CHICAGO, July 23, 2020 /PRNewswire/ -- Grainger (NYSE:
GWW) today reported results for the 2020 second quarter including
sales of $2.8 billion in the quarter
driven by significant share gains in the U.S. segment. We estimate
the MRO market declined between 14% and 15% in the U.S.
"We remain grounded in our priorities of serving our customers
well, helping our customers and team members focus on safety and
well-being, and maintaining a strong financial position even in
times like these," said DG Macpherson, Chairman and Chief Executive
Officer. "During the second quarter, Grainger performed well. We
gained significant share in a down market, fueled by elevated
levels of pandemic product sales and improving trends in
non-pandemic product sales throughout the quarter. On the cost
side, we achieved significant leverage and generated over
$75 million of sequential cost
reductions contributing to strong operating cash flow and allowing
continued investment in the business. The work our team members are
doing resonates with our customers and communities and positions
Grainger to support our customers and deliver results even in this
uncertain time."
2020 Second Quarter Financial Summary
($ in
millions)
|
Q2
2020
|
Q2
2019
|
Q2
|
Fav. (Unfav.) vs.
Prior
|
|
Reported
|
Adjusted1
|
Reported
|
Adjusted1
|
Reported
|
Adjusted1
|
Net
Sales
|
$2,837
|
$2,837
|
$2,893
|
$2,893
|
(2)%
|
(2)%
|
Gross
Profit
|
$1,016
|
$1,016
|
$1,121
|
$1,121
|
(9)%
|
(9)%
|
Operating
Earnings
|
$205
|
$315
|
$380
|
$377
|
(46)%
|
(16)%
|
Net
Earnings
|
$114
|
$204
|
$260
|
$258
|
(56)%
|
(21)%
|
Diluted
EPS
|
$2.10
|
$3.75
|
$4.67
|
$4.64
|
(55)%
|
(19)%
|
|
|
|
|
|
|
|
Gross Profit
%
|
35.8%
|
35.8%
|
38.7%
|
38.7%
|
(290) bps
|
(290) bps
|
Operating
Margin
|
7.3%
|
11.1%
|
13.1%
|
13.0%
|
(590) bps
|
(190) bps
|
Tax
Rate
|
30.2%
|
25.8%
|
25.6%
|
25.5%
|
(460) bps
|
(30) bps
|
|
|
(1)
|
Results exclude
restructuring and income tax items as shown in the supplemental
information of this release. Reconciliations of the adjusted
measures reflected in this table to the most directly comparable
GAAP measures are provided in the supplemental information of this
release. During this quarter, the company recorded a $109 million
pretax loss from the sale of the Fabory business which was the
largest contributor to the decline in reported operating
earnings.
|
Revenue
Daily sales for the quarter decreased 1.9% as compared to the
2019 second quarter. The sales decline was driven by volume
decreases including unfavorable product mix from heightened levels
of pandemic-related sales, as well as decreased volume of
non-pandemic products. Foreign exchange had a very small, negative
impact of 10 basis points in the quarter. The second quarter of
2019 and 2020 had the same number of selling days.
Gross Profit Margin
Reported and adjusted gross profit margin for the second quarter
of 2020 was 35.8%. This compares to reported and adjusted gross
profit margin in the second quarter of 2019 of 38.7%. The
unfavorable variance continues to be driven primarily by
pandemic-related impacts, including product mix and heightened
freight expense, that were particularly noticeable in our U.S.
segment. The continued business unit mix impact from the faster
growth in our lower-margin endless assortment businesses also
contributed to the variance.
Earnings
Reported operating earnings for the 2020 second quarter of
$205 million were down 46% versus
$380 million in the 2019 second
quarter. On an adjusted basis, operating earnings for the quarter
of $315 million were down 16% versus
$377 million in the 2019 second
quarter. During the second quarter, the company recorded a
$109 million pretax loss from the
sale of the Fabory business, which was the largest contributor to
the difference between reported and adjusted operating
earnings.
