W.W. Grainger, Inc 8-K, filed Mar 8, 2021
W.W. Grainger, Inc. (GWW)
8-K
2021-03-08
For: 2021-03-08
View Original
Added on
April 08, 2026
About this 8-K
W.W. Grainger, Inc filed this 8-K on March 8, 2021.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| | |||||||||||||||||
| (State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) | |||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
| (Registrant’s telephone number including area code) | | ||||||||||||||||
| Not Applicable | |||||||||||||||||
| (Former name or former address, if changed since last report) | |||||||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01. Other Events.
On February 3, 2021, W.W. Grainger, Inc. (the “Company”) announced a change to its reportable segments to align with its go-to-market strategies and bifurcated business models (high-touch solutions and endless assortment). Effective January 1, 2021, the Company’s reportable segments are comprised of the following:
•High-Touch Solutions North America (N.A.) – the Company’s high-touch solutions businesses provide value-added MRO solutions that are rooted in deep product knowledge and customer expertise. This segment includes the Grainger-branded businesses in the United States of America (U.S.), Canada, Mexico and Puerto Rico.
•Endless Assortment – the Company’s endless assortment businesses provide a simple, transparent and streamlined experience for customers to shop millions of products. This segment includes the Company’s Zoro and MonotaRO online businesses which operate predominately in the U.S. and Japan.
The Company will classify its remaining international high-touch solutions businesses as “Other” to reconcile to consolidated results. Consistent with current reporting, assets not attributable to a reportable segment are included in “Other current and non-current assets.”
Also, effective January 1, 2021, the Company updated its reporting and accounting policies for corporate cost and intersegment sales transactions as follows:
•Corporate costs, some of which were previously included in “Unallocated expenses”, are now fully allocated to each reportable segment based on benefits received.
•Intersegment sales transactions, which are sales between Grainger businesses presented in separate reportable segments and were previously included in segment-level “Net Sales” and “Gross Profit”, are now eliminated within the segment to present only the impact of third-party sales and respective gross profit. Service fees for intersegment sales, which were previously included in segment-level “Gross Profit” as markup, are now presented as part of segment selling, general and administrative expense.
The Company is issuing this Current Report on Form 8-K in order to provide investors with segment summary historical financial information and segment historical data that is consistent with its new reportable segment structure and reflective of the changes to accounting policies as described above. The schedules in Exhibit 99.1 filed with this Current Report on Form 8-K provide recast unaudited summary financial information and other data according to the new reporting segments for the previously reported years ended December 31, 2018 through December 31, 2020, and the previously reported quarters in the years ended December 31, 2019 and 2020.
All summary financial information on a prospective basis will be presented under the new reportable segments beginning with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021.
The information included in this Form 8-K in no way amends or restates the Company’s previously reported consolidated financial statements for any period and is presented for information purposes only. It does not change the Company's previously reported total assets, liabilities or shareholders' equity or its reported net income or earnings per share, nor does it reflect any subsequent information or events, other than as required to reflect the change in reporting segments as described above. This information should be read in conjunction with the Company’s previously filed reports.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description of Exhibit | ||||
| Recast Segment Information of W.W. Grainger, Inc. | |||||
| 104 | Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document (contained in Exhibit 101). | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 8, 2021
W.W. GRAINGER, INC. | ||||||||
| By: | /s/ Deidra C. Merriwether | |||||||
| Name: | Deidra C. Merriwether | |||||||
| Title: | Senior Vice President and Chief Financial Officer | |||||||
W.W. Grainger, Inc.
