CHICAGO, Oct. 16, 2018 /PRNewswire/ -- Grainger (NYSE:
GWW) today reported results for the third quarter ended
September 30, 2018. Sales of
$2.8 billion increased
7.4 percent versus $2.6 billion
in the third quarter of 2017. Normalizing for foreign exchange and
the impact of hurricanes, sales increased 8.2 percent versus the
third quarter of 2017.
Reported earnings contained $139
million in non-cash impairment charges relating to the
Cromwell business in the U.K., reflecting a slower growth
trajectory and structural issues. These issues include prolonged
Brexit uncertainty that impacted the market outlook and higher
discount rates, which together account for a majority of the
reduction in valuation.
Operating earnings for the quarter of $189 million were down 32 percent versus
$278 million in the 2017 third quarter. On an adjusted basis,
operating earnings for the quarter of $332
million were up 15 percent versus $287 million in the 2017 third quarter. Earnings
per share of $1.82 were down 35
percent versus $2.79 in the 2017
third quarter. Adjusted earnings per share of $4.19 increased 44 percent versus $2.90 in the 2017 third quarter. The improvement
in adjusted earnings per share was due primarily to higher sales,
operating expense leverage and a lower tax rate.
Quarterly
Financial Summary
|
|
($ in
millions)
|
Q3
2018
|
Q3
2017
|
Change
|
|
Reported
|
Adjusted
(1)
|
Reported
|
Adjusted
(1)
|
Reported
|
Adjusted
(1)
|
Net sales
|
$2,831
|
$2,831
|
$2,636
|
$2,636
|
7%
|
7%
|
Gross
profit
|
$1,079
|
$1,079
|
$1,017
|
$1,018
|
6%
|
6%
|
Operating
earnings
|
$189
|
$332
|
$278
|
$287
|
-32%
|
15%
|
Net
earnings
|
$104
|
$240
|
$162
|
$169
|
-36%
|
43%
|
Diluted earnings per
share
|
$1.82
|
$4.19
|
$2.79
|
$2.90
|
-35%
|
44%
|
|
|
|
|
|
|
|
Gross profit
margin
|
38.1%
|
38.1%
|
38.6%
|
38.6%
|
(50) bps
|
(50) bps
|
Gross profit margin
(rev. rec.) (2)
|
38.6%
|
38.6%
|
38.6%
|
38.6%
|
0 bps
|
0 bps
|
Operating
margin
|
6.7%
|
11.7%
|
10.5%
|
10.9%
|
(380) bps
|
80 bps
|
Tax rate
|
32.7%
|
20.0%
|
31.7%
|
31.7%
|
100 bps
|
(1170) bps
|
(1)
|
Results exclude restructuring
and impairment of intangible assets as shown on pages 8-9 of this
release. Reconciliations of the adjusted measures reflected in this
table to the most directly comparable GAAP measures are provided on
pages 8-9 of this release.
|
(2)
|
Gross margin
normalized for the new revenue recognition standard.
|
"The third quarter represented another solid quarter of
profitable growth across the business," said DG Macpherson,
Chairman and Chief Executive Officer. "Even though we lapped the
2017 U.S. pricing changes during the quarter, we saw continued
strong momentum and share gains from large and medium customers.
Adjusted for the new revenue recognition standard, gross profit
margin in the United States was up
modestly over last year. The balance of the portfolio is performing
as expected, particularly in Canada and with the single channel online
businesses. We are confident in our ability to lead the industry
with the best service and solutions for our customers."
Company
Sales increased 7.4 percent in the 2018 third
quarter versus the 2017 third quarter, driven by a 7 percentage
point increase from volume and 1 percentage point increase in
price, partially offset by a 1 percentage point decline from
foreign exchange and the impact of hurricanes.
Gross profit margin for the quarter was 38.1 percent versus 38.6
percent in the 2017 third quarter. The lower gross profit margin
reflects a 50 basis point decline from implementation of a new
revenue recognition standard. When normalized for the new standard,
gross profit margin for the 2018 third quarter was 38.6 percent,
flat to the 2017 third quarter.