Reported operating margin of 7.3% decreased 590 basis points in
the second quarter of 2020 versus the prior year second
quarter. Adjusted operating margin of 11.1% in this quarter
declined 190 basis points versus the prior year second quarter. The
decline in adjusted operating margin was due primarily to lower
adjusted gross margin, offset in part by 100 basis points of
SG&A leverage.
Reported earnings per share of $2.10 in the second quarter of 2020 was down 55%
versus $4.67 in the 2019 second
quarter. Adjusted earnings per share in this quarter of
$3.75 decreased 19% versus
$4.64 in the 2019 second quarter. The
decrease in adjusted earnings per share was due primarily to lower
operating earnings, which were partially offset by lower average
shares outstanding in the current period.
Tax Rate
For the 2020 second quarter, the company's reported tax rate was
30.2% versus 25.6% in the 2019 second quarter. The difference was
primarily related to the impairment and subsequent divestiture of
the Fabory business.
Excluding net restructuring, impairment charges and
non-recurring income tax items, the adjusted tax rates were 25.8%
and 25.5% for the three months ended June 30, 2020 and
June 30, 2019, respectively.
Cash Flow
Operating cash flow was $232
million in the 2020 second quarter compared to $323 million in the 2019 second quarter. The
decrease in operating cash flow was primarily driven by lower net
income and significant investments in working capital, primarily
inventory, enabling us to better serve our customers. This was
partially offset by the timing of our annual income tax payment.
During the second quarter of 2020, Grainger returned $86 million in the form of dividends to
shareholders. While we remain committed to returning excess capital
to shareholders over time, our share repurchase program remained
paused throughout the second quarter of 2020.
Webcast
Grainger will conduct a live conference call and webcast at
11:00 a.m. ET on July 23, 2020 to discuss the second quarter
results. The webcast will be hosted by DG Macpherson, Chairman and
CEO, and Tom Okray, Senior Vice
President and CFO, and can be accessed at invest.grainger.com. For
those unable to participate in the live event, a webcast replay
will be available for 90 days at invest.grainger.com.
About Grainger
W.W. Grainger, Inc., with 2019 sales of $11.5 billion, is North
America's leading broad line supplier of maintenance, repair
and operating (MRO) products, with operations primarily in
North America, Japan and Europe. For more information about the
company, visit invest.grainger.com.
Visit invest.grainger.com to view information about the
company, including a supplement regarding 2020 first quarter
results. Additional company information can be found on the
Grainger Investor Relations website which includes 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."
Forward-looking statements can generally be identified by their use
of terms such as "anticipate," "estimate," "believe," "expect,"
"could," "forecast," "may," "intend," "plan," "predict," "project"
"will" or "would" and similar terms and phrases, including
references to assumptions. 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. 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 those presented or implied
in the forward-looking statements include, without limitation: the
unknown duration and the health, economic, operational and
financial impacts of the global outbreak of the Coronavirus in 2019
(COVID-19 pandemic) and the actions taken or contemplated by
governmental authorities or others in connection with the COVID-19
pandemic on the company's businesses, its employees, customers and
suppliers, including disruption to our operations resulting from
employee illnesses, the development and availability of effective
treatment or vaccines, the uncertain duration of mandated facility
closures of non-essential businesses, stay in shelter health orders
or other similar restrictions for customers and suppliers, changes
in customers' product needs, suppliers' inability to meet
unprecedented demand for COVID-19 related products, the potential
for government action to allocate or direct products to certain
customers which may cause disruption in relationships with other
customers, disruption caused by business responses to the COVID-19
pandemic, including working remote arrangements, which may create
increased vulnerability to cybersecurity incidents, including
breaches of information systems security, adaptions to the
Company's controls and procedures, including financial reporting
processes, required by working remote arrangements, which could
impact the design or operating effectiveness of such controls or
procedures, and global or regional economic downturns or
recessions, which could result in a decline in demand for the
company's products or limit the company's ability to access capital
markets on terms that are attractive or at all; higher product
costs or other expenses; a major loss of customers; loss or
disruption of sources of supply; increased competitive pricing
pressures; failure to develop or implement new technology
initiatives or business strategies; failure to adequately protect
intellectual property or successfully defend against infringement
claims; fluctuations or declines in the company's gross profit
percentage; the company's responses to market pressures; 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, consumer
protection, pricing (including disaster or emergency declaration
pricing statutes), product liability,
safety or compliance, or privacy
and cybersecurity matters; investigations,
inquiries, audits and changes in laws and regulations; failure to
comply with laws, regulations and standards; government contract
matters; disruption of information technology or data security
systems involving the company or third parties on which the company
depends; general industry, economic, market or political
conditions; general global economic conditions including tariffs
and trade issues and policies; currency exchange rate fluctuations;
market volatility, including volatility or price declines of the
company's common stock; commodity price volatility; labor
shortages; facilities disruptions or shutdowns; higher fuel costs
or disruptions in transportation services; pandemic diseases or
viral contagions; natural and other catastrophes; unanticipated
and/or extreme weather conditions; loss of key members of
management; the company's ability to operate, integrate and
leverage acquired businesses; changes in effective tax rates;
changes in credit ratings or outlook; the company's incurrence of
indebtedness 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.