Recast Financial Statements — Total Company (Unaudited)
(In millions of dollars)
| Three Months Ended 2020 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Net Sales | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 2,355 | $ | 2,197 | $ | 2,377 | $ | 2,292 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Endless Assortment | 496 | 525 | 572 | 585 | 1,541 | 1,836 | 2,178 | ||||||||||||||||||||||||||||||||||
| Total reported net sales | 2,851 | 2,722 | 2,949 | 2,877 | 10,526 | 10,872 | 11,399 | ||||||||||||||||||||||||||||||||||
| Other | 150 | 115 | 69 | 64 | 695 | 614 | 398 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 3,001 | $ | 2,837 | $ | 3,018 | $ | 2,941 | $ | 11,221 | $ | 11,486 | $ | 11,797 | |||||||||||||||||||||||||||
| Reported Operating Earnings | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 314 | $ | 285 | $ | 334 | $ | 249 | $ | 1,168 | $ | 1,278 | $ | 1,182 | |||||||||||||||||||||||||||
| Endless Assortment | 35 | 42 | 48 | 41 | 139 | 122 | 166 | ||||||||||||||||||||||||||||||||||
| Total reported operating earnings | 349 | 327 | 382 | 290 | 1,307 | 1,400 | 1,348 | ||||||||||||||||||||||||||||||||||
| Other | (190) | (122) | (2) | (15) | (149) | (138) | (329) | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 159 | $ | 205 | $ | 380 | $ | 275 | $ | 1,158 | $ | 1,262 | $ | 1,019 | |||||||||||||||||||||||||||
| Adjusted Operating Earnings1 | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 321 | $ | 286 | $ | 333 | $ | 260 | $ | 1,211 | $ | 1,282 | $ | 1,200 | |||||||||||||||||||||||||||
| Endless Assortment | 35 | 42 | 48 | 50 | 139 | 122 | 175 | ||||||||||||||||||||||||||||||||||
| Total adjusted operating earnings | 356 | 328 | 381 | 310 | 1,350 | 1,404 | 1,375 | ||||||||||||||||||||||||||||||||||
| Other | (13) | (13) | (7) | (15) | (6) | (16) | (48) | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 343 | $ | 315 | $ | 374 | $ | 295 | $ | 1,344 | $ | 1,388 | $ | 1,327 | |||||||||||||||||||||||||||
| Total Assets | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 3,071 | $ | 3,154 | $ | 3,273 | $ | 3,171 | $ | 2,754 | $ | 2,914 | $ | 3,171 | |||||||||||||||||||||||||||
| Endless Assortment | 323 | 312 | 333 | 351 | 265 | 315 | 351 | ||||||||||||||||||||||||||||||||||
| Total assets | 3,394 | 3,466 | 3,606 | 3,522 | 3,019 | 3,229 | 3,522 | ||||||||||||||||||||||||||||||||||
| Other current and noncurrent assets | 3,783 | 3,728 | 2,977 | 2,773 | 2,854 | 2,776 | 2,773 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 7,177 | $ | 7,194 | $ | 6,583 | $ | 6,295 | $ | 5,873 | $ | 6,005 | $ | 6,295 | |||||||||||||||||||||||||||
| Total Capital Expenditures | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 30 | $ | 17 | $ | 20 | $ | 28 | $ | 209 | $ | 177 | $ | 95 | |||||||||||||||||||||||||||
| Endless Assortment | 11 | 22 | 42 | 17 | 10 | 57 | 92 | ||||||||||||||||||||||||||||||||||
| Total capital expenditures | 41 | 39 | 62 | 45 | 219 | 234 | 187 | ||||||||||||||||||||||||||||||||||
| Other | 1 | 1 | 1 | 2 | 27 | 15 | 5 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 42 | $ | 40 | $ | 63 | $ | 47 | $ | 246 | $ | 249 | $ | 192 | |||||||||||||||||||||||||||
| Total Depreciation and Amortization | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 37 | $ | 38 | $ | 33 | $ | 35 | $ | 207 | $ | 186 | $ | 143 | |||||||||||||||||||||||||||
| Endless Assortment | 4 | 4 | 4 | 5 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Total depreciation and amortization | 41 | 42 | 37 | 40 | 219 | 200 | 160 | ||||||||||||||||||||||||||||||||||
| Other | 1 | 4 | 2 | 2 | 15 | 10 | 9 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 42 | $ | 46 | $ | 39 | $ | 42 | $ | 234 | $ | 210 | $ | 169 | |||||||||||||||||||||||||||
1 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
1
W.W. Grainger, Inc.
