W.W. Grainger Inc. (GWW, Financial) filed Quarterly Report for the period ended 2009-09-30.
Grainger offers a breadth of MRO solutions by combining products services and information. The company tailors its capabilities toward the objective of providing the lowest total cost MRO solution to select customer groups. The Branch-based Distribution Businesses serve immediate and/or planned purchase MRO needs. The Digital Businesses offer a broad array of indirect materials and related information to meet the needs of businesses looking to reduce process costs through Internet-enabled solutions. W.w. Grainger Inc. has a market cap of $6.86 billion; its shares were traded at around $93.18 with a P/E ratio of 17.1 and P/S ratio of 1. The dividend yield of W.w. Grainger Inc. stocks is 1.9%. W.w. Grainger Inc. had an annual average earning growth of 7.4% over the past 10 years. GuruFocus rated W.w. Grainger Inc. the business predictability rank of 2-star.
Net earnings for the first nine months of 2009 decreased by 9.3% to $333.4 million from $367.4 million in 2008. The decrease in net earnings for the nine months primarily resulted from the decline in operating earnings, partially offset by the one-time non-cash pre-tax gain of $47.4 million ($28 million after tax) from the step-up of the investment in MonotaRO after Grainger became a majority owner in September 2009. Diluted earnings per share of $4.34 in the first nine months of 2009 were 5.7% lower than the $4.60 for the first nine months of 2008 primarily due to the decrease in net earnings, partially offset by lower shares outstanding and the one-time gain from the MonotaRo transaction. During the first quarter of 2009 Grainger adopted FSP 03-6-1 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” resulting in a five cent reduction to the previously reported earnings per share for the first nine months of 2008.
For the nine months ended September 30, 2009, working capital of $1,611.0 million increased by $228.6 million when compared to $1,382.4 million at December 31, 2008. The increase in working capital primarily relates to a higher cash balance. The ratio of current assets to current liabilities increased to 3.4 at September 30, 2009, versus 2.8 at December 31, 2008.
Net cash provided by operating activities was $509.7 million and $335.3 million for the nine months ended September 30, 2009 and 2008, respectively. Net cash flows from operating activities serve as Grainger s primary source to fund its growth initiatives. Contributing to cash flows from operations were net earnings in the nine months ended September 30, 2009 of $333.4 million and the effect of non-cash expenses such as stock-based compensation, and depreciation and amortization. Also contributing to net cash provided by operating activities were changes in operating assets and liabilities, which resulted in a net source of cash $69.5 million for the first nine months of 2009. The principal operating sources of cash was a decrease in inventory due to lower purchases. Other current liabilities declined primarily due to reduced profit sharing accruals, as well as no bonus accruals.
Net cash used in investing activities was $76.9 million and $152.9 million for the nine months ended September 30, 2009 and 2008, respectively. Cash expended for additions to property, buildings, equipment and capitalized software was $89.9 million in the first nine months of 2009 versus $140.5 million in the first nine months of 2008. Capital expenditures in 2009 included funding of infrastructure improvement projects in the distribution centers in the United States, Canada and Mexico. Net cash acquired in business acquisitions was $10.4 million for the first nine months of 2009 compared to cash expended for business acquisitions of $34.0 million for the first nine months of 2008.
Net cash used in financing activities was $161.9 million for the nine months ended September 30, 2009, versus net cash provided by financing activities of $69.9 million for the nine months ended September 30, 2008. The $231.8 million difference in cash used versus provided in financing activities for the nine months ended September 30, 2009 was due primarily to a four-year bank term loan of $500 million obtained in May 2008. Amounts used in financing activities included treasury stock purchases of $127.7 million for the first nine months of 2009 versus $307.6 million for the first nine months of 2008. Grainger repurchased 1.9 million shares and 4.3 million shares in the first nine months of 2009 and 2008, respectively. Grainger also used cash in financing activities to pay dividends to shareholders of $100.0 million and $90.4 million for the first nine months of 2009 and 2008, respectively. Offsetting these financing cash outlays were net proceeds from short-term borrowings of $1.6 million in the first nine months of 2009 versus net payments of $85.0 million in the first nine months of 2008. Also offsetting cash outlays were proceeds and excess tax benefits realized from stock options exercised of $72.5 million and $52.8 million in the first nine months of 2009 and 2008, respectively.