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In millions of
dollars, except for share and per share amounts)
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
2,837
|
|
|
$
|
2,893
|
|
|
$
|
5,838
|
|
|
$
|
5,692
|
|
Cost of goods sold
|
1,821
|
|
|
1,772
|
|
|
3,701
|
|
|
3,476
|
|
Gross profit
|
1,016
|
|
|
1,121
|
|
|
2,137
|
|
|
2,216
|
|
Selling, general and
administrative expenses
|
811
|
|
|
741
|
|
|
1,773
|
|
|
1,473
|
|
Operating earnings
|
205
|
|
|
380
|
|
|
364
|
|
|
743
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
Interest expense,
net
|
28
|
|
|
21
|
|
|
49
|
|
|
40
|
|
Other, net
|
(7)
|
|
|
(7)
|
|
|
(11)
|
|
|
(14)
|
|
Total other
expense, net
|
21
|
|
|
14
|
|
|
38
|
|
|
26
|
|
Earnings before income taxes
|
184
|
|
|
366
|
|
|
326
|
|
|
717
|
|
Income tax
provision
|
55
|
|
|
94
|
|
|
12
|
|
|
183
|
|
Net earnings
|
129
|
|
|
272
|
|
|
314
|
|
|
534
|
|
Less: Net earnings
attributable to noncontrolling interest
|
15
|
|
|
12
|
|
|
27
|
|
|
21
|
|
Net earnings
attributable to W.W. Grainger, Inc.
|
$
|
114
|
|
|
$
|
260
|
|
|
$
|
287
|
|
|
$
|
513
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
2.11
|
|
|
$
|
4.69
|
|
|
$
|
5.31
|
|
|
$
|
9.19
|
|
Diluted
|
$
|
2.10
|
|
|
$
|
4.67
|
|
|
$
|
5.29
|
|
|
$
|
9.14
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
53.5
|
|
|
55.1
|
|
|
53.6
|
|
|
55.4
|
|
Diluted
|
53.7
|
|
|
55.4
|
|
|
53.8
|
|
|
55.7
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
Net earnings as
reported
|
$
|
114
|
|
|
$
|
260
|
|
|
$
|
287
|
|
|
$
|
513
|
|
Earnings allocated to
participating securities
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
Net earnings
available to common shareholders
|
$
|
113
|
|
|
$
|
258
|
|
|
$
|
284
|
|
|
$
|
509
|
|
Weighted average
shares adjusted for dilutive securities
|
53.7
|
|
|
55.4
|
|
|
53.8
|
|
|
55.7
|
|
Diluted earnings per
share
|
$
|
2.10
|
|
|
$
|
4.67
|
|
|
$
|
5.29
|
|
|
$
|
9.14
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions of
dollars)
|
|
|
|
|
(Unaudited)
|
|
|
Assets
|
June 30, 2020
(1)
|
|
December 31,
2019
|
Cash and cash
equivalents (7)
|
$
|
1,603
|
|
|
$
|
360
|
|
Accounts receivable –
net
|
1,460
|
|
|
1,425
|
|
Inventories –
net
|
1,695
|
|
|
1,655
|
|
Prepaid expenses and
other current assets
|
127
|
|
|
104
|
|
Prepaid income
taxes
|
33
|
|
|
11
|
|
Total current
assets
|
4,918
|
|
|
3,555
|
|
Property, buildings
and equipment – net
|
1,365
|
|
|
1,400
|
|
Deferred income
taxes
|
10
|
|
|
11
|
|
Goodwill
(2)
|
365
|
|
|
429
|
|
Intangibles –
net (3)
|
223
|
|
|
304
|
|
Other
assets
|
313
|
|
|
306
|
|
Total
assets
|
$
|
7,194
|
|
|
$
|
6,005
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Short-term debt
(4)
|
$
|
15
|
|
|
$
|
55
|
|
Current maturities of
long-term debt (5)
|
21
|
|
|
246
|
|
Trade accounts
payable
|
770
|
|
|
719
|
|
Accrued compensation
and benefits
|
212
|
|
|
228
|
|
Accrued contributions