Recast Financial Statements — Total Company (Unaudited)
(In millions of dollars)
| Three Months Ended 2019 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Net Sales | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 2,214 | $ | 2,282 | $ | 2,325 | $ | 2,215 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Endless Assortment | 419 | 453 | 477 | 487 | 1,541 | 1,836 | 2,178 | ||||||||||||||||||||||||||||||||||
| Total reported net sales | 2,633 | 2,735 | 2,802 | 2,702 | 10,526 | 10,872 | 11,399 | ||||||||||||||||||||||||||||||||||
| Other | 166 | 158 | 145 | 145 | 695 | 614 | 398 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 2,799 | $ | 2,893 | $ | 2,947 | $ | 2,847 | $ | 11,221 | $ | 11,486 | $ | 11,797 | |||||||||||||||||||||||||||
| Reported Operating Earnings | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 335 | $ | 351 | $ | 312 | $ | 280 | $ | 1,168 | $ | 1,278 | $ | 1,182 | |||||||||||||||||||||||||||
| Endless Assortment | 30 | 30 | 33 | 29 | 139 | 122 | 166 | ||||||||||||||||||||||||||||||||||
| Total reported operating earnings | 365 | 381 | 345 | 309 | 1,307 | 1,400 | 1,348 | ||||||||||||||||||||||||||||||||||
| Other | (2) | (1) | (7) | (128) | (149) | (138) | (329) | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 363 | $ | 380 | $ | 338 | $ | 181 | $ | 1,158 | $ | 1,262 | $ | 1,019 | |||||||||||||||||||||||||||
| Adjusted Operating Earnings2 | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 337 | $ | 349 | $ | 313 | $ | 283 | $ | 1,211 | $ | 1,282 | $ | 1,200 | |||||||||||||||||||||||||||
| Endless Assortment | 30 | 30 | 33 | 29 | 139 | 122 | 175 | ||||||||||||||||||||||||||||||||||
| Total adjusted operating earnings | 367 | 379 | 346 | 312 | 1,350 | 1,404 | 1,375 | ||||||||||||||||||||||||||||||||||
| Other | (2) | (2) | (7) | (5) | (6) | (16) | (48) | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 365 | $ | 377 | $ | 339 | $ | 307 | $ | 1,344 | $ | 1,388 | $ | 1,327 | |||||||||||||||||||||||||||
| Total Assets | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 2,829 | $ | 2,867 | $ | 2,871 | $ | 2,914 | $ | 2,754 | $ | 2,914 | $ | 3,171 | |||||||||||||||||||||||||||
| Endless Assortment | 265 | 289 | 298 | 315 | 265 | 315 | 351 | ||||||||||||||||||||||||||||||||||
| Total assets | 3,094 | 3,156 | 3,169 | 3,229 | 3,019 | 3,229 | 3,522 | ||||||||||||||||||||||||||||||||||
| Other current and noncurrent assets | 2,920 | 2,836 | 2,753 | 2,776 | 2,854 | 2,776 | 2,773 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 6,014 | $ | 5,992 | $ | 5,922 | $ | 6,005 | $ | 5,873 | $ | 6,005 | $ | 6,295 | |||||||||||||||||||||||||||
| Total Capital Expenditures | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 40 | $ | 36 | $ | 40 | $ | 61 | $ | 209 | $ | 177 | $ | 95 | |||||||||||||||||||||||||||
| Endless Assortment | 3 | 30 | 18 | 6 | 10 | 57 | 92 | ||||||||||||||||||||||||||||||||||
| Total capital expenditures | 43 | 66 | 58 | 67 | 219 | 234 | 187 | ||||||||||||||||||||||||||||||||||
| Other | 4 | 5 | 3 | 3 | 27 | 15 | 5 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 47 | $ | 71 | $ | 61 | $ | 70 | $ | 246 | $ | 249 | $ | 192 | |||||||||||||||||||||||||||
| Total Depreciation and Amortization | |||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions (N.A.) | $ | 44 | $ | 46 | $ | 47 | $ | 49 | $ | 207 | $ | 186 | $ | 143 | |||||||||||||||||||||||||||
| Endless Assortment | 3 | 3 | 4 | 4 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Total depreciation and amortization | 47 | 49 | 51 | 53 | 219 | 200 | 160 | ||||||||||||||||||||||||||||||||||
| Other | 3 | 3 | 2 | 2 | 15 | 10 | 9 | ||||||||||||||||||||||||||||||||||
| Total consolidated | $ | 50 | $ | 52 | $ | 53 | $ | 55 | $ | 234 | $ | 210 | $ | 169 | |||||||||||||||||||||||||||
2 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
2
W.W. Grainger, Inc.
