This excerpt taken from the GWW 10-K filed Mar 6, 2006.
Net sales of $4,716.2 million in 2004 increased 8.0% over 2003 net sales of $4,365.5 million. Sales in the United States were up 8.2% over the prior year. All customer segments increased, with the strongest sales growth in the manufacturing and commercial sectors. National account sales, which include all customer segments, were up 12%. Sales to government accounts were up 5% primarily due to increased sales to the U.S. Postal Service and to federal, state and local governments.
Net sales in Canada were 11.1% higher in 2004 than in 2003, benefiting primarily from a favorable Canadian exchange rate. In local currency, sales increased 3.3%, primarily due to a strengthening in the Canadian economy in the second half of the year driven by the natural resources sector. Sales in Mexico were up 15.4% in 2004 as compared to 2003, driven by an improving local economy, expanded telesales operations and several branch facility enhancements during the year.
Cost of merchandise sold of $2,950.1 million increased $147.2 million, or 5.3%, over 2003 due to increased volume, while gross profit margins improved 1.7 percentage points to 37.5% in 2004 from 35.8% in 2003. Contributing to the improvement in gross profit margin were product cost reduction programs, which included the global sourcing of additional products, combined with selected price increases and the positive effect of product mix. These margin improvements were partially offset by unfavorable changes in selling price category mix.
Operating expenses for the Branch-based Distribution businesses increased 11.5% in 2004. Operating expenses were up primarily as a result of higher sales commissions and bonus and profit sharing accruals associated with the improved 2004 performance, as well as increased costs related to strategic initiatives such as the market expansion program and technology upgrades. Partially offsetting these increases was improved productivity achieved from the redesigned logistics network.
In 2004, operating earnings of $465.5 million increased by $69.8 million, or 17.6%, over 2003. The effect of sales growth, combined with the improvement in gross profit margin, more than offset the increase in operating expenses.
This excerpt taken from the GWW 10-Q filed Nov 2, 2005.
Net sales of $3,850.1 million increased $321.2 million, or 9.1%, in the first nine months of 2005 compared to net sales of $3,528.9 million in the first nine months of 2004. Sales in the United States were up 8.3% with growth in all customer end markets, led by the government, manufacturing and natural resource sectors. National accounts sales within all customer segments were up 12% for the nine-month period. The sales growth was negatively affected by 2 percentage points by the wind-down of Integrated Supply and related automotive contracts. The Company is expecting an additional 2 percentage point reduction in sales growth related to these types of contacts in 2006.
In 2004, the Company launched a multiyear initiative to strengthen its presence in top metropolitan markets and better position itself to serve the local customer. Phases 1 through 3 include 10 markets. As of the third quarter of 2005, the Company had begun Phase 4 of the project. Additional phases are scheduled for 2006 and beyond.
Net sales in Canada during the first nine months of 2005 were 15.8% higher than the comparable 2004 period, benefiting from the stronger Canadian economy fueled by its natural resources industry and a favorable exchange rate. In local currency, sales increased 6.7%. Sales in Mexico increased 19.2% in the year-to-date period ended September 30, 2005, driven by an improving economy, increased telesales and incremental sales for one new branch added in September of 2004.
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The gross profit margin increased 1.4 percentage points in the first nine months of 2005 over the comparable period of 2004. Contributing to the improvement in gross profit margin were favorable changes in selling price category mix and the positive effect of product mix. A major driver of the improvement in selling price category mix was reduced sales to Integrated Supply and automotive customers, which carry lower margins than the overall average.
Operating expenses for the Branch-based Distribution businesses were up 13.0% in the first nine months of the year. Increased costs related to market expansion and the SAP system implementation were the primary drivers of the operating expense growth. Higher expenses for payroll, benefits and profit sharing also contributed to the increase. Partially offsetting these increases were lower bad debt expenses.
In the first nine months of 2005, operating earnings of $379.0 million increased 14.7% compared with $330.4 million for the comparable period of 2004. The earnings improvement resulted from higher sales and improved gross profit margin, partially offset by operating expenses that increased at a faster rate than sales.
These excerpts taken from the GWW 8-K filed Oct 17, 2005.
Sales in the Branch-based Distribution segment increased by 10 percent in the 2005 third quarter versus the 2004 quarter. Strong growth in all customer sectors except transportation contributed to a 9 percent increase in sales in the United States. Improved sales of seasonal products contributed approximately 1 percentage point to sales growth. Overall, U.S. sales growth was reduced 2 percentage points as a result of the wind-down of Integrated Supply and automotive-related contracts.
Hurricane-related sales for the quarter were approximately $4 million below the same period last year. Damage to company facilities as a result of the hurricanes was minimal.
Sales in Phase 1 of the market expansion program (Atlanta, Denver and Seattle) grew by 9 percent in the quarter. Sales growth in the Denver market continued to be affected by lower sales to one large customer. Excluding the effect of that customer, sales in Phase 1 were up 13 percent. Sales in Phase 2, covering four markets in Southern California, were up 17 percent for the quarter. Sales in Phase 3 Houston, St. Louis and Tampa were up 18 percent. In total, market expansion contributed approximately 1 percentage point to the 10 percent segment sales growth. Phase 1 was completed in the first quarter of 2005, when the final branch opened in Seattle. Phase 2 is 90 percent complete and Phase 3 is 70 percent complete.
Sales in Mexico were up 18 percent in the quarter versus the 2004 period, driven by a strengthening Mexican economy, additional telesales efforts and the opening of a new branch in September 2004. Canadian operations benefited from increased sales in the natural resources industry and a favorable exchange rate, with overall sales for the quarter up 16 percent (7 percent in Canadian currency).
W.W. Grainger, Inc. 2005 third quarter results
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Operating earnings for the quarter were up 27 percent in the Branch-based Distribution segment, the result of higher sales and improved gross profit. The segments gross profit margins continued to benefit from the positive effect of product mix and exiting lower-margin Integrated Supply and automotive contracts. The market expansion initiative in Phases 1, 2 and 3 approached break-even from an operating earnings standpoint for the third quarter versus a loss in the 2004 quarter. However, entering future expansion markets will affect operating earnings performance.
This excerpt taken from the GWW 8-K filed Apr 15, 2005.
This excerpt taken from the GWW 8-K filed Jan 27, 2005.
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