to employees' profit-sharing plans (6)
|
33
|
|
|
85
|
|
Accrued
expenses
|
312
|
|
|
318
|
|
Income taxes
payable
|
25
|
|
|
27
|
|
Total current
liabilities
|
1,388
|
|
|
1,678
|
|
Long-term debt – less
current maturities (7)
|
3,301
|
|
|
1,914
|
|
Deferred income taxes
and tax uncertainties
|
103
|
|
|
106
|
|
Other non-current
liabilities
|
250
|
|
|
247
|
|
Shareholders' equity
(8)
|
2,152
|
|
|
2,060
|
|
Total liabilities and
shareholders' equity
|
$
|
7,194
|
|
|
$
|
6,005
|
|
|
(1) Does not
include the Fabory business results due to business divestiture in
the second quarter of 2020.
|
(2) Goodwill
decreased $64 million primarily due to a $58 million Fabory
impairment in the first quarter of 2020.
|
(3) Intangibles
- net decreased $81 million primarily due to a $74 million Fabory
impairment in the first quarter of 2020.
|
(4) Short-term
debt decreased $40 million primarily due to the repayment of the
Company's foreign lines of credit.
|
(5) Current
maturities of long-term debt decreased $225 million primarily due
to the repayment of the British pound term loan and the Canadian
dollar revolving credit facility.
|
(6) Accrued
contributions to employees' profit-sharing plans decreased $52
million primarily due to the timing of annual cash contributions
and the reduction of the contribution rate in 2020.
|
(7) Long-term
debt increased $1,387 million primarily due to the draw down on the
Company's revolving credit facility of $1 billion in March 2020 and
the issuance of $500 million in unsecured senior notes in February
2020, partially offset by the repayments of international
debt.
|
(8) Common
stock outstanding as of June 30, 2020 was 53,571,736 compared with
53,687,528 shares at December 31, 2019, primarily due to share
repurchases.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
(In millions of
dollars)
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
129
|
|
|
$
|
272
|
|
|
$
|
314
|
|
|
$
|
534
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses
|
8
|
|
|
2
|
|
|
14
|
|
|
6
|
|
Deferred income taxes
and tax uncertainties
|
7
|
|
|
16
|
|
|
—
|
|
|
12
|
|
Depreciation and
amortization
|
50
|
|
|
56
|
|
|
95
|
|
|
113
|
|
Net losses (gains)
from sales of assets and business divestitures
|
107
|
|
|
(3)
|
|
|
110
|
|
|
(5)
|
|
Impairment of
goodwill, intangible and long-lived assets
|
—
|
|
|
—
|
|
|
177
|
|
|
—
|
|
Stock-based
compensation
|
17
|
|
|
18
|
|
|
26
|
|
|
23
|
|
Subtotal
|
189
|
|
|
89
|
|
|
422
|
|
|
149
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
104
|
|
|
(16)
|
|
|
(113)
|
|
|
(118)
|
|
Inventories
|
(163)
|
|
|
(8)
|
|
|
(144)
|
|
|
12
|
|
Prepaid expenses and
other assets
|
(11)
|
|
|
8
|
|
|
(37)
|
|
|
(22)
|
|
Trade accounts
payable
|
(76)
|
|
|
36
|
|
|
79
|
|
|
100
|
|
Accrued
liabilities
|
4
|
|
|
20
|
|
|
(32)
|
|
|
(187)
|
|
Income taxes,
net
|
44
|
|
|
(71)
|
|
|
(18)
|
|
|
(7)
|
|
Other non-current
liabilities
|
12
|
|