Recast Financial Statements — High-Touch Solutions (N.A) Segment (Unaudited)
(In millions of dollars)
| Three Months Ended 2020 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Reported Results | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,355 | $ | 2,197 | $ | 2,377 | $ | 2,292 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Gross profit | 934 | 838 | 901 | 851 | 3,669 | 3,684 | 3,524 | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative (SG&A) expenses | 620 | 553 | 567 | 602 | 2,501 | 2,406 | 2,342 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Reported | 314 | 285 | 334 | 249 | 1,168 | 1,278 | 1,182 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 37 | 38 | 33 | 35 | 207 | 186 | 143 | ||||||||||||||||||||||||||||||||||
| Reported Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) | $ | 351 | $ | 323 | $ | 367 | $ | 284 | $ | 1,375 | $ | 1,464 | $ | 1,325 | |||||||||||||||||||||||||||
| Gross margin | 39.6% | 38.1% | 37.9% | 37.1% | 40.8% | 40.8% | 38.2% | ||||||||||||||||||||||||||||||||||
| SG&A to net sales | 26.3% | 25.1% | 23.9% | 26.3% | 27.8% | 26.6% | 25.4% | ||||||||||||||||||||||||||||||||||
| Operating margin | 13.3% | 13.0% | 14.1% | 10.8% | 13.0% | 14.1% | 12.8% | ||||||||||||||||||||||||||||||||||
| Adjusted Results3 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,355 | $ | 2,197 | $ | 2,377 | $ | 2,292 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Gross profit | 934 | 838 | 901 | 851 | 3,668 | 3,684 | 3,524 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 613 | 552 | 568 | 591 | 2,457 | 2,402 | 2,324 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Adjusted | 321 | 286 | 333 | 260 | 1,211 | 1,282 | 1,200 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 37 | 38 | 33 | 35 | 207 | 186 | 143 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 358 | $ | 324 | $ | 366 | $ | 295 | $ | 1,418 | $ | 1,468 | $ | 1,343 | |||||||||||||||||||||||||||
| Adjusted gross margin | 39.6% | 38.1% | 37.9% | 37.1% | 40.8% | 40.8% | 38.2% | ||||||||||||||||||||||||||||||||||
| Adjusted SG&A to net sales | 26.1% | 25.1% | 23.9% | 25.8% | 27.4% | 26.6% | 25.2% | ||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 13.6% | 13.0% | 14.0% | 11.3% | 13.5% | 14.2% | 13.0% | ||||||||||||||||||||||||||||||||||
3 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
3
W.W. Grainger, Inc.