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Grainger offers a breadth of MRO solutions by combining products services and information. The company tailors its capabilities toward the objective of providing the lowest total cost MRO solution to select customer groups. The Branch-based Distribution Businesses serve immediate and/or planned purchase MRO needs. The Digital Businesses offer a broad array of indirect materials and related information to meet the needs of businesses looking to reduce process costs through Internet-enabled solutions. W.w. Grainger Inc. has a market cap of $6.86 billion; its shares were traded at around $93.18 with a P/E ratio of 17.1 and P/S ratio of 1. The dividend yield of W.w. Grainger Inc. stocks is 1.9%. W.w. Grainger Inc. had an annual average earning growth of 7.4% over the past 10 years. GuruFocus rated W.w. Grainger Inc. the business predictability rank of 2-star.
Highlight of Business Operations:
Net earnings for the third quarter of 2009 increased by 3.2% to $144.6 million from $140.0 million in 2008. The increase in net earnings for the quarter primarily resulted from the one-time non-cash pre-tax gain of $47.4 million ($28 million after tax) from the step-up of the investment in MonotaRO Co., Ltd. (MonotaRO) after Grainger became a majority owner in September 2009. Diluted earnings per share of $1.88 in the third quarter of 2009 were 6.2% higher than the $1.77 for the third quarter of 2008 primarily due to the one-time gain from the MonotaRO transaction. In the first quarter of 2009 Grainger adopted FSP 03-6-1 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” resulting in a two cent reduction to the previously reported 2008 third quarter earnings per share.Net earnings for the first nine months of 2009 decreased by 9.3% to $333.4 million from $367.4 million in 2008. The decrease in net earnings for the nine months primarily resulted from the decline in operating earnings, partially offset by the one-time non-cash pre-tax gain of $47.4 million ($28 million after tax) from the step-up of the investment in MonotaRO after Grainger became a majority owner in September 2009. Diluted earnings per share of $4.34 in the first nine months of 2009 were 5.7% lower than the $4.60 for the first nine months of 2008 primarily due to the decrease in net earnings, partially offset by lower shares outstanding and the one-time gain from the MonotaRo transaction. During the first quarter of 2009 Grainger adopted FSP 03-6-1 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” resulting in a five cent reduction to the previously reported earnings per share for the first nine months of 2008.
For the nine months ended September 30, 2009, working capital of $1,611.0 million increased by $228.6 million when compared to $1,382.4 million at December 31, 2008. The increase in working capital primarily relates to a higher cash balance. The ratio of current assets to current liabilities increased to 3.4 at September 30, 2009, versus 2.8 at December 31, 2008.
Net cash provided by operating activities was $509.7 million and $335.3 million for the nine months ended September 30, 2009 and 2008, respectively. Net cash flows from operating activities serve as Grainger s primary source to fund its growth initiatives. Contributing to cash flows from operations were net earnings in the nine months ended September 30, 2009 of $333.4 million and the effect of non-cash expenses such as stock-based compensation, and depreciation and amortization. Also contributing to net cash provided by operating activities were changes in operating assets and liabilities, which resulted in a net source of cash $69.5 million for the first nine months of 2009. The principal operating sources of cash was a decrease in inventory due to lower purchases. Other current liabilities declined primarily due to reduced profit sharing accruals, as well as no bonus accruals.
Net cash used in investing activities was $76.9 million and $152.9 million for the nine months ended September 30, 2009 and 2008, respectively. Cash expended for additions to property, buildings, equipment and capitalized software was $89.9 million in the first nine months of 2009 versus $140.5 million in the first nine months of 2008. Capital expenditures in 2009 included funding of infrastructure improvement projects in the distribution centers in the United States, Canada and Mexico. Net cash acquired in business acquisitions was $10.4 million for the first nine months of 2009 compared to cash expended for business acquisitions of $34.0 million for the first nine months of 2008.
Net cash used in financing activities was $161.9 million for the nine months ended September 30, 2009, versus net cash provided by financing activities of $69.9 million for the nine months ended September 30, 2008. The $231.8 million difference in cash used versus provided in financing activities for the nine months ended September 30, 2009 was due primarily to a four-year bank term loan of $500 million obtained in May 2008. Amounts used in financing activities included treasury stock purchases of $127.7 million for the first nine months of 2009 versus $307.6 million for the first nine months of 2008. Grainger repurchased 1.9 million shares and 4.3 million shares in the first nine months of 2009 and 2008, respectively. Grainger also used cash in financing activities to pay dividends to shareholders of $100.0 million and $90.4 million for the first nine months of 2009 and 2008, respectively. Offsetting these financing cash outlays were net proceeds from short-term borrowings of $1.6 million in the first nine months of 2009 versus net payments of $85.0 million in the first nine months of 2008. Also offsetting cash outlays were proceeds and excess tax benefits realized from stock options exercised of $72.5 million and $52.8 million in the first nine months of 2009 and 2008, respectively.
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