For the third quarter, the company's reported tax rate was
32.7 percent versus 31.7 percent in the 2017 third quarter.
The increase was primarily due to the Cromwell impairment charges
that lowered reported earnings and were not tax deductible, net of
the benefit from U.S. tax reform. The adjusted tax rate was
20.0 percent in the 2018 third quarter versus 31.7 percent in the
2017 third quarter. The lower tax rate reflects the impact of U.S.
tax reform and the tax benefit from stock-based compensation. For
the fourth quarter, the company projects a reported and adjusted
tax rate of 23 to 26 percent, which does not include any future tax
benefit from stock-based compensation.
Cash Flow
Operating cash flow for the quarter was $367
million versus $349 million in
the 2017 third quarter, an increase of 5 percent compared to the
same period last year, due to increased net earnings, partially
offset by working capital investments to support growth. Free cash
flow in the quarter was $334 million
versus $329 million in the 2017 third
quarter. The company used the cash generated during the quarter to
invest in the business and return cash to shareholders through
share repurchases and dividends. During the quarter, capital
expenditures were $66 million. In the
quarter, Grainger returned $159 million to shareholders
through $77 million in dividends and
$82 million to buy back 243,000
shares.
Webcast
Grainger will conduct a live conference call and webcast at
11:00 a.m. Eastern Daylight Time on
October 16, 2018, to discuss the
third quarter. The webcast will be hosted by DG Macpherson and
Tom Okray, Senior Vice President and
Chief Financial Officer and can be accessed at
www.grainger.com/investor. For those unable to participate in the
live event, a webcast replay will be available for 90 days at
www.grainger.com/investor.
About Grainger
W.W. Grainger, Inc., with 2017 sales of $10.4 billion, is North
America's leading broad line supplier of maintenance, repair
and operating products (MRO), with operations also in Europe, Asia
and Latin America.
Visit www.grainger.com/investor to view
information about the company, including a supplement regarding
2018 third quarter results. The Grainger Investor
Relations website also includes company information in
our Fact Book and Corporate Social
Responsibility report.
Safe Harbor Statement
All statements in this communication, other than those relating
to historical facts, are "forward-looking statements." These
forward-looking statements are not guarantees of future performance
and are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from such statements.
These forward-looking statements include, but are not limited to,
statements about future strategic plans and future financial and
operating results. Important factors that could cause actual
results to differ materially from expectations include, among
others: higher product costs or other expenses; a major loss of
customers; loss or disruption of source of supply; increased
competitive pricing pressures; failure to develop or implement new
technologies; the implementation, timing and success of our
strategic pricing initiatives; the outcome of pending and future
litigation or governmental or regulatory proceedings, including
with respect to wage and hour, anti-bribery and corruption,
environmental, advertising, privacy and cybersecurity matters;
investigations, inquiries, audits and changes in laws and
regulations; disruption of information technology or data security
systems; general industry or market conditions; general global
economic conditions; currency exchange rate fluctuations; market
volatility; commodity price volatility; labor shortages; facilities
disruptions or shutdowns; higher fuel costs or disruptions in
transportation services; natural and other catastrophes;
unanticipated weather conditions; loss of key members of
management; our ability to operate, integrate and leverage acquired
businesses; changes in credit ratings; changes in effective tax
rates and other factors which can be found in our filings with the
Securities and Exchange Commission, including our most recent
periodic reports filed on Form 10-K and Form 10-Q, which are
available on our Investor Relations website. Forward-looking
statements are given only as of the date of this communication and
we disclaim any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by law.