|
(7)
|
|
|
5
|
|
|
(11)
|
|
Subtotal
|
(86)
|
|
|
(38)
|
|
|
(260)
|
|
|
(233)
|
|
Net cash provided by
operating activities
|
232
|
|
|
323
|
|
|
476
|
|
|
450
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Additions to property,
buildings, equipment and intangibles
|
(43)
|
|
|
(47)
|
|
|
(93)
|
|
|
(107)
|
|
Proceeds from sale of
assets and business divestitures
|
13
|
|
|
8
|
|
|
13
|
|
|
14
|
|
Other - net
|
—
|
|
|
—
|
|
|
(2)
|
|
|
2
|
|
Net cash used in
investing activities
|
(30)
|
|
|
(39)
|
|
|
(82)
|
|
|
(91)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net (decrease)
increase in lines of credit
|
(2)
|
|
|
—
|
|
|
(38)
|
|
|
3
|
|
Net (decrease)
increase in long-term debt
|
(2)
|
|
|
(20)
|
|
|
1,153
|
|
|
(34)
|
|
Proceeds from stock
options exercised
|
9
|
|
|
13
|
|
|
28
|
|
|
16
|
|
Payments for employee
taxes withheld from stock awards
|
(9)
|
|
|
(7)
|
|
|
(14)
|
|
|
(10)
|
|
Purchases of treasury
stock
|
(1)
|
|
|
(265)
|
|
|
(101)
|
|
|
(400)
|
|
Cash dividends
paid
|
(86)
|
|
|
(87)
|
|
|
(164)
|
|
|
(163)
|
|
Other - net
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Net cash (used in)
provided by financing activities
|
(91)
|
|
|
(365)
|
|
|
864
|
|
|
(586)
|
|
Exchange rate effect
on cash and cash equivalents
|
—
|
|
|
4
|
|
|
(15)
|
|
|
4
|
|
Net change in cash
and cash equivalents
|
111
|
|
|
(77)
|
|
|
1,243
|
|
|
(223)
|
|
Cash and cash
equivalents at beginning of period
|
1,492
|
|
|
392
|
|
|
360
|
|
|
538
|
|
Cash and cash
equivalents at end of period
|
$
|
1,603
|
|
|
$
|
315
|
|
|
$
|
1,603
|
|
|
$
|
315
|
|
SUPPLEMENTAL INFORMATION - CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In
millions 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 gross profit,
adjusted gross profit margin, adjusted operating earnings, adjusted
operating margin, adjusted net earnings, adjusted tax rate and
adjusted diluted earnings per share. 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 gross profit, adjusted gross profit margin,
adjusted operating earnings, adjusted operating margin, adjusted
net earnings, adjusted tax rate and adjusted diluted earnings per
share 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.
This press release also includes certain non-GAAP
forward-looking information. The company believes that a
quantitative reconciliation of such forward-looking information to
the most comparable financial measure calculated and presented in
accordance with GAAP cannot be made available without unreasonable
efforts. A reconciliation of these non-GAAP financial measures
would require the company to predict the timing and likelihood of
future restructurings, asset impairments, and other charges.
Neither of these forward-looking measures, nor their probable
significance, can be quantified with a reasonable degree of
accuracy. Accordingly, the most directly comparable forward-looking
GAAP measures are not provided.
