W.w. Grainger, Inc. · NYSE:GWW
W.w. Grainger — Q2 2023 Earnings Presentation
29 slides from W.w. Grainger's earnings presentation, Jul 27, 2023
Slide 1: Q2 2023 Earnings Call
NYSE: GWW Q2 2023 Earnings Call July 27, 2023
Slide 2: Safe Harbor Statement and Non-GAAP Financial Measures
Safe Harbor Statement and Non-GAAP Financial Measures All statements in this communication, other than those relating to historical facts, are “forward-looking statements.” Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expe
Slide 3: Opening Remarks
Opening Remarks D.G. Macpherson Chairman and CEO © 2023 W.W. Grainger, Inc. 3
Slide 4: The Grainger Edge and Our Purpose
The Grainger Edge® INVESTOR DAY Start with the Our We Keep the Do the customer World Working® Embrace Purpose right thing curiosity We relentlessly expand our Invest in our Act with Our leadership position by being the go-to partner for people who success intent Aspiration build and run safe, sustai
Slide 5: Highlights from the 2023 ESG Report
Highlights from the 2023 ESG Report Progressing on our near-term ESG initiatives Helping our customers achieve their own ESG objectives Customer sustainability $1 B solutions Revenue from Environmentally Grainger is the go-to partner for people who seek to build and Preferable Products in HTS – U.S.
Slide 6: Q2 2023 Highlights
Q2 2023 Highlights Focused execution driving continued strong results +9.0% Sales $4.2B $4.1B (daily basis) • Sustained momentum with our HTS-N.A. growth engines and EA flywheel • Announced addition of four new sites to expand U.S. supply chain capacity Operating Margin 15.8% $4.1B +190bps • Deliver
Slide 7: Q2 2023 Results
Q2 2023 Results Dee Merriwether SVP and CFO © 2023 W.W. Grainger, Inc. 7
Slide 8: Q2 2023 Results: Total Company
Q2 2023 Results: Total Company Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q2 2023 Q2 2022 Sales increased 9.0% (reported and daily) Fav/(Unfav) • 10.1% sales growth on a daily, constant currency basis Sales $ 4,182 $ 3,837 9.0% • Double-digit revenue growth in both segments w
Slide 9: Q2 2023 Results: High-Touch Solutions - N.A.
Q2 2023 Results: High-Touch Solutions - N.A. Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q2 2023 Q2 2022 Sales increased 9.9% (reported and daily) Fav/(Unfav) • 10.0% sales growth on a daily, constant currency basis Sales $ 3,355 $ 3,053 9.9% • Solid growth across all geograph
Slide 10: Sales Outgrowth: High-Touch Solutions - U.S.
Sales Outgrowth: High-Touch Solutions - U.S. Continued traction with growth engines driving outgrowth of ~525 basis points in Q2’23 Annual Trend Quarterly Trend 1,000 800 775 800 750 Impacted by 700 heightened Target is to grow pandemic sales; ~525 400 to 500 bps ~450 bps 2-year avg faster than the
Slide 11: Q2 2023 Results: Endless Assortment
Q2 2023 Results: Endless Assortment Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q2 2023 Q2 2022 Sales increased 4.5% (reported and daily); up Fav/(Unfav) 10.1% in daily, constant currency Sales $ 751 $ 719 4.5% • Zoro growth of 2.8% on a daily basis Daily Sales 11.7 11.2 4.5%
Slide 12: Operating Metrics: Endless Assortment
Operating Metrics: Endless Assortment Growth of registered users and SKU additions continue to provide strong foundation for sales growth across the segment Total Registered Users Total Active SKUs (Zoro U.S.) (user count in (SKU count in thousands) millions) +16% +20% 12.2 13,402 12.0 12,920 12,479
Slide 13: Looking Ahead
Looking Ahead Dee Merriwether SVP and CFO © 2023 W.W. Grainger, Inc. 13
Slide 14: 2023 Full Year Guidance: Total Company
2023 Full Year Guidance: Total Company 2023 Y/Y change 2022A Guidance (updated as of July 27, 2023) Raising Net Sales ($ billions) $15.2 $16.4 – $16.8 8.0% to 10.6% (8.5% to 11.0% daily sales) midpoint of Prior FY’23 Guidance $16.2 - $16.8 39.1% – 39.4% revenue and Gross Profit Margin 38.4% 70 to 10
Slide 15: Closing Remarks
Closing Remarks D.G. Macpherson Chairman and CEO © 2023 W.W. Grainger, Inc. 15
Slide 16: Q&A
Q&A © 2023 W.W. Grainger, Inc. 16
Slide 17: Appendix
Appendix © 2023 W.W. Grainger, Inc. 17
Slide 18: Q2 2023 Segment Highlights: High-Touch Solutions - N.A.
