CHICAGO, Oct. 18, 2016 /PRNewswire/ -- Grainger (NYSE:
GWW) today reported results for the 2016 third quarter ended
September 30, 2016. Sales of
$2.6 billion increased 3 percent
versus $2.5 billion in the third
quarter of 2015. There were 64 selling days in the 2016 third
quarter, the same as the 2015 third quarter. Net earnings for
the quarter of $186 million were down
3 percent versus $192 million in
2015. Earnings per share of $3.05 increased 4 percent versus $2.92 in 2015.
Third quarter results contained the following special items that
the company believes are not indicative of ongoing operations and
have been adjusted to provide better comparability with prior
periods. Excluding the special items in both years noted
below, net earnings decreased 6 percent and earnings per share
increased 1 percent.
|
Three Months
Ended
September
30,
|
|
|
2016
|
2015
|
%
Change
|
Diluted earnings per
share reported
|
$
3.05
|
$
2.92
|
4%
|
Pretax
adjustments:
|
|
|
|
Restructuring (United States)
|
0.09
|
0.14
|
|
Restructuring (Canada)
|
0.07
|
0.02
|
|
Restructuring (Other Businesses)
|
-
|
0.01
|
|
Total pretax
adjustments
|
0.16
|
0.17
|
|
Tax
effect (1)
|
(0.05)
|
(0.06)
|
|
Discrete
tax items
|
(0.10)
|
-
|
|
Total, net of
tax
|
0.01
|
0.11
|
|
Diluted earnings per
share adjusted
|
$
3.06
|
$
3.03
|
1%
|
|
|
|
|
(1) The tax impact of
adjustments is calculated based on the income tax rate in each
applicable jurisdiction.
|
"We continue to operate in a challenging economic environment,"
said DG Macpherson, Chief Executive Officer. "The third
quarter results were within our expectations. I'm pleased
with our ability to continue to effectively manage costs in this
low growth environment while still investing in our future
success." Macpherson added, "During the quarter, we continued
to see strong revenue and earnings growth in our single channel
online businesses, and we started operations in our new 1.3 million
square foot distribution center in New Jersey. We expect
fourth quarter demand to remain challenged, and as a result, we
have narrowed our guidance and lowered the midpoint for the full
year. We remain committed to managing the company for
long-term success with a focus on providing our customers an
exceptional experience at every touch."
The company now expects 2016 sales growth of 1.5 to 2.5 percent
and earnings per share of $11.40 to
$11.70. The company's previous 2016 guidance,
communicated on July 19, 2016,
included sales growth of 1 to 4 percent and earnings per share of
$11.20 to $12.20.
Company
Sales increased 3 percent in the 2016 third quarter versus the
prior year. The sales performance included a
2 percentage point contribution from Cromwell Group (Holdings)
Limited, acquired on September 1,
2015, and a 1 percentage point contribution from foreign
exchange. Excluding acquisitions and foreign exchange,
organic sales were flat consisting of a 1 percentage point
contribution from sales of seasonal products offset by a 1
percentage point reduction in price.
The company's gross profit margin declined 1.9 percentage points
to 40.0 percent versus 41.9 percent in the 2015 third quarter,
due primarily to unfavorable customer mix and price deflation
exceeding product cost deflation. Operating expenses for the
company declined 1 percent driven by lower payroll and
benefits costs.
Company operating earnings of $323
million for the 2016 third quarter declined 5 percent versus
$341 million in the 2015
quarter. The decline was driven by lower gross profit margins
partially offset by lower operating expenses.
The company has two reportable business segments, the United States and Canada, which represented approximately 81
percent of company sales for the quarter. The remaining
operating businesses are located in Europe, Asia
and Latin America. The single channel online businesses are
included in Other Businesses and are not reportable
segments.
