{"id":230976,"date":"2010-01-26T09:43:50","date_gmt":"2010-01-26T14:43:50","guid":{"rendered":"http:\/\/chicagopressrelease.com\/?p=13691"},"modified":"2010-01-26T09:43:50","modified_gmt":"2010-01-26T14:43:50","slug":"grainger-reports-sales-of-6-2-billion-and-earnings-per-share-of-5-62-for-the-year-ended-dec-31-2009","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/230976","title":{"rendered":"Grainger reports sales of $6.2 billion and earnings per share of $5.62 for the year ended Dec. 31, 2009"},"content":{"rendered":"

Grainger (NYSE: GWW) today reported sales, earnings and earnings per share for the year ended Dec. 31, 2009<\/span>.<\/p>\n

Sales of $6<\/span>.2\u00a0billion were down 9\u00a0percent versus 2008. \u00a0Net\u00a0earnings of $430 million<\/span> decreased 9 percent versus $475 million<\/span> in 2008. \u00a0Earnings per share of $5.62<\/span> decreased 6 percent versus $5.97*<\/span>* in 2008. <\/span><\/p>\n

“I am very proud of our employees and how they have successfully navigated this company through one of the most difficult economic times in our history,” said Chairman, President and Chief Executive Officer Jim Ryan<\/span>.<\/p>\n

“The actions we took in 2009 to keep service levels and customer relationships strong are paying off. \u00a0 I am excited about the opportunity we have going forward to gain additional market share and create value for our shareholders by serving as the indispensable MRO partner to businesses and institutions.”<\/p>\n

*The GAAP financial statements are the source for all amounts used in the Return on Invested Capital (ROIC) calculation. \u00a0ROIC is calculated using annualized operating earnings based on year-to-date operating earnings divided by a 13 point average for net working assets.<\/p>\n

Net working assets are working assets minus working liabilities defined as follows: \u00a0working assets equal total assets less cash equivalents (non operating cash), deferred taxes, and investments in unconsolidated entities, plus the LIFO reserve.<\/p>\n

Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to employees’ profit sharing plans, and accrued expenses.<\/p>\n

** Reported 2008 EPS were $6.04<\/span>, which was restated after adopting FSP 03-6-1 on January 1, 2009<\/span>, resulting in a 7 cent<\/span> reduction in EPS in 2008 and 6 cents<\/span> in 2009. \u00a0(See page K-41 of the company’s 2008 10-K for additional information).<\/p>\n

Ryan added, “We are seeing some initial signs of improvement in the overall economy, although job growth is expected to lag the recovery. \u00a0Stronger sales growth in December and January give us greater confidence to raise our 2010 sales growth guidance to a range of 6 to 10 percent and our earnings per share guidance to the new range of $5.40 to $5.90<\/span>.<\/p>\n

We remain cautiously optimistic about the economy and are executing on the things we can control like our customer service and high product availability. \u00a0As a result, we are well positioned for continued share gain, particularly as many competitors have been forced to reduce inventories.”<\/p>\n

The company had previously issued 2010 guidance of 4 to 9\u00a0percent sales growth and earnings per share of $5.30 to $5.80<\/span>.<\/p>\n

For the 2009 fourth quarter, sales of $1<\/span>.6\u00a0billion increased 3\u00a0percent versus the fourth quarter of 2008. There were 64 sales days in both the 2009 and 2008 fourth quarters. \u00a0Daily sales decreased 3 percent in October, increased 2 percent in November and increased 11 percent in December.<\/p>\n

The 3 percent increase for the quarter included a 4\u00a0percentage point contribution from acquisitions, a 2\u00a0percentage point benefit from foreign exchange and a 2 percentage point lift from price increases, partially offset by a 5\u00a0percentage point decline in volume.<\/p>\n

Net earnings of $97 million<\/span> decreased 10\u00a0percent versus $108 million<\/span> in 2008. \u00a0Earnings per share of $1.27<\/span> decreased 7 percent versus $1.37<\/span> in 2008. The effect of adopting FSP 03-6-1 was a 1 cent<\/span> per share reduction in the fourth quarter of 2009 and 2 cents<\/span> in the 2008 quarter.<\/p>\n