CONSOLIDATED
STATEMENTS OF EARNINGS (Unaudited)
|
(In thousands of
dollars, except for per share amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine
Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
$
|
2,831,429
|
|
|
$
|
2,635,999
|
|
|
$
|
8,458,042
|
|
|
$
|
7,792,397
|
|
Cost of goods sold
|
1,752,194
|
|
|
1,618,819
|
|
|
5,176,107
|
|
|
4,716,069
|
|
Gross profit
|
1,079,235
|
|
|
1,017,180
|
|
|
3,281,935
|
|
|
3,076,328
|
|
Selling, general and
administrative expense
|
890,113
|
|
|
739,442
|
|
|
2,413,997
|
|
|
2,277,009
|
|
Operating earnings
|
189,122
|
|
|
277,738
|
|
|
867,938
|
|
|
799,319
|
|
Other income and (expense)
|
|
|
|
|
|
|
|
Interest income
|
2,003
|
|
|
707
|
|
|
3,645
|
|
|
1,365
|
|
Interest expense
|
(22,353)
|
|
|
(23,790)
|
|
|
(69,942)
|
|
|
(64,971)
|
|
Equity method
investment
|
(3,731)
|
|
|
(10,635)
|
|
|
(18,271)
|
|
|
(25,130)
|
|
Other non-operating
income
|
5,976
|
|
|
5,978
|
|
|
18,001
|
|
|
17,284
|
|
Total other
expense, net
|
(18,105)
|
|
|
(27,740)
|
|
|
(66,567)
|
|
|
(71,452)
|
|
Earnings before income taxes
|
171,017
|
|
|
249,998
|
|
|
801,371
|
|
|
727,867
|
|
Income
taxes
|
55,972
|
|
|
79,182
|
|
|
197,798
|
|
|
267,239
|
|
Net earnings
|
115,045
|
|
|
170,816
|
|
|
603,573
|
|
|
460,628
|
|
Net earnings
attributable to noncontrolling interest
|
10,668
|
|
|
8,810
|
|
|
30,680
|
|
|
25,957
|
|
Net earnings
attributable to W.W. Grainger, Inc.
|
$
|
104,377
|
|
|
$
|
162,006
|
|
|
$
|
572,893
|
|
|
$
|
434,671
|
|
|
|
|
|
|
|
|
|
Earnings per share
-Basic
|
$
|
1.84
|
|
|
$
|
2.80
|
|
|
$
|
10.12
|
|
|
$
|
7.43
|
|
-Diluted
|
$
|
1.82
|
|
|
$
|
2.79
|
|
|
$
|
10.04
|
|
|
$
|
7.39
|
|
Average number of shares outstanding
-Basic
|
56,340
|
|
|
57,317
|
|
|
56,172
|
|
|
58,010
|
|
-Diluted
|
56,804
|
|
|
57,521
|
|
|
56,589
|
|
|
58,330
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
Net earnings as
reported
|
$
|
104,377
|
|
|
$
|
162,006
|
|
|
$
|
572,893
|
|
|
$
|
434,671
|
|
Earnings allocated to
participating securities
|
(882)
|
|
|
(1,406)
|
|
|
(4,682)
|
|
|
(3,532)
|
|
Net earnings
available to common shareholders
|
$
|
103,495
|
|
|
$
|
160,600
|
|
|
$
|
568,211
|
|
|
$
|
431,139
|
|
Weighted average
shares adjusted for dilutive securities
|
56,804
|
|
|
57,521
|
|
|
56,589
|
|
|
58,330
|
|
Diluted earnings per
share
|
$
|
1.82
|
|
|
$
|
2.79
|
|
|
$
|
10.04
|
|
|
$
|
7.39
|
|
|
NOTE: Results for
2017 have been restated due to adoption of Accounting Standards
Update (ASU) 2017-07, Compensation Retirement Benefits (Topic
715): Improving the Presentation of Net Periodic Pension Cost and
Net Periodic Postretirement Benefit Cost. The ASU effectively
increases Selling, general and administrative expense, lowering
Operating earnings, and decreases total other expense, net, with no
impact on Net earnings or Earnings per share. Restated 2017
quarterly and annual financials can be found at
www.grainger.com/investor.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
(In thousands of
dollars)
|
|
|
|
Assets
|
September 30,
2018
|
|
December 31,