United States
Sales for the U.S. segment declined 1 percent versus the 2015 third
quarter. The decline was driven by a 1 percentage point
decrease in volume and a 1 percentage point decline in price,
partially offset by a 1 percentage point contribution from
increased sales to Zoro, the single channel online business in the
United States. Government and Retail customers posted the
strongest sales growth in the quarter for the segment.
Operating earnings for the U.S. segment declined 5 percent in
the quarter driven by lower sales and lower gross profit margins,
partially offset by lower operating expenses. Gross profit
margins for the quarter declined 1.3 percentage points driven
by unfavorable customer mix and price deflation outpacing cost
deflation. Operating expenses for the segment were down
3 percent in the quarter versus the 2015 third quarter
primarily due to lower payroll and benefits. Reported results
included $5.4 million of net
restructuring charges composed of $6.6
million of pretax charges, partially offset by $1.2 million of pretax gains, primarily from the
sale of real estate.
Canada
Third quarter 2016 sales for Acklands-Grainger declined 16 percent
in U.S. dollars and local currency, consisting of
15 percentage points from lower volume and a 1 percentage
point decline in price. Daily sales in the province of
Alberta, which currently
represents about 30 percent of the company's business in
Canada, were down 22 percent
versus the prior year, while daily sales for all other provinces
were down 12 percent in the quarter.
The Canadian segment posted a $15
million operating loss in the 2016 third quarter versus
operating earnings of $4 million in
the prior year, driven primarily by the sales decline and a lower
gross profit margin, partially offset by lower operating expenses.
The gross profit margin in Canada declined 5.5 percentage points
versus the prior year, primarily due to product cost inflation
exceeding price deflation, including U.S. sourced products, and
higher freight costs. Operating expenses declined 5 percent
in the quarter due to lower SAP project costs and payroll costs.
Reported results included $4.4
million of pretax restructuring charges, composed of
$3.8 million in operating
expense-related charges and $0.6
million of inventory-related charges.
Other Businesses
Sales for the Other Businesses increased 36 percent for the 2016
third quarter versus the prior year, consisting of 16 percentage
points from Cromwell, 15 percentage points from volume and price
and a 5 percentage point benefit from foreign exchange.
Strong performance for the Other Businesses was driven by 38
percent sales growth for the single channel online businesses.
Operating earnings for the Other Businesses of $25 million in the 2016 third quarter were up
74 percent versus $14 million
the prior year. This performance was driven by strong
operating results from Zoro in the United
States, MonotaRO in Japan
and the business in Mexico.
Cromwell's business also contributed to the earnings growth
in the quarter.
Other
Other income and expense was a net expense of $29 million in the 2016 third quarter versus a
net expense of $21 million in the 2015 third quarter.
This increase was primarily due to additional interest expense from
the $400 million of debt issued in
May 2016 used to buy back stock and
higher losses from the company's clean energy investments.
For the quarter, the effective tax rate in 2016 was 34.0 percent
versus 38.4 percent in 2015. The year-over-year decrease in
the tax rate was primarily due to a higher benefit from the
company's clean energy investments partially offset by a larger
proportion of earnings from higher tax rate jurisdictions.
The 2016 third quarter also included a $6
million benefit from the conclusion of the federal income
tax audit for the years 2009 through 2012 and other discrete
items. Excluding this discrete benefit, the company's
effective tax rate was 36.1 percent.
Cash Flow
Operating cash flow was $344 million
in the 2016 third quarter versus $366
million in the 2015 third quarter. The company used
the cash generated during the quarter and proceeds from the
May 2016 debt offering to invest in
the business and return cash to shareholders through share
repurchase and dividends. Capital expenditures were
$108 million in the 2016 third
quarter versus $82 million in the third quarter of 2015.
In the 2016 third quarter, Grainger returned $275 million
to shareholders through $74 million
in dividends and $201 million to buy
back 887,000 shares of stock.