The reconciliations provided below reconcile GAAP financial
measures to the non-GAAP financial measures: , adjusted gross
profit, adjusted gross profit margin, adjusted operating earnings,
adjusted operating margin, adjusted net earnings, adjusted tax rate
and adjusted diluted earnings per share:
In
millions
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2020
|
Gross
Profit %
|
|
2019
|
Gross
Profit %
|
|
2020
|
Gross
Profit %
|
|
2019
|
Gross
Profit %
|
|
Gross profit
reported
|
$
|
1,016
|
|
35.8
|
%
|
|
$
|
1,121
|
|
38.7
|
%
|
|
2,137
|
|
36.6
|
%
|
|
$
|
2,216
|
|
38.9
|
%
|
|
Restructuring, net,
impairment
charges, and business divestiture
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
|
Gross profit
adjusted
|
$
|
1,016
|
|
35.8
|
%
|
|
$
|
1,121
|
|
38.7
|
%
|
|
2,137
|
|
36.6
|
%
|
|
$
|
2,217
|
|
38.9
|
%
|
|
|
In
millions
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
Operating
Margin %
|
|
2019
|
Operating
Margin %
|
|
2020
|
Operating
Margin %
|
|
2019
|
Operating
Margin %
|
Operating earnings
reported
|
$
|
205
|
|
7.3
|
%
|
|
$
|
380
|
|
13.1
|
%
|
|
364
|
|
6.2
|
%
|
|
$
|
743
|
|
13.1
|
%
|
Restructuring, net,
impairment
charges, and business divestiture
|
110
|
|
3.8
|
|
|
(3)
|
|
(0.1)
|
|
|
294
|
|
5.1
|
|
|
(1)
|
|
(0.1)
|
|
Operating earnings
adjusted
|
$
|
315
|
|
11.1
|
%
|
|
$
|
377
|
|
13.0
|
%
|
|
$
|
658
|
|
11.3
|
%
|
|
$
|
742
|
|
13.0
|
%
|
SUPPLEMENTAL
INFORMATION - CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In millions of
dollars, except for per share amounts)
|
|
|
In
millions
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
%
|
|
2020
|
|
2019
|
%
|
Net earnings
reported
|
$
|
114
|
|
|
$
|
260
|
|
(56)
|
%
|
|
$
|
287
|
|
|
$
|
513
|
|
(44)
|
%
|
Restructuring, net,
impairment
charges, and business divestiture
|
90
|
|
|
(2)
|
|
|
|
147
|
|
|
—
|
|
|
Net earnings
adjusted
|
$
|
204
|
|
|
$
|
258
|
|
(21)
|
%
|
|
$
|
434
|
|
|
$
|
513
|
|
(15)
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share reported
|
$
|
2.10
|
|
|
$
|
4.67
|
|
(55)
|
%
|
|
$
|
5.29
|
|
|
$
|
9.14
|
|
(42)
|
%
|
Pretax restructuring,
net, impairment
charges, and business divestiture
|
2.03
|
|
|
(0.05)
|
|
|
|
5.42
|
|
|
(0.01)
|
|
|
Tax effect
(1)
|
(0.38)
|
|
|
0.02
|
|
|
|
(2.71)
|
|
|
0.01
|
|
|
Total, net of
tax
|
1.65
|
|
|
(0.03)
|
|
|
|
2.71
|
|
|
—
|
|
|
Diluted earnings per
share adjusted
|
$
|
3.75
|
|
|
$
|
4.64
|
|
(19)
|
%
|
|
$
|
8.00
|
|
|
$
|
9.14
|
|
(12)
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) 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. The
lower tax rate effect in the current year quarter was primarily
driven by tax impacts related to the Fabory divestiture.
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
Bps
impact
|
|
2020
|
|
2019
|
|
Bps
impact
|
Effective tax rate
reported
|
30.2
|
%
|
|
25.6
|
%
|
|
460
|
|
|
3.9
|
%
|
|
25.5
|
%
|
|
(2,160)
|
|
Fabory Tax Impact,
non-operating
|
(4.4)
|
|
|
—
|
|
|
|
|
21.8
|
|
|
—
|
|
|
|
Tax impact of other
restructuring
|
—
|
|
|
(0.1)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Effective tax rate
adjusted
|
25.8
|
%
|
|
25.5
|
%
|
|
30
|
|
|
25.7
|
%
|
|
25.5
|
%
|
|
20
|
|
View original
content:http://www.prnewswire.com/news-releases/grainger-reports-results-for-the-2020-second-quarter-301098484.html
SOURCE W.W. Grainger, Inc.