Recast Financial Statements — High-Touch Solutions (N.A.) Segment (Unaudited)
(In millions of dollars)
| Three Months Ended 2019 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Reported Results | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,214 | $ | 2,282 | $ | 2,325 | $ | 2,215 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Gross profit | 922 | 942 | 920 | 900 | 3,669 | 3,684 | 3,524 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 587 | 591 | 608 | 620 | 2,501 | 2,406 | 2,342 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Reported | 335 | 351 | 312 | 280 | 1,168 | 1,278 | 1,182 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 44 | 46 | 47 | 49 | 207 | 186 | 143 | ||||||||||||||||||||||||||||||||||
| Reported EBITDA | $ | 379 | $ | 397 | $ | 359 | $ | 329 | $ | 1,375 | $ | 1,464 | $ | 1,325 | |||||||||||||||||||||||||||
| Gross margin | 41.7% | 41.3% | 39.6% | 40.6% | 40.8% | 40.8% | 38.2% | ||||||||||||||||||||||||||||||||||
| SG&A to net sales | 26.5% | 25.9% | 26.2% | 28.0% | 27.8% | 26.6% | 25.4% | ||||||||||||||||||||||||||||||||||
| Operating margin | 15.1% | 15.4% | 13.4% | 12.6% | 13.0% | 14.1% | 12.8% | ||||||||||||||||||||||||||||||||||
| Adjusted Results4 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,214 | $ | 2,282 | $ | 2,325 | $ | 2,215 | $ | 8,985 | $ | 9,036 | $ | 9,221 | |||||||||||||||||||||||||||
| Gross profit | 923 | 942 | 920 | 899 | 3,668 | 3,684 | 3,524 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 586 | 593 | 607 | 616 | 2,457 | 2,402 | 2,324 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Adjusted | 337 | 349 | 313 | 283 | 1,211 | 1,282 | 1,200 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 44 | 46 | 47 | 49 | 207 | 186 | 143 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 381 | $ | 395 | $ | 360 | $ | 332 | $ | 1,418 | $ | 1,468 | $ | 1,343 | |||||||||||||||||||||||||||
| Adjusted gross margin | 41.7% | 41.3% | 39.6% | 40.6% | 40.8% | 40.8% | 38.2% | ||||||||||||||||||||||||||||||||||
| Adjusted SG&A to net sales | 26.5% | 26.0% | 26.1% | 27.8% | 27.4% | 26.6% | 25.2% | ||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 15.2% | 15.3% | 13.4% | 12.8% | 13.5% | 14.2% | 13.0% | ||||||||||||||||||||||||||||||||||
4 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
4
W.W. Grainger, Inc.
Recast Financial Statements — Endless Assortment Segment (Unaudited)
(In millions of dollars)
| Three Months Ended 2020 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Reported Results | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 496 | $ | 525 | $ | 572 | $ | 585 | $ | 1,541 | $ | 1,836 | $ | 2,178 | |||||||||||||||||||||||||||
| Gross profit | 138 | 144 | 156 | 163 | 441 | 509 | 601 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 103 | 102 | 108 | 122 | 302 | 387 | 435 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Reported | 35 | 42 | 48 | 41 | 139 | 122 | 166 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 4 | 4 | 4 | 5 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Reported EBITDA | $ | 39 | $ | 46 | $ | 52 | $ | 46 | $ | 151 | $ | 136 | $ | 183 | |||||||||||||||||||||||||||
| Gross margin | 27.8 | % | 27.4 | % | 27.3 | % | 27.9 | % | 28.6 | % | 27.7 | % | 27.6 | % | |||||||||||||||||||||||||||
| SG&A to net sales | 20.7 | % | 19.4 | % | 19.0 | % | 20.7 | % | 19.6 | % | 21.1 | % | 20.0 | % | |||||||||||||||||||||||||||
| Operating margin | 7.0 | % | 8.0 | % | 8.3 | % | 7.2 | % | 9.0 | % | 6.6 | % | 7.6 | % | |||||||||||||||||||||||||||
| Adjusted Results5 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 496 | $ | 525 | $ | 572 | $ | 585 | $ | 1,541 | $ | 1,836 | $ | 2,178 | |||||||||||||||||||||||||||
| Gross profit | 138 | 144 | 156 | 163 | 441 | 509 | 601 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 103 | 102 | 108 | 113 | 302 | 387 | 426 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Adjusted | 35 | 42 | 48 | 50 | 139 | 122 | 175 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 4 | 4 | 4 | 5 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 39 | $ | 46 | $ | 52 | $ | 55 | $ | 151 | $ | 136 | $ | 192 | |||||||||||||||||||||||||||
| Adjusted gross margin | 27.8 | % | 27.4 | % | 27.3 | % | 27.9 | % | 28.6 | % | 27.7 | % | 27.6 | % | |||||||||||||||||||||||||||
| Adjusted SG&A to net sales | 20.7 | % | 19.4 | % | 19.0 | % | 19.2 | % | 19.6 | % | 21.1 | % | 19.6 | % | |||||||||||||||||||||||||||
| Adjusted operating margin | 7.0 | % | 8.0 | % | 8.3 | % | 8.6 | % | 9.0 | % | 6.6 | % | 8.0 | % | |||||||||||||||||||||||||||
5 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
5
W.W. Grainger, Inc.