Year-to-Date
For the nine months ended September 30,
2016, sales of $7.7 billion
increased 2 percent versus $7.5 billion in the nine months ended
September 30, 2015. There were
192 selling days in the first nine months of 2016, one more than in
2015. Net earnings declined 13 percent to $545 million
versus $624 million in the first nine
months of 2015. Earnings per share for the nine months
decreased 5 percent to $8.82
versus $9.24 in the first nine months
of 2015.
Year-to-date results contained special items that the company
believes are not indicative of ongoing operations and have been
adjusted to provide better comparability with prior periods.
Excluding the special items in both nine-month periods noted below,
net earnings decreased 11 percent and earnings per share
decreased 3 percent.
|
Nine Months
Ended
September
30,
|
|
|
2016
|
2015
|
%
Change
|
Diluted earnings per
share reported
|
$
8.82
|
$
9.24
|
-5%
|
Pretax
adjustments:
|
|
|
|
Restructuring (United States)
|
0.20
|
0.14
|
|
Inventory reserve adjustment (Canada)
|
0.16
|
-
|
|
Restructuring (Canada)
|
0.25
|
0.02
|
|
Restructuring (Unallocated expense)
|
0.15
|
-
|
|
Restructuring (Other Businesses)
|
-
|
0.07
|
|
Total pretax
adjustments
|
0.76
|
0.23
|
|
Tax
effect (1)
|
(0.24)
|
(0.07)
|
|
Discrete
tax items
|
(0.21)
|
-
|
|
Total, net of
tax
|
0.31
|
0.16
|
|
Diluted earnings per
share adjusted
|
$
9.13
|
$
9.40
|
-3%
|
|
|
|
|
(1) The tax impact of
adjustments is calculated based on the income tax rate in each
applicable jurisdiction.
|
About Grainger
W.W. Grainger, Inc., with 2015 sales
of $10 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 history of sales by
segment and a podcast regarding 2016 third quarter results. The
Grainger website also includes more information through
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" based on our
current view of the competitive market and the overall environment.
Factors that could cause our actual results to differ materially
from those statements include, among other risks and uncertainties,
a major loss of customers or suppliers, competitive pressures,
legal proceedings, changes in laws and regulations, general
economic, industry or market conditions, technological or
operational disruptions, natural and other catastrophes and other
factors that can be found in our filings with the Securities and
Exchange Commission, including our most recent Forms 10-K and 10-Q,
which are available on our Investor Relations website. We disclaim
any obligation to update or revise any forward-looking statement,
except as required by law.
CONSOLIDATED
STATEMENTS OF EARNINGS (Unaudited)
|
(In thousands, except
for per share amounts)
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
2,596,288
|
|
|
$
|
2,532,900
|
|
|
$
|
7,666,494
|
|
|
$
|
7,495,126
|
|
Cost of merchandise sold
|
1,556,536
|
|
|
1,471,021
|
|
|
4,541,629
|
|
|
4,266,073
|
|
Gross profit
|
1,039,752
|
|
|
1,061,879
|
|
|
3,124,865
|
|
|
3,229,053
|
|
Warehousing, marketing and administrative expenses
|
717,165
|
|
|
721,150
|
|
|
2,179,596
|
|
|
2,180,359
|
|
Operating earnings
|
322,587
|
|
|
340,729
|
|
|
945,269
|
|
|
1,048,694
|
|
Other income and (expense)
|
|
|
|
|
|
|
|
Interest income
|
147
|
|
|
464
|
|
|
474
|
|
|
934
|
|
Interest expense
|
(18,024)
|
|
|
(13,899)
|
|
|
(48,556)
|
|
|
(19,719)
|
|
Loss from equity
method investment
|
(10,333)
|
|
|
(5,972)
|
|
|
(22,147)
|
|
|
(10,273)
|
|
Other non-operating
expense
|
(1,192)
|
|
|
(1,875)
|
|
|
(1,291)
|
|
|
(3,864)
|
|
Total other
expense
|
(29,402)
|
|
|
(21,282)
|
|
|
(71,520)
|
|
|
(32,922)
|
|
Earnings before income taxes
|
293,185
|
|
|
319,447
|
|
|
873,749
|
|
|
1,015,772
|
|
Income
taxes
|
99,776
|
|
|
122,825
|
|
|
309,251
|
|
|
379,769
|
|
Net earnings
|
193,409
|
|
|
196,622
|
|
|
564,498
|
|
|
636,003
|
|
Net earnings
attributable to noncontrolling interest
|
7,536
|
|
|
4,421
|
|
|
19,236
|
|
|
12,239
|
|
Net earnings
attributable to W.W. Grainger, Inc.
