Grainger (GWW) Q3 Earnings, Revenues Beat On Higher Volumes
Zacks Investment Research | Oct 16, 2017 11:01PM ET
W.W. Grainger, Inc.’s (NYSE:GWW) third-quarter 2017 adjusted earnings per share of $2.90 came in lower than the prior-year figure of $3.06 by 5%. However, earnings, beat the Zacks Consensus Estimate of $2.57 by 13%.
Including one-time items such as restructuring charges and branch gains, earnings came in at $2.79 per share in the reported quarter, down 9% from $3.06 in the year-ago quarter.
The company witnessed strong volumes in its U.S. business driven by strategic pricing initiatives as well as an improving demand environment. Grainger noted solid response, particularly from the mid-sized customers and also from digital marketing activities that began in mid-August. The single channel online businesses continued to deliver strong sales growth and improved profits. However, the Canadian business continues to be challenged.
Operational Update
Grainger reported revenues of $2,636 million, up 1.5% from the prior-year quarter figure of $2,596 million, driven by an increase of 8 percentage point (pp) from volume growth, partly offset by a decline of 4 pp in price and 1 percentage point from the divestiture of a specialty business in the United States in mid-July. Hurricane-related sales in the United States contributed 1 pp but were negated by a decline of 1 percentage point in seasonal sales. The figure marginally also beat the Zacks Consensus Estimate of $2,629 million.
There were 63 selling days in the reported quarter, one less than third-quarter 2016. The company continues to streamline portfolio with the divestiture of a non-core U.S. specialty business, which impacted sales in the quarter.
Cost of sales increased 4% year over year to $1,619 million. Gross profit decreased 2% to $1,017 million from $1,040 million recorded in the year-ago quarter. Gross margin contracted 140 basis points (bps) to 38.6%.
Grainger’s adjusted operating income in the quarter decreased 13% to $291 million from $332 million recorded in the prior-year quarter. Adjusted operating margin fell 180 bps to 11.0% in the quarter from 12.8% in the year-earlier quarter.
W.W. Grainger, Inc. Price, Consensus and EPS Surprise
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