Grainger Reports Results For The Second Quarter 2021

Second Quarter Highlights
*Delivered sales of $3.2 billion, up 13.1%, compared to the second quarter of 2020; up 15.0% on an organic, daily, constant currency basis
*Generated $269 million in operating cash flow and returned $203 million to shareholders through dividends and share repurchases
*Earned 2021 Great Place to Work® Certification™

Grainger (NYSE: GWW) today reported results for the second quarter 2021 with sales of $3.2 billion, up 13.1% and up 15.0% on an organic, daily, constant currency basis compared to the second quarter 2020. Both the High-Touch Solutions N.A. and Endless Assortment segments produced strong top-line growth.

“Grainger is uniquely positioned to navigate one of the most challenging supply chain environments in recent history, with labor shortages, material shortages and transportation challenges. I am proud of how the Grainger team has remained committed to our operating principles, served customers well during this period and delivered strong top-line growth,” said DG Macpherson, Chairman and Chief Executive Officer. “As more of the U.S. became vaccinated, and mask mandates were relaxed earlier than expected, demand for pandemic products stalled, resulting in further inventory adjustments and a negative impact to gross profit margin. Excluding these adjustments, our underlying gross profit margin has improved as customer demand has returned to a more normal mix. We remain confident in our ability to achieve full year financial results within our guidance range.”

Daily sales for the quarter increased 13.1% as compared to the second quarter of 2020 with the same number of selling days. On an organic, constant currency basis, which excludes revenues from the divested Fabory and China businesses from the prior year results, daily sales increased 15.0% as compared to the second quarter of 2020. Foreign exchange contributed a 0.9% favorable impact during the second quarter of 2021 compared to the second quarter of 2020.

In the High-Touch Solutions N.A. segment, sales were up 13.7% on a daily basis versus the prior year second quarter due primarily to a strong recovery in non-pandemic product growth. In the Endless Assortment segment, daily sales growth was up 23.0% versus the second quarter of 2020 from strong customer acquisition in both Zoro U.S. and MonotaRO.

Gross margin for the second quarter of 2021 was 35.0%, a 75 basis point decline over the prior year quarter driven by pandemic-related inventory adjustments recorded in the High-Touch Solutions N.A. segment. Early in the pandemic, the Company purchased a wide range of products to meet customer needs, but as the pandemic evolved, demand for certain pandemic products weakened and market prices lowered. During the second quarter of 2021, mask demand declined abruptly when most local and federal mask mandates were lifted in mid-May of 2021, earlier than the previously expected re-openings. This change, along with vaccine availability and general economic recovery, resulted in the Company recording inventory adjustments totaling $63 million. It does not expect any further material pandemic-related inventory adjustments. Excluding these adjustments, gross margin for the total company would have been 37.0%, up 120 basis points compared to the second quarter of 2020.

The Endless Assortment segment continued to show positive gross margin trends, expanding by 75 basis points versus the prior year second quarter and growing gross profit dollars 26% in the second quarter of 2021.

Reported operating earnings for the second quarter of 2021 of $334 million were up 62% versus the second quarter of 2020, primarily due to losses taken in the second quarter of 2020 related to the divested Fabory business. On an adjusted basis, operating earnings for the quarter were $334 million, up 6% versus the second quarter of 2020.

In the second quarter of 2021, reported operating margin of 10.4% increased 315 basis points, driven by the $109 million pretax loss recorded on the sale of Fabory in the second quarter of 2020. On an adjusted basis, operating margin decreased 70 basis points versus the second quarter of 2020 driven primarily by the decline in gross profit margin, as SG&A leverage remained nearly flat year over year.

Reported earnings per share of $4.27 in the second quarter of 2021 increased 103% versus the second quarter of 2020. Adjusted earnings per share for the quarter of $4.27 increased 14% versus the second quarter of 2020. The increase in earnings per share was due primarily to higher operating earnings and lower average shares outstanding in the current period.
details at: https://pressroom.grainger.com/news/press-release-details/2021/Grainger-Reports-Results-For-The-Second-Quarter-2021/default.aspx

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