|
$
|
185,873
|
|
|
$
|
192,201
|
|
|
$
|
545,262
|
|
|
$
|
623,764
|
|
Earnings per share
-Basic
|
$
|
3.07
|
|
|
$
|
2.94
|
|
|
$
|
8.88
|
|
|
$
|
9.33
|
|
-Diluted
|
$
|
3.05
|
|
|
$
|
2.92
|
|
|
$
|
8.82
|
|
|
$
|
9.24
|
|
Average number of shares outstanding
-Basic
|
60,017
|
|
|
64,720
|
|
|
60,855
|
|
|
66,188
|
|
-Diluted
|
60,416
|
|
|
65,289
|
|
|
61,268
|
|
|
66,850
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
Net earnings as
reported
|
$
|
185,873
|
|
|
$
|
192,201
|
|
|
$
|
545,262
|
|
|
$
|
623,764
|
|
Earnings allocated to
participating securities
|
(1,625)
|
|
|
(1,805)
|
|
|
(4,906)
|
|
|
(6,159)
|
|
Net earnings
available to common shareholders
|
$
|
184,248
|
|
|
$
|
190,396
|
|
|
$
|
540,356
|
|
|
$
|
617,605
|
|
Weighted average
shares adjusted for dilutive securities
|
60,416
|
|
|
65,289
|
|
|
61,268
|
|
|
66,850
|
|
Diluted earnings per
share
|
$
|
3.05
|
|
|
$
|
2.92
|
|
|
$
|
8.82
|
|
|
$
|
9.24
|
|
SEGMENT RESULTS
(Unaudited)
|
(In thousands of
dollars)
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Sales
|
|
|
|
|
|
|
|
United
States
|
$
|
2,028,235
|
|
|
$
|
2,039,488
|
|
|
$
|
5,973,044
|
|
|
$
|
6,041,576
|
|
Canada
|
179,281
|
|
|
213,132
|
|
|
552,470
|
|
|
687,128
|
|
Other
Businesses
|
481,929
|
|
|
354,692
|
|
|
1,401,429
|
|
|
971,389
|
|
Intersegment sales
|
(93,157)
|
|
|
(74,412)
|
|
|
(260,449)
|
|
|
(204,967)
|
|
Net sales to external customers
|
$
|
2,596,288
|
|
|
$
|
2,532,900
|
|
|
$
|
7,666,494
|
|
|
$
|
7,495,126
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
|
|
|
|
|
United
States
|
$
|
342,524
|
|
|
$
|
359,414
|
|
|
$
|
1,023,318
|
|
|
$
|
1,095,036
|
|
Canada
|
(15,118)
|
|
|
3,587
|
|
|
(55,207)
|
|
|
22,474
|
|
Other
Businesses
|
24,835
|
|
|
14,260
|
|
|
76,343
|
|
|
38,943
|
|
Unallocated expense
|
(29,654)
|
|
|
(36,532)
|
|
|
(99,185)
|
|
|
(107,759)
|
|
Operating earnings
|
$
|
322,587
|
|
|
$
|
340,729
|
|
|
$
|
945,269
|
|
|
$
|
1,048,694
|
|
|
|
|
|
|
|
|
|
Company
operating margin
|
12.4
|
%
|
|
13.5
|
%
|
|
12.3
|
%
|
|
14.0
|
%
|
ROIC* for Company
|
|
|
|
|
25.3
|
%
|
|
31.2
|
%
|
ROIC* for United States
|
|
|
|
|
43.1
|
%
|
|
48.2
|
%
|
ROIC* for Canada
|
|
|
|
|
(12.6)
|
%
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
*The GAAP financial statements are the source for all amounts
used in the Return on Invested Capital (ROIC) calculation.
