotaRO through 2025
  • The Company provides insights into its supply chain advantage and outlines plans to invest in Distribution Center capacity, automation, and environmental, social and governance (ESG) initiatives to support future growth expectations

Assuming normal economic growth, delivering on these expectations would result in total Company full year 2025 performance targets, including:

  • Net sales between $19 and $20 billion, representing 8% to 10% compounded annual growth compared to the mid-point of 2022 guidance of $15.1 billion
  • Adjusted operating margin of approximately 14.5%, representing approximately 70 basis points of improvement compared to the mid-point of 2022 guidance of 13.8%
  • Adjusted earnings per share of approximately $40, a 43% increase compared to the mid-point of 2022 guidance of $28
  • Operating cash flow of approximately $2 billion, a 54% increase compared to the mid-point of 2022 guidance at $1.3 billion
  • Expected annual capital expenditures between $500 and $600 million per year for 2023 through 2025
  • Management plans to follow a balanced approach to capital allocation that combines investing to accelerate growth with continuing to return significant capital to shareholders through dividends and share repurchases

The Company also reaffirms its prior full year 2022 guidance, previously provided on July 29, 2022, including 14.5% to 16.5% total Company daily sales growth, and adjusted EPS between $27.25 to $28.75, up 37% to 45% compared to 2021.

A webcast replay of Investor Day will be available at invest.grainger.com.

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