Recast Financial Statements — Endless Assortment Segment (Unaudited)
(In millions of dollars)
| Three Months Ended 2019 | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| Reported Results | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 419 | $ | 453 | $ | 477 | $ | 487 | $ | 1,541 | $ | 1,836 | $ | 2,178 | |||||||||||||||||||||||||||
| Gross profit | 118 | 127 | 130 | 134 | 441 | 509 | 601 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 88 | 97 | 97 | 105 | 302 | 387 | 435 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Reported | 30 | 30 | 33 | 29 | 139 | 122 | 166 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 3 | 3 | 4 | 4 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Reported EBITDA | $ | 33 | $ | 33 | $ | 37 | $ | 33 | $ | 151 | $ | 136 | $ | 183 | |||||||||||||||||||||||||||
| Gross margin | 28.2 | % | 28.0 | % | 27.4 | % | 27.4 | % | 28.6 | % | 27.7 | % | 27.6 | % | |||||||||||||||||||||||||||
| SG&A to net sales | 21.1 | % | 21.3 | % | 20.4 | % | 21.6 | % | 19.6 | % | 21.1 | % | 20.0 | % | |||||||||||||||||||||||||||
| Operating margin | 7.0 | % | 6.7 | % | 7.0 | % | 5.8 | % | 9.0 | % | 6.6 | % | 7.6 | % | |||||||||||||||||||||||||||
| Adjusted Results6 | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 419 | $ | 453 | $ | 477 | $ | 487 | $ | 1,541 | $ | 1,836 | $ | 2,178 | |||||||||||||||||||||||||||
| Gross profit | 118 | 127 | 130 | 134 | 441 | 509 | 601 | ||||||||||||||||||||||||||||||||||
| SG&A expenses | 88 | 97 | 97 | 105 | 302 | 387 | 426 | ||||||||||||||||||||||||||||||||||
| Operating earnings - Adjusted | 30 | 30 | 33 | 29 | 139 | 122 | 175 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 3 | 3 | 4 | 4 | 12 | 14 | 17 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 33 | $ | 33 | $ | 37 | $ | 33 | $ | 151 | $ | 136 | $ | 192 | |||||||||||||||||||||||||||
| Adjusted gross margin | 28.2 | % | 28.0 | % | 27.4 | % | 27.4 | % | 28.6 | % | 27.7 | % | 27.6 | % | |||||||||||||||||||||||||||
| Adjusted SG&A to net sales | 21.1 | % | 21.3 | % | 20.4 | % | 21.6 | % | 19.6 | % | 21.1 | % | 19.6 | % | |||||||||||||||||||||||||||
| Adjusted operating margin | 7.0 | % | 6.7 | % | 7.0 | % | 5.8 | % | 9.0 | % | 6.6 | % | 8.0 | % | |||||||||||||||||||||||||||
6 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
6
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)
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 margin, adjusted SG&A, adjusted SG&A to net sales, adjusted operating earnings, adjusted operating margin, reported EBITDA, and adjusted EBITDA. 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 margin, adjusted SG&A, adjusted SG&A to net sales, adjusted operating earnings, adjusted operating margin, reported EBITDA and adjusted EBITDA 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.