ROIC is calculated using operating earnings divided by net working
assets (a 4-point average for the year). Net working assets
are working assets minus working liabilities defined as follows:
working assets equal total assets less cash equivalents (4-point
average of $95.2 million, deferred
taxes, and investments in unconsolidated entities, plus the LIFO
reserve (4-point average of $388.0
million). Working liabilities are the sum of trade
payables, accrued compensation and benefits, accrued contributions
to employees' profit sharing plans, and accrued expenses.
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
Preliminary
|
(In thousands of
dollars)
|
|
|
|
|
Assets
|
September 30,
2016
|
|
December 31,
2015
|
Cash and cash
equivalents
|
$
|
285,981
|
|
|
$
|
290,136
|
|
Accounts receivable –
net
|
1,326,359
|
|
|
1,209,641
|
|
Inventories
|
1,381,468
|
|
|
1,414,177
|
|
Prepaid expenses and
other assets
|
135,384
|
|
|
134,688
|
|
Total current
assets
|
3,129,192
|
|
|
3,048,642
|
|
Property, buildings
and equipment – net
|
1,436,938
|
|
|
1,431,241
|
|
Deferred income
taxes
|
37,513
|
|
|
83,996
|
|
Goodwill
|
594,511
|
|
|
582,336
|
|
Intangibles –
net
|
420,087
|
|
|
463,294
|
|
Other
assets
|
267,268
|
|
|
248,246
|
|
Total
assets
|
$
|
5,885,509
|
|
|
$
|
5,857,755
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Short-term
debt
|
$
|
387,684
|
|
|
$
|
353,072
|
|
Current maturities of
long-term debt (1)
|
16,488
|
|
|
247,346
|
|
Trade accounts
payable
|
623,745
|
|
|
583,474
|
|
Accrued compensation
and benefits
|
181,456
|
|
|
196,667
|
|
Accrued contributions
to employees' profit sharing plans
|
47,412
|
|
|
124,587
|
|
Accrued
expenses
|
269,057
|
|
|
266,702
|
|
Income taxes
payable
|
10,469
|
|
|
16,686
|
|
Total current
liabilities
|
1,536,311
|
|
|
1,788,534
|
|
Long-term debt
(1)(2)
|
1,874,132
|
|
|
1,388,414
|
|
Deferred income taxes
and tax uncertainties
|
132,761
|
|
|
154,352
|
|
Employment-related
and other non-current liabilities
|
181,269
|
|
|
173,741
|
|
Shareholders' equity
(3)
|
2,161,036
|
|
|
2,352,714
|
|
Total liabilities and
shareholders' equity
|
$
|
5,885,509
|
|
|
$
|
5,857,755
|
|
|
|
(1)
|
Short-term debt
decreased and long-term debt increased due to the refinancing of
€110 million of debt in August 2016 for the Fabory
business.
|
(2)
|
Long-term debt also
increased due to the issuance of $400 million of Senior Notes in
May 2016.