Appendix Q2 2023 Segment Highlights: High-Touch Solutions - N.A. HTS - U.S. HTS - Canada ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +10.1% Daily +200 bps +2.0% +180 bps Daily $3,126 40.0% 42.0% $157 32.5% 34.3% $2,838 $153 Q2’22 Q2’23 Q2’22 Q2’23 Q2’22 Q2’23 Q2’22 Q2’23 Local da
Slide 19: Q2 2023 Segment Highlights: Endless Assortment
Q2 2023 Segment Highlights: Endless Assortment MonotaRO (1) Zoro - U.S. ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +5.5% +2.8% Daily +140 bps +380 bps Daily -90 bps 26.8% 28.2% 33.3% 32.4% Q2’22 Q2’23 Q2’22 Q2’23 $445 $470 41.4% $268 $275 37.7% Op. Margin Op. Margin +70 bps -200
Slide 20: Q2 2023 Sales Performance: High-Touch Solutions - U.S.
Q2 2023 Sales Performance: High-Touch Solutions - U.S. Large Customers(1) Mid-sized Customers(1) 23% 23% 20% 20% 19% 17% 16% 14% 11% 10% Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Note: FY’22 large customer daily sales growth was 20% Note: FY’22 mid-size customer daily sales growth
Slide 21: Sales Growth By Customer End Market: HTS - U.S.
Sales Growth By Customer End Market: HTS – U.S. Q2’23 5 Quarter Trend Commercial Services UP High-Single Digits Contractors UP Low-Double Digits Government UP Mid-Teens Healthcare UP Low-Double Digits Manufacturing UP High-Single Digits Retail UP Low-Double Digits Transportation UP Low-Double Digits
Slide 22: 2023 Full Year Supplemental Guidance
Appendix 2023 Full Year Supplemental Guidance Adj. Operating Margin: Maintaining HTS-N.A. operating margin outlook, Cash Flow: Increasing operating cash flow and share repurchase while lowering EA on slower sales outlook on improved earnings and lower working capital 2020A 2021A 2022A 2023 Guidance
Slide 23: Definitions & Calculations
Definitions & Calculations Basis of presentation: The Company has a controlling ownership interest in MonotaRO, which is part of our Endless Assortment segment. MonotaRO’s results are fully consolidated, reflected in U.S. GAAP, and reported one-month in arrears. Results will differ from MonotaRO’s e
Slide 24: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Sales growth for the three months ended June 30, 2023 (percent change compared to the prior year period) (unaudited) Note: For more information on the Company's use of non-GAAP measures in this presentation, please see the appendix Definitions and Calculations. (1) B
Slide 25: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Income statement adjustments for the three months ended June 30, 2023 (in millions, except for percentage data) (unaudited) Total Company results included adjusting items which impacted U.S. GAAP as follows: Note: For more information on the Company's use of non-GAAP
Slide 26: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Income statement adjustments for the three months ended June 30, 2022 (in millions, except for percentage data) (unaudited) Total Company results included adjusting items which impacted U.S. GAAP as follows: Note: For more information on the Company's use of non-GAAP
Slide 27: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating margin adjustments for the twelve months ended December 31, 2022, 2021, and 2020 (in millions, except for percentage data) (unaudited) Note: For more information on the Company's use of non-GAAP measures in this presentation, please see the appendix Definit
Slide 28: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Key metrics for the three months ended June 30, 2023 (in millions, except for percentage data) (unaudited) Note: For more information on the Company's use of non-GAAP measures in this presentation, please see the appendix Definitions and Calculations. (1) Last twelve
Slide 29: IR Contacts
IR Contacts Kyle Bland Vice President, Investor Relations Andrew Ansay Director, Investor Relations Abby Schill Sr. Manager, Investor Relations InvestorRelations@grainger.com © 2023 W.W. Grainger, Inc. 29