Note: The reconciliations provided in the immediately following tables for reported gross profit to adjusted gross profit are on a total company level and are comprised of the adjustments indicated in the tables below. The reconciliations for reported gross profit to adjusted gross profit on a segment level contain the same adjustments as the adjustments specified for the applicable segment as provided in the immediately following tables for the applicable period reported. Therefore, no separate reconciliation is provided for segment information. The reconciliations for reported SG&A to adjusted SG&A and reported EBITDA to adjusted EBITDA, on a total company and segment levels, respectively, contain the same adjustments in the same amounts presented in the reported gross profit to adjusted gross profit and reported operating earnings to adjusted operating earnings tables. Therefore, no separate reconciliation is provided.
| In millions | Three Months Ended 2020 | ||||||||||||||||||||||||||||||||||
| Mar. 31 | Gross Margin | June 30 | Gross Margin | Sept. 30 | Gross Margin | Dec. 31 | Gross Margin | ||||||||||||||||||||||||||||
| Total company gross profit reported | $ | 1,121 | 37.4% | $ | 1,016 | 35.8% | $ | 1,074 | 35.6% | $ | 1,027 | 34.9% | |||||||||||||||||||||||
| Total company gross profit adjusted | $ | 1,121 | 37.4% | $ | 1,016 | 35.8% | $ | 1,074 | 35.6% | $ | 1,027 | 34.9% | |||||||||||||||||||||||
| In millions | Three Months Ended 2019 | ||||||||||||||||||||||||||||||||||
| Mar. 31 | Gross Margin | June 30 | Gross Margin | Sept. 30 | Gross Margin | Dec. 31 | Gross Margin | ||||||||||||||||||||||||||||
| Total company gross profit reported | $ | 1,095 | 39.1% | $ | 1,121 | 38.7% | $ | 1,099 | 37.3% | $ | 1,082 | 38.0% | |||||||||||||||||||||||
| Restructuring, net (High- Touch Solutions (N.A.)) | 1 | 0.1 | — | — | — | — | (1) | — | |||||||||||||||||||||||||||
| Total company gross profit adjusted | $ | 1,096 | 39.2% | $ | 1,121 | 38.7% | $ | 1,099 | 37.3% | $ | 1,081 | 38.0% | |||||||||||||||||||||||
7
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)
| In millions | Year Ended December 31, | |||||||||||||||||||||||||
| 2018 | Gross Margin | 2019 | Gross Margin | 2020 | Gross Margin | |||||||||||||||||||||
| Total company gross profit reported | $ | 4,348 | 38.7% | $ | 4,397 | 38.3% | $ | 4,238 | 35.9% | |||||||||||||||||
| Restructuring, net (High- Touch Solutions (N.A.)) | (1) | — | — | — | — | — | ||||||||||||||||||||
| Restructuring, net (Other) | 1 | — | — | — | — | — | ||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | ||||||||||||||||||||
| Total company gross profit adjusted | $ | 4,348 | 38.7% | $ | 4,397 | 38.3% | $ | 4,238 | 35.9% | |||||||||||||||||
Note: The reconciliations provided in the immediately following tables for reported operating earnings to adjusted operating earnings are on a total company level, and are comprised of the adjustments indicated in the tables below. The reconciliations for reported operating earnings to adjusted operating earnings on a segment level, and as classified as “Other”, contain the same adjustments as the adjustments specified for the applicable segment, or for “Other”, as provided in the immediately following tables for the applicable period reported. Therefore, no separate reconciliation is provided for segment information. The reconciliations for reported SG&A to adjusted SG&A and reported EBITDA to adjusted EBITDA, on a total company and segment levels, respectively, contain the same adjustments in the same amounts presented in the reported gross profit to adjusted gross profit and reported operating earnings to adjusted operating earnings tables. Therefore, no separate reconciliation is provided.