|
(3)
|
Common stock
outstanding as of September 30, 2016, was 59,569,554 shares as
compared with 62,028,708 shares at December 31, 2015.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
Preliminary
|
(In thousands of
dollars)
|
|
|
|
Nine Months
Ended
September
30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net
earnings
|
$
|
564,498
|
|
|
$
|
636,003
|
|
Provision for losses
on accounts receivable
|
14,753
|
|
|
6,416
|
|
Deferred income taxes
and tax uncertainties
|
24,259
|
|
|
(6,906)
|
|
Depreciation and
amortization
|
177,395
|
|
|
164,200
|
|
Gains from sales of
assets, net of asset impairment
|
(16,928)
|
|
|
(709)
|
|
Stock-based
compensation
|
27,545
|
|
|
35,627
|
|
Losses from equity
method investment
|
22,147
|
|
|
10,273
|
|
Change in operating
assets and liabilities – net of business acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(123,922)
|
|
|
(69,784)
|
|
Inventories
|
41,938
|
|
|
12,627
|
|
Prepaid expenses and
other assets
|
3,478
|
|
|
27,858
|
|
Trade accounts
payable
|
36,594
|
|
|
19,126
|
|
Other current
liabilities
|
(86,911)
|
|
|
(102,951)
|
|
Current income taxes
payable
|
(9,714)
|
|
|
2,451
|
|
Accrued
employment-related benefits cost
|
5,591
|
|
|
2,401
|
|
Other –
net
|
(10,340)
|
|
|
(702)
|
|
Net cash provided by
operating activities
|
670,383
|
|
|
735,930
|
|
Cash flows from
investing activities:
|
|
|
|
Additions to
property, buildings and equipment
|
(213,622)
|
|
|
(253,197)
|
|
Proceeds from sales
of assets
|
48,089
|
|
|
12,351
|
|
Equity method
investment
|
(19,299)
|
|
|
(15,687)
|
|
Net cash paid for
business acquisitions
|
(159)
|
|
|
(463,302)
|
|
Other –
net
|
(405)
|
|
|
(206)
|
|
Net cash used in
investing activities
|
(185,396)
|
|
|
(720,041)
|
|
Cash flows from
financing activities:
|
|
|
|
Net increase in
short-term debt
|
34,053
|
|
|
159,268
|
|
Net increase in
long-term debt
|
258,949
|
|
|
1,207,418
|
|
Proceeds from stock
options exercised
|
29,553
|
|
|
53,688
|
|
Excess tax benefits
from stock-based compensation
|
11,873
|
|
|
24,415
|
|
Purchase of treasury
stock
|
(613,198)
|
|
|
(1,177,241)
|
|
Cash dividends
paid
|
(221,131)
|
|
|
(230,948)
|
|
Net cash (used in)
provided by financing activities
|
(499,901)
|
|
|
36,600
|
|
Exchange rate effect
on cash and cash equivalents
|
10,759
|
|
|
(20,982)
|
|
Net change in cash
and cash equivalents
|
(4,155)
|
|
|
31,507
|
|
Cash and cash
equivalents at beginning of year
|
290,136
|
|
|
226,644
|
|
Cash and cash
equivalents at end of period
|
$
|
285,981
|
|
|
$
|
258,151
|
|
SUPPLEMENTAL INFORMATION - CONSOLIDATED
STATEMENTS OF EARNINGS
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (Unaudited)
(In thousands of dollars)
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 operating
earnings, adjusted segment operating earnings, adjusted net
earnings 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 operating earnings,
adjusted net earnings 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.