During the quarter, the company continued to lower its cost structure by closing branches and reducing headcount. \u00a0In total, 12 branches, including 6 Will Call Express locations, were closed. \u00a0These closures, along with other asset write-downs, resulted in asset impairment charges of $9\u00a0million or 7 cents<\/span> per share.<\/p>\n

In addition, the company reduced headcount by another 200 positions in the 2009 fourth quarter, incurring $7<\/span>.5\u00a0million or 5 cents<\/span> per share in severance cost. \u00a0For the full year 2009, the company eliminated approximately 600 <\/em>positions and incurred $18 million<\/span> in severance or 11 cents<\/span> per share.<\/p>\n

Effective with the first quarter of 2009, the company has two reportable business segments, the United States<\/span> and Canada<\/span>, which represent approximately 98 percent of full year company sales. \u00a0This reporting structure reflects the integration of Lab Safety Supply with Grainger’s U.S. branch-based business.<\/p>\n

The remaining operating units (Japan<\/span>, Mexico<\/span>, India<\/span>, Puerto Rico<\/span>, China<\/span> and Panama<\/span>) are included in other businesses and are not considered a segment. \u00a0The company acquired Asia Pacific Brands India Private Limited in June 2009<\/span> resulting in the inclusion of the India<\/span> operations in other businesses in the third quarter.<\/p>\n

The company also acquired a majority ownership of MonotaRO in September 2009<\/span>, consolidated this Japanese entity in its balance sheet as of the end of the third quarter and began consolidating its income statement in the fourth quarter.<\/p>\n

United States<\/span><\/strong><\/p>\n

Sales for the United States<\/span> segment decreased 2 percent in the 2009 fourth quarter, with daily sales down 7 percent in October, down 3 percent in November and up 5\u00a0percent in December. \u00a0Acquisitions and the timing of the Christmas holiday accounted for 3 percentage points of the sales growth in December.<\/p>\n

Grainger serves a diverse set of customer end-markets in the United States<\/span>. \u00a0During the quarter, sales to government and commercial customers increased versus the 2008 fourth quarter, while sales to resellers, contractors, manufacturing and retail customers declined.<\/p>\n

Throughout 2009, Grainger added products to its already broad offering that will result in having approximately 307,000 in-stock products in the 2010 catalog. \u00a0Product line expansion contributed $260 million<\/span> in sales for the fourth quarter versus $185 million<\/span> in the 2008 fourth quarter. \u00a0Products added over the last four years resulted in $934 million<\/span> in sales in 2009.<\/p>\n

Also contributing to segment performance in the quarter was ongoing work to integrate Lab Safety Supply with Grainger Industrial Supply. \u00a0The company still expects this combination to deliver $70-$100 million<\/span> in incremental revenue and $20-$30 million<\/span> in cost savings by mid-2010. \u00a0Through the end of 2009, the integration has generated $44\u00a0million of the additional revenue and $22 million<\/span> of the cost savings.<\/p>\n

Operating earnings for the quarter were down 6 percent in the United States<\/span>, the result of operating expenses declining at a slower rate than sales.<\/p>\n

The decline in operating expenses was primarily the result of lower payroll-related expenses, reduced commissions and no bonus accruals, partially offset by higher severance and asset impairment charges particularly related to the branch closings. Gross profit margins for the quarter were flat with the prior year.<\/p>\n

Canada<\/span><\/strong><\/p>\n

Sales for the Acklands-Grainger business in the quarter were up 11 percent versus the 2008 fourth quarter\u00a0in U.S.\u00a0dollars. \u00a0In local currency, sales were down 3 percent for the quarter and on a daily basis were down 7 percent in October, down 8 percent in November and up 7\u00a0percent in December. \u00a0Sales performance in December benefited from some large customer orders and the incremental sales from an acquisition.<\/p>\n

From a customer sector standpoint, the 3 percent sales decline for the quarter was attributable to continued weakness among heavy manufacturing, contractor and forestry, partially offset by growth among utilities, government and agriculture and mining.<\/p>\n