| In millions | Three Months Ended 2020 | ||||||||||||||||||||||||||||||||||
| Mar. 31 | Operating Margin | June 30 | Operating Margin | Sept. 30 | Operating Margin | Dec. 31 | Operating Margin | ||||||||||||||||||||||||||||
| Total company operating earnings reported | $ | 159 | 5.3% | $ | 205 | 7.3% | $ | 380 | 12.6% | $ | 275 | 9.4% | |||||||||||||||||||||||
| Restructuring, net (High-Touch Solutions (N.A.)) | 7 | 1 | (1) | 11 | |||||||||||||||||||||||||||||||
| Restructuring, net (Endless Assortment) | — | — | — | 9 | |||||||||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||||||||
| Impairment charges | 177 | — | — | — | |||||||||||||||||||||||||||||||
| Fabory divestiture | — | 109 | — | — | |||||||||||||||||||||||||||||||
| Grainger China divestiture | — | — | (5) | — | |||||||||||||||||||||||||||||||
| Subtotal - other | 177 | 109 | (5) | — | |||||||||||||||||||||||||||||||
| Subtotal - total company | 184 | 6.1 | 110 | 3.8 | (6) | (0.2) | 20 | 0.6 | |||||||||||||||||||||||||||
| Total company operating earnings adjusted | $ | 343 | 11.4% | $ | 315 | 11.1% | $ | 374 | 12.4% | $ | 295 | 10.0% | |||||||||||||||||||||||
8
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)
| In millions | Three Months Ended 2019 | ||||||||||||||||||||||||||||||||||
| Mar. 31 | Operating Margin | June 30 | Operating Margin | Sept. 30 | Operating Margin | Dec. 31 | Operating Margin | ||||||||||||||||||||||||||||
| Total company operating earnings reported | $ | 363 | 13.0% | $ | 380 | 13.1% | $ | 338 | 11.4% | $ | 181 | 6.4% | |||||||||||||||||||||||
| Restructuring, net (High-Touch Solutions (N.A.)) | 2 | (2) | 1 | 3 | |||||||||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||||||||
| Restructuring, net | — | (1) | — | 3 | |||||||||||||||||||||||||||||||
| Impairment charges | — | — | — | 120 | |||||||||||||||||||||||||||||||
| Subtotal - other | — | (1) | — | 123 | |||||||||||||||||||||||||||||||
| Subtotal - total company | 2 | — | (3) | (0.1) | 1 | 0.1 | 126 | 4.4 | |||||||||||||||||||||||||||
| Total company operating earnings adjusted | $ | 365 | 13.0% | $ | 377 | 13.0% | $ | 339 | 11.5% | $ | 307 | 10.8% | |||||||||||||||||||||||
| In millions | Year Ended December 31, | |||||||||||||||||||||||||
| 2018 | Operating Margin | 2019 | Operating Margin | 2020 | Operating Margin | |||||||||||||||||||||
| Total company operating earnings reported | $ | 1,158 | 10.3% | $ | 1,262 | 11.0% | $ | 1,019 | 8.6% | |||||||||||||||||
| Restructuring, net (High-Touch Solutions (N.A.)) | 43 | 4 | 18 | |||||||||||||||||||||||
| Restructuring, net (Endless Assortment) | — | — | 9 | |||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||
| Restructuring, net | 4 | 2 | — | |||||||||||||||||||||||
| Impairment charges | 139 | 120 | 177 | |||||||||||||||||||||||
| Fabory divestiture | — | — | 109 | |||||||||||||||||||||||
| Grainger China divestiture | — | — | (5) | |||||||||||||||||||||||
| Subtotal - other | 143 | 122 | 281 | |||||||||||||||||||||||
| Subtotal - total company | 186 | 1.7% | 126 | 1.1% | 308 | 2.6% | ||||||||||||||||||||
| Total company operating earnings adjusted | $ | 1,344 | 12.0% | $ | 1,388 | 12.1% | $ | 1,327 | 11.2% | |||||||||||||||||
###
9