The reconciliations provided below reconcile the non-GAAP
financial measures adjusted net earnings, adjusted diluted earnings
per share, adjusted operating earnings and adjusted segment
operating earnings with GAAP financial measures:
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
2016
|
|
2015
|
%
|
|
2016
|
|
2015
|
%
|
Operating earnings
reported
|
$
|
322,587
|
|
|
$
|
340,729
|
|
(5)%
|
|
|
$
|
945,269
|
|
|
$
|
1,048,694
|
|
(10)%
|
|
Restructuring (United
States)
|
5,437
|
|
|
9,374
|
|
|
|
12,492
|
|
|
9,374
|
|
|
Inventory reserve
adjustment (Canada)
|
—
|
|
|
—
|
|
|
|
9,847
|
|
|
—
|
|
|
Restructuring
(Canada)
|
4,367
|
|
|
1,145
|
|
|
|
15,499
|
|
|
1,145
|
|
|
Restructuring
(Unallocated expense)
|
—
|
|
|
(37)
|
|
|
|
8,947
|
|
|
(37)
|
|
|
Restructuring (Other
Businesses)
|
—
|
|
|
497
|
|
|
|
—
|
|
|
4,583
|
|
|
Subtotal
|
9,804
|
|
|
10,979
|
|
|
|
46,785
|
|
|
15,065
|
|
|
Operating earnings
adjusted
|
$
|
332,391
|
|
|
$
|
351,708
|
|
(5)%
|
|
|
$
|
992,054
|
|
|
$
|
1,063,759
|
|
(7)%
|
|
SUPPLEMENTAL
INFORMATION - CONSOLIDATED STATEMENTS OF EARNINGS
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited) (In thousands of dollars)
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
2016
|
|
2015
|
%
|
|
2016
|
|
2015
|
%
|
Segment operating
earnings adjusted
|
|
|
|
|
|
|
|
|
|
United
States
|
347,961
|
|
|
368,788
|
|
|
|
1,035,810
|
|
|
1,104,410
|
|
|
Canada
|
(10,751)
|
|
|
4,732
|
|
|
|
(29,861)
|
|
|
23,619
|
|
|
Other
Businesses
|
24,835
|
|
|
14,757
|
|
|
|
76,343
|
|
|
43,526
|
|
|
Unallocated expense
|
(29,654)
|
|
|
(36,569)
|
|
|
|
(90,238)
|
|
|
(107,796)
|
|
|
Segment operating
earnings adjusted
|
$
|
332,391
|
|
|
$
|
351,708
|
|
(5)%
|
|
|
$
|
992,054
|
|
|
$
|
1,063,759
|
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
Company
operating margin adjusted
|
12.8
|
%
|
|
13.9
|
%
|
|
|
12.9
|
%
|
|
14.2
|
%
|
|
ROIC* for Company
|
|
|
|
|
|
26.5
|
%
|
|
31.6
|
%
|
|
ROIC* for United States
|
|
|
|
|
|
43.6
|
%
|
|
50.6
|
%
|
|
ROIC* for Canada
|
|
|
|
|
|
(6.8)
|
%
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Adjusted ROIC is
calculated as defined on page 8, excluding the items adjusting
operating earnings as noted above.
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
2016
|
|
2015
|
%
|
|
2016
|
|
2015
|
%
|
Net earnings
reported
|
$
|
185,873
|
|
|
$
|
192,201
|
|
(3)%
|
|
|
$
|
545,262
|
|
|
$
|
623,764
|
|
(13)%
|
|
Restructuring (United
States)
|
3,409
|
|
|
5,870
|
|
|
|
7,831
|
|
|
5,870
|
|
|
Inventory reserve
adjustment (Canada)
|
—
|
|
|
—
|
|
|
|
7,240
|
|
|
—
|
|
|
Restructuring
(Canada)
|
3,210
|
|
|
846
|
|
|
|
11,395
|
|
|
846
|
|
|
Restructuring
(Unallocated expense)
|
—
|
|
|
(23)
|
|
|
|
5,609
|
|
|
(23)
|
|
|
Restructuring (Other
Businesses)
|
—
|
|
|
423
|
|
|
|
—
|
|
|
3,927
|
|
|
Discrete tax