2017
|
Cash and cash
equivalents
|
$
|
516,850
|
|
|
$
|
326,876
|
|
Accounts receivable –
net
|
1,481,300
|
|
|
1,325,186
|
|
Inventories
|
1,473,117
|
|
|
1,429,199
|
|
Prepaid expenses and
other assets
|
93,586
|
|
|
86,667
|
|
Prepaid income
taxes
|
18,491
|
|
|
38,061
|
|
Total current
assets
|
3,583,344
|
|
|
3,205,989
|
|
Property, buildings
and equipment – net
|
1,348,914
|
|
|
1,391,967
|
|
Deferred income
taxes
|
20,726
|
|
|
22,362
|
|
Goodwill
(1)
|
429,818
|
|
|
543,903
|
|
Intangibles - net
(1)
|
479,521
|
|
|
569,115
|
|
Other
assets
|
69,860
|
|
|
70,918
|
|
Total
assets
|
$
|
5,932,183
|
|
|
$
|
5,804,254
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Short-term
debt
|
$
|
49,429
|
|
|
$
|
55,603
|
|
Current maturities of
long-term debt
|
36,973
|
|
|
38,709
|
|
Trade accounts
payable
|
730,215
|
|
|
731,582
|
|
Accrued compensation
and benefits
|
215,727
|
|
|
254,560
|
|
Accrued contributions
to employees' profit sharing plans
|
93,509
|
|
|
92,682
|
|
Accrued
expenses
|
302,263
|
|
|
313,766
|
|
Income taxes
payable
|
39,216
|
|
|
19,759
|
|
Total current
liabilities
|
1,467,332
|
|
|
1,506,661
|
|
Long-term
debt
|
2,148,399
|
|
|
2,248,036
|
|
Deferred income taxes
and tax uncertainties
|
115,644
|
|
|
111,710
|
|
Employment-related
and other non-current liabilities
|
100,754
|
|
|
110,114
|
|
Shareholders' equity
(2)
|
2,100,054
|
|
|
1,827,733
|
|
Total liabilities and
shareholders' equity
|
$
|
5,932,183
|
|
|
$
|
5,804,254
|
|
|
|
(1)
|
Primarily related to
a goodwill impairment of $105 million and an intangible impairment
of $34 million relating to Cromwell. Also includes foreign currency
translation and amortization of intangibles.
|
(2)
|
Common stock
outstanding as of September 30, 2018 was 56,320,463 compared with
56,328,863 shares at December 31, 2017, primarily due to share
repurchases.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
(In thousands of
dollars)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
115,045
|
|
|
$
|
170,816
|
|
|
$
|
603,573
|
|
|
$
|
460,628
|
|
Provision for losses
on accounts receivable
|
3,166
|
|
|
2,418
|
|
|
6,784
|
|
|
15,187
|
|
Deferred income taxes
and tax uncertainties
|
6,928
|
|
|
(7,922)
|
|
|
10,004
|
|
|
(15,261)
|
|
Depreciation and
amortization
|
63,871
|
|
|
66,143
|
|
|
191,602
|
|
|
194,338
|
|
Net gains from sale
of assets and divestitures
|
(4,813)
|
|
|
(1,241)
|
|
|
(22,270)
|
|
|
(7,163)
|
|
Impairment of
goodwill, intangible and other assets
|
138,829
|
|
|
—
|
|
|
142,155
|
|
|
18,459
|
|
Stock-based
compensation
|
8,408
|
|
|
7,122
|
|
|
36,241
|
|
|
27,152
|
|
Losses from equity
method investment
|
3,731
|
|
|
10,635
|
|
|
18,271
|
|
|
25,130
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(23,681)
|
|
|
(8,787)
|
|
|
(171,829)
|
|
|
(145,631)
|
|
Inventories
|
(8,930)
|
|
|
4,915
|
|
|
(53,270)
|
|
|
34,851
|
|
Prepaid expenses and
other assets
|
12,231
|
|
|
20,026
|
|
|
(12,920)
|
|
|
(4,206)
|
|
Trade accounts
payable
|
(1,006)
|
|
|
19,900
|
|
|
4,419
|
|
|
56,717
|
|
Other current
liabilities
|
42,638
