Distributors

Grainger reports double-digit growth in 2012

W. W. Grainger (NYSE: GWW) posted sales of $9.0 billion for 2012, an increase of 11% over the Chicago-based distributor’s 2011 sales of $8.1 billion. The company’s net earnings of $690 million increased 5% versus $658 million in 2011, and earnings per share of $9.52 increased 5% versus $9.07 in 2011.

Grainger’s sales for the 2012 fourth quarter of $2.2 billion increased 7% versus $2.1 billion in the 2011 fourth quarter. Net earnings of $156 million increased 5% versus $148 million in 2011, and fourth quarter earnings per share of $2.17 increased 6% versus $2.04 in 2011. The global distributor’s operating earnings of $258 million for the 2012 fourth quarter increased 17% versus $221 million in the 2011 quarter.

“It was a record year for Grainger,” said Jim Ryan, chairman, president, and CEO, in a press release. “Despite a slowing of business activity in the back half of the year, particularly in late-December when uncertainty surrounding the economy and the fiscal cliff virtually paralyzed many businesses and government institutions, we achieved solid results while continuing to invest for future growth.”

For the full year, Grainger generated $816 million in operating cash flow versus $746 million in 2011. Capital expenditures for the year were $250 million versus $197 million in 2011, driven primarily by investments to expand the distribution center network in North America. The company also used cash to fund two acquisitions.

During the fourth quarter, Grainger incurred restructuring charges of $0.18 per share primarily related to improving the long-term performance of the businesses in Europe, India and China and $0.03 per share related to branch closures in the United States. The company also recorded an impairment charge of $0.04 per share related to Alliance Energy Solutions, an acquisition completed in November 2009. These items combined in the 2012 fourth quarter represented a $0.25 reduction to earnings per share, resulting in adjusted EPS of $2.42.

During 2012, Grainger posted $2.7 billion in eCommerce sales, representing 30% of total company sales and an increase of 23% versus the prior year. The distributor added 160 new sales representatives and more than 80,000 new products to its U.S. catalog, bringing the total number of products in the 2012 printed catalog to more than 413,000.

“As we look forward to 2013, we remain confident in our strategy and our ability to provide the best service and gain share in the MRO industry,” Ryan said. “While we were disappointed in our earnings leverage for the quarter, we are encouraged by the strong sales rebound we’ve seen thus far in January, despite a very difficult comparison with 2012.”

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