items
|
(6,087)
|
|
|
—
|
|
|
|
(13,162)
|
|
|
—
|
|
|
Subtotal
|
532
|
|
|
7,116
|
|
|
|
18,913
|
|
|
10,620
|
|
|
Net earnings
adjusted
|
$
|
186,405
|
|
|
$
|
199,317
|
|
(6)%
|
|
|
$
|
564,175
|
|
|
$
|
634,384
|
|
(11)%
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share reported
|
$
|
3.05
|
|
|
$
|
2.92
|
|
4%
|
|
|
$
|
8.82
|
|
|
$
|
9.24
|
|
(5)%
|
|
Pretax
adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring (United
States)
|
0.09
|
|
|
0.14
|
|
|
|
0.20
|
|
|
0.14
|
|
|
Inventory reserve
adjustment (Canada)
|
—
|
|
|
—
|
|
|
|
0.16
|
|
|
—
|
|
|
Restructuring
(Canada)
|
0.07
|
|
|
0.02
|
|
|
|
0.25
|
|
|
0.02
|
|
|
Restructuring
(Unallocated expense)
|
—
|
|
|
—
|
|
|
|
0.15
|
|
|
—
|
|
|
Restructuring (Other
Businesses)
|
—
|
|
|
0.01
|
|
|
|
—
|
|
|
0.07
|
|
|
Total pretax
adjustments
|
0.16
|
|
|
0.17
|
|
|
|
0.76
|
|
|
0.23
|
|
|
Tax effect
(1)
|
(0.05)
|
|
|
(0.06)
|
|
|
|
(0.24)
|
|
|
(0.07)
|
|
|
Discrete tax
items
|
(0.10)
|
|
|
—
|
|
|
|
(0.21)
|
|
|
—
|
|
|
Total, net of
tax
|
0.01
|
|
|
0.11
|
|
|
|
0.31
|
|
|
0.16
|
|
|
Diluted earnings per
share adjusted
|
$
|
3.06
|
|
|
$
|
3.03
|
|
1%
|
|
|
$
|
9.13
|
|
|
$
|
9.40
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
(1) The tax impact of
adjustments is calculated based on the income tax rate in each
applicable jurisdiction.
|
|
Three Months
Ended
March
31,
|
|
|
2016
|
|
2015
|
|
Diluted earnings per
share reported
|
$
|
2.98
|
|
|
$
|
3.07
|
|
(3)%
|
|
Pretax
adjustments:
|
|
|
|
|
Restructuring (United
States)
|
0.26
|
|
|
—
|
|
|
Restructuring
(Canada)
|
0.05
|
|
|
—
|
|
|
Restructuring (Other
Businesses)
|
—
|
|
|
0.03
|
|
|
Total pretax
adjustments
|
0.31
|
|
|
0.03
|
|
|
Tax effect
(1)
|
(0.11)
|
|
|
—
|
|
|
Discrete tax
items
|
—
|
|
|
—
|
|
|
Total, net of
tax
|
0.20
|
|
|
0.03
|
|
|
Diluted earnings per
share adjusted
|
$
|
3.18
|
|
|
$
|
3.10
|
|
3%
|
|
|
Three Months
Ended
June
30,
|
|
|
2016
|
|
2015
|
|
Diluted earnings per
share reported
|
$
|
2.79
|
|
|
$
|
3.25
|
|
(14)%
|
|
Pretax
adjustments:
|
|
|
|
|
Restructuring (United
States)
|
(0.15)
|
|
|
—
|
|
|
Inventory reserve
adjustment (Canada)
|
0.16
|
|
|
—
|
|
|
Restructuring
(Canada)
|
0.13
|
|
|
—
|
|
|
Restructuring
(Unallocated expense)
|
0.15
|
|
|
—
|
|
|
Restructuring (Other
Businesses)
|
—
|
|
|
0.03
|
|
|
Total pretax
adjustments
|
0.29
|
|
|
0.03
|
|
|
Tax effect
(1)
|
(0.08)
|
|
|
(0.01)
|
|
|
Discrete tax
items
|
(0.11)
|
|
|
—
|
|
|
Total, net of
tax
|
0.10
|
|
|
0.02
|
|
|
Diluted earnings per
share adjusted
|
$
|
2.89
|
|
|
$
|
3.27
|
|
(12)%
|
|
|
(1) The tax impact of
adjustments is calculated based on the income tax rate in each
applicable jurisdiction.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/grainger-reports-results-for-the-2016-third-quarter-300346238.html
SOURCE W.W. Grainger, Inc.