Operating earnings in Canada<\/span> increased 59 percent in the 2009 fourth quarter and were up 38\u00a0percent in local currency. \u00a0This improvement resulted from the sales increase, a 0.9\u00a0percentage point improvement in gross profit margins, and operating expenses which increased at a slower rate than sales.<\/p>\n

The improvement in gross margins was driven by a year-end inventory pick up primarily attributable to lower than forecasted transportation and product costs. \u00a0Product costs were lower than expected due in part to favorable foreign exchange.<\/p>\n

The 2008 fourth quarter included a charge for the bankruptcy of a provider of freight payment services. \u00a0Excluding these items, operating earnings were up 6\u00a0percent in U.S. dollars, and down 7 percent in local currency, versus 2008.<\/p>\n

Other Businesses<\/strong><\/p>\n

Sales for the other businesses, which now include Japan<\/span>, Mexico<\/span>, India<\/span>, Puerto Rico<\/span>, China<\/span>, and Panama<\/span>, were up 214 percent for the 2009 fourth quarter versus prior year. \u00a0The sales increase was due primarily to the acquisition of the businesses in India<\/span> and Japan<\/span>, along with contributions from Mexico<\/span> and China<\/span>.<\/p>\n

Operating losses for other businesses were $3\u00a0million in both the 2009 and 2008 quarters.<\/p>\n

Taxes<\/strong><\/p>\n

The fourth quarter 2009 tax rate of 40.6 percent includes the effect of a one-time tax expense resulting from tax law changes in Mexico.\u00a0 Excluding the effect of this one-time expense, the effective tax rate for the fourth quarter was 39.1 percent.<\/p>\n

The effective tax rate for the year 2009 was also 39.1 percent, excluding the effects of the Mexican tax expense recognized in the fourth quarter and a tax benefit recorded in the 2009 third quarter.<\/p>\n

Cash Flow<\/strong><\/p>\n

Operating cash flow was $223 million<\/span> versus $195 million<\/span> in the 2008 fourth quarter. \u00a0For the full year, the company generated $732 million<\/span> in operating cash flow versus $530 million<\/span> in 2008. The company used cash from operations to fund capital expenditures of $53 million<\/span> in the quarter versus $54 million<\/span> in the fourth quarter of 2008.<\/p>\n

Capital expenditures for the year were $142 million<\/span> versus $195 million<\/span> in 2008. The company paid $35\u00a0million in dividends to shareholders and repurchased 2.5 million shares of stock in the quarter. \u00a0For the full year, Grainger returned $507 million<\/span> in cash to shareholders in the form of dividends and share repurchases.<\/p>\n

After buying back 4.5 million shares of stock in 2009, approximately 3.1\u00a0million shares remain under the current repurchase authorization at the end of the year.<\/p>\n

W.W. Grainger<\/span>, Inc. with 2009 sales of $6.2 billion<\/span> is the leading broad line supplier of facilities maintenance products serving businesses and institutions in the United States<\/span> and Canada<\/span>, with an expanding presence in Japan<\/span>, Mexico<\/span>, India<\/span>, China<\/span> and Panama<\/span>.<\/p>\n

Through a highly integrated network including branches, distribution centers and Web\u00a0sites, Grainger’s employees help customers get the job done.<\/p>\n

Visit grainger.com\/investor<\/a> to view information about the company, including a history of daily sales by segment and a podcast regarding fourth quarter 2009 results.<\/p>\n

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<\/p>\n","protected":false},"excerpt":{"rendered":"

Grainger (NYSE: GWW) today reported sales, earnings and earnings per share for the year ended Dec. 31, 2009. Sales of $6.2\u00a0billion were down 9\u00a0percent versus 2008. \u00a0Net\u00a0earnings of $430 million decreased 9 percent versus $475 million in 2008. \u00a0Earnings per share of $5.62 decreased 6 percent versus $5.97** in 2008. “I am very proud of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-230976","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/230976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=230976"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/230976\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=230976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=230976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=230976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}