|
|
|
48,632
|
|
|
(36,377)
|
|
|
29,643
|
|
Current income taxes
payable, net
|
10,122
|
|
|
11,655
|
|
|
38,666
|
|
|
18,015
|
|
Accrued
employment-related benefits cost
|
(4,803)
|
|
|
651
|
|
|
(18,408)
|
|
|
4,306
|
|
Other –
net
|
5,355
|
|
|
3,737
|
|
|
6,363
|
|
|
8,713
|
|
Net cash provided by
operating activities
|
367,091
|
|
|
348,700
|
|
|
743,004
|
|
|
720,878
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Additions to
property, buildings and equipment and intangibles
|
(65,813)
|
|
|
(60,036)
|
|
|
(168,896)
|
|
|
(191,183)
|
|
Proceeds from sales
of assets
|
32,278
|
|
|
40,663
|
|
|
75,558
|
|
|
110,421
|
|
Equity method
investment
|
2,111
|
|
|
(9,130)
|
|
|
(11,875)
|
|
|
(22,430)
|
|
Other –
net
|
—
|
|
|
3,700
|
|
|
—
|
|
|
3,554
|
|
Net cash used in
investing activities
|
(31,424)
|
|
|
(24,803)
|
|
|
(105,213)
|
|
|
(99,638)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net (decrease)
increase in commercial paper
|
—
|
|
|
(99,907)
|
|
|
18
|
|
|
(369,748)
|
|
Borrowings under
lines of credit
|
1,638
|
|
|
3,557
|
|
|
23,782
|
|
|
33,931
|
|
Payments against
lines of credit
|
(5,591)
|
|
|
(21,669)
|
|
|
(27,899)
|
|
|
(39,705)
|
|
Net (decrease)
increase of long-term debt
|
(53,160)
|
|
|
335
|
|
|
(89,223)
|
|
|
408,208
|
|
Proceeds from stock
options exercised
|
92,415
|
|
|
191
|
|
|
179,549
|
|
|
27,255
|
|
Payments for employee
taxes withheld from stock awards
|
(1,281)
|
|
|
(827)
|
|
|
(11,381)
|
|
|
(17,546)
|
|
Purchase of treasury
stock
|
(81,868)
|
|
|
(122,421)
|
|
|
(282,746)
|
|
|
(435,983)
|
|
Cash dividends
paid
|
(77,157)
|
|
|
(73,867)
|
|
|
(232,289)
|
|
|
(225,504)
|
|
Other –
net
|
7
|
|
|
—
|
|
|
2,747
|
|
|
—
|
|
Net cash used in
financing activities
|
(124,997)
|
|
|
(314,608)
|
|
|
(437,442)
|
|
|
(619,092)
|
|
Exchange rate effect
on cash and cash equivalents
|
(6,281)
|
|
|
221
|
|
|
(10,375)
|
|
|
8,281
|
|
Net change in cash
and cash equivalents
|
204,389
|
|
|
9,510
|
|
|
189,974
|
|
|
10,429
|
|
Cash and cash
equivalents at beginning of period
|
312,461
|
|
|
275,065
|
|
|
326,876
|
|
|
274,146
|
|
Cash and cash
equivalents at end of period
|
$
|
516,850
|
|
|
$
|
284,575
|
|
|
$
|
516,850
|
|
|
$
|
284,575
|
|
SUPPLEMENTAL INFORMATION - CONSOLIDATED
STATEMENTS OF EARNINGS
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (Unaudited)
(In thousands of dollars,
except for per share amounts)
The company supplemented the reporting of financial information
determined under U.S. generally accepted accounting principles
(GAAP) with certain non-GAAP financial measures, which the company
refers to as "adjusted" measures, including adjusted net sales
growth, adjusted gross profit, adjusted gross profit margin,
adjusted operating earnings, adjusted operating margin, adjusted
net earnings, adjusted diluted earnings per share and adjusted tax
rate. Free cash flow is not defined under GAAP. The company defines
free cash flow as net cash flow provided by operating activities
less purchases of property, buildings and equipment plus proceeds
from the sale of assets. The company believes free cash flow is
meaningful to investors as a useful measure of performance and the
company uses this measure as an indication of the strength of the
company and its ability to generate cash. Adjusted measures exclude
items that may not be indicative of core operating results. The
company believes that these non-GAAP measures provide meaningful
information to assist shareholders in understanding financial
results and assessing prospects for future performance. Management
believes adjusted net sales growth, adjusted gross profit, adjusted
gross profit margin, adjusted operating earnings, adjusted
operating margin, adjusted net earnings, adjusted diluted earnings
per share and adjusted tax rate are important indicators of
operations because they exclude items that may not be indicative of
our core operating results, and provide a better baseline for
analyzing trends in our underlying businesses. Because non-GAAP
financial measures are not standardized, it may not be possible to
compare these financial measures with other companies' non-GAAP
financial measures having the same or similar names. These adjusted
financial measures should not be considered in isolation or as a
substitute for reported results. These non-GAAP financial measures
reflect an additional way of viewing aspects of operations that,
when viewed with GAAP results, provide a more complete
understanding of the business. The company strongly encourages
investors and shareholders to review company financial statements
and publicly filed reports in their entirety and not to rely on any
single financial measure.
The reconciliations provided below reconcile the non-GAAP
financial measures adjusted net sales growth, adjusted gross
profit, adjusted gross profit margin, adjusted operating earnings,
adjusted operating margin, adjusted net earnings, adjusted diluted
earnings per share and adjusted tax rate with GAAP financial
measures:
|
Three Months
Ended
September 30, 2018
|
|
Nine Months
Ended
September 30, 2018
|
Net sales growth
reported
|
7.4
|
%
|
|
8.5
|
%
|
Foreign
exchange
|
0.4
|
|
|
(0.7)
|
|
Hurricane
|
0.4
|
|
|
0.1
|
|
Net sales growth
adjusted
|
8.2
|
%
|
|
7.9
|
%
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
2018
|
Gross
Profit %
|
|
2017
|
Gross
Profit %
|
|
2018
|
Gross
Profit %
|
|
2017
|
Gross
Profit %
|
Gross profit
reported
|
$
|
1,079,235
|
|
38.1
|
%
|
|
$
|
1,017,180
|
|
38.6
|
%
|
|
$
|
3,281,935
|
|
38.8
|
%
|
|
$
|
3,076,328
|
|
39.5
|
%
|
Restructuring, net (1)
|
(141)
|
|
—
|
|
|
481
|
|
—
|
|
|
820
|
|
—
|
|
|
3,055
|
|
—
|
|
Gross profit
adjusted
|
$
|
1,079,094
|
|
38.1
|
%
|
|
$
|
1,017,661
|
|
38.6
|
%
|
|
$
|
3,282,755
|
|
38.8
|
%
|
|
$
|
3,079,383
|
|
39.5
|
%
|
SUPPLEMENTAL
INFORMATION - CONSOLIDATED STATEMENTS OF EARNINGS
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
|
(In thousands of
dollars, except for per share amounts)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended September 30,
|
|
2018
|
Operating
Margin %
|
|
2017
|
Operating
Margin %
|
|
2018
|
Operating
Margin %
|
|
2017
|
Operating
Margin %
|
Operating earnings
reported
|
$
|
189,122
|
|
6.7
|
%
|
|
$
|
277,738
|
|
10.5
|
%
|
|
$
|
867,938
|
|
10.3
|
%
|
|
$
|
799,319
|
|
10.3
|
%
|
Restructuring,
impairment and other charges, net (1)
|
142,484
|
|
5.0
|
|
|
9,648
|
|
0.4
|
|
|
165,818
|
|
1.9
|
|
|
66,511
|
|
0.8
|
|
Operating earnings
adjusted
|
$
|
331,606
|
|
11.7
|
%
|
|
$
|
287,386
|
|
10.9
|
%
|
|
$
|
1,033,756
|
|
12.2
|
%
|
|
$
|
865,830
|
|
11.1
|
%
|
|
|
Three Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
%
|
|
2018
|
|
2017
|
%
|
Net earnings
reported
|
$
|
104,377
|
|
|
$
|
162,006
|
|
(36)%
|
|
|
$
|
572,893
|
|
|
$
|
434,671
|
|
32
|
%
|
Restructuring,
impairment and other charges, net (1)
|
136,029
|
|
|
6,519
|
|
|
|
154,066
|
|
|
66,576
|
|
|
Net earnings
adjusted
|
$
|
240,406
|
|
|
$
|
168,525
|
|
43
|
%
|
|
$
|
726,959
|
|
|
$
|
501,247
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share reported
|
$
|
1.82
|
|
|
$
|
2.79
|
|
(35)%
|
|
|
$
|
10.04
|
|
|
$
|
7.39
|
|
36
|
%
|
Pretax
restructuring, impairment and other charges, net (1)
|
2.48
|
|
|
0.17
|
|
|
|
2.90
|
|
|
1.13
|
|
|
Tax effect
(2)
|
(0.11)
|
|
|
(0.06)
|
|
|
|
(0.20)
|
|
|
—
|
|
|
Total, net of
tax
|
2.37
|
|
|
0.11
|
|
|
|
2.70
|
|
|
1.13
|
|
|
Diluted earnings per
share adjusted
|
$
|
4.19
|
|
|
$
|
2.90
|
|
44
|
%
|
|
$
|
12.74
|
|
|
$
|
8.52
|
|
50
|
%
|
|
|
Three Months
Ended
September 30, 2018
|
Three Months
Ended
September 30, 2017
|
Tax rate
reported
|
32.7
|
%
|
31.7
|
%
|
Stock-based
compensation
|
(2.6)
|
|
(0.2)
|
|
Restructuring,
impairment and other charges, net (1)
|
(10.1)
|
|
0.2
|
|
Tax rate
adjusted
|
20.0
|
%
|
31.7
|
%
|
|
(1) Third
quarter 2018 charges primarily related to the impairment of
intangible assets in Cromwell. The charges also included
restructuring actions in the United States and Canada. Third
quarter 2017 charges related to restructuring actions and sales of
branches in the United States and branch closures and other
restructuring in Canada.
|
|
(2) The tax impact of
adjustments is calculated based on the income tax rate in each
applicable jurisdiction, subject to deductibility limitations and
the company's ability to realize the associated tax
benefits.
|
SUPPLEMENTAL
INFORMATION - CONSOLIDATED STATEMENTS OF EARNINGS
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
|
(In thousands of
dollars, except for per share amounts)
|
|
Free Cash
Flow
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net cash provided by
operating activities
|
$
|
367,091
|
|
|
$
|
348,700
|
|
|
$
|
743,004
|
|
|
$
|
720,878
|
|
Less:
|
|
|
|
|
|
|
|
Additions to
property, building and equipment
|
65,813
|
|
|
60,036
|
|
|
168,896
|
|
|
191,183
|
|
Add:
|
|
|
|
|
|
|
|
Proceeds from the
sale of assets
|
32,278
|
|
|
40,663
|
|
|
75,558
|
|
|
110,421
|
|
Free Cash
Flow
|
$
|
333,556
|
|
|
$
|
329,327
|
|
|
$
|
649,666
|
|
|
$
|
640,116
|
|
View original
content:http://www.prnewswire.com/news-releases/grainger-reports-results-for-the-2018-third-quarter-300731413.html
SOURCE W.W. Grainger, Inc.