W.w. Grainger, Inc. · NYSE:GWW
W.w. Grainger — Q3 2023 Earnings Presentation
28 slides from W.w. Grainger's earnings presentation, Oct 26, 2023
Slide 1: Q3 2023 Earnings Call
NYSE: GWW Q3 2023 Earnings Call October 26, 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: Q3 2023 Highlights
Q3 2023 Highlights Advancing strategic initiatives while driving continued strong results +6.7% Sales $4.2B $4.1B (reported) • Sustained momentum with our HTS-N.A. growth engines and EA flywheel • Commenced construction on previously announced Northwest Distribution Center Operating Margin 15.9% $4.
Slide 6: Q3 2023 Results
Q3 2023 Results Dee Merriwether SVP and CFO © 2023 W.W. Grainger, Inc. 6
Slide 7: Q3 2023 Results: Total Company
Q3 2023 Results: Total Company Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q3 2023 Q3 2022 Sales increased 6.7%; up 8.4% on a daily basis Fav/(Unfav) • 8.7% sales growth on a daily, constant currency basis Sales $ 4,208 $ 3,943 6.7% • High-single-digit revenue growth in both s
Slide 8: Q3 2023 Results: High-Touch Solutions - N.A.
Q3 2023 Results: High-Touch Solutions - N.A. Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q3 2023 Q3 2022 Fav/(Unfav) Sales increased 7.0%; up 8.7% on a daily basis • 8.5% sales growth on a daily, constant currency basis Sales $ 3,403 $ 3,180 7.0% • Solid growth across all geog
Slide 9: Sales Outgrowth: High-Touch Solutions - U.S.
Sales Outgrowth: High-Touch Solutions - U.S. Continued traction with growth engines driving outgrowth of ~550 basis points in Q3’23 Annual Trend Quarterly Trend 800 750 700 800 775 Impacted by ~550 heightened 525 Target is to grow pandemic sales; 400 to 500 bps ~450 bps 2-year avg faster than the ma
Slide 10: Q3 2023 Results: Endless Assortment
Q3 2023 Results: Endless Assortment Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q3 2023 Q3 2022 Sales increased 4.3%; up 9.2% on a daily, Fav/(Unfav) constant currency basis Sales $ 732 $ 701 4.3% • Zoro growth of 1.2% on a daily basis Daily Sales 11.6 10.9 6.0% • MonotaRO rep
Slide 11: 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) +25% +15% 12.8 13,778 12.0 12.2 13,402 1
Slide 12: Looking Ahead
Looking Ahead Dee Merriwether SVP and CFO © 2023 W.W. Grainger, Inc. 12
Slide 13: 2023 Full Year Guidance: Total Company
2023 Full Year Guidance: Total Company 2023 Y/Y change 2022A Guidance (updated as of Oct 26, 2023) Narrowing Net Sales ($ billions) $15.2 $16.4 – $16.6 8.0% to 9.1% (8.5% to 9.5% daily sales) expectations; Prior FY’23 Guidance $16.4 - $16.8 39.3% – 39.4% remain on- Gross Profit Margin 38.4% 85 to 10
Slide 14: Closing Remarks
Closing Remarks D.G. Macpherson Chairman and CEO © 2023 W.W. Grainger, Inc. 14
Slide 15: Q&A
Q&A © 2023 W.W. Grainger, Inc. 15
Slide 16: Appendix
Appendix © 2023 W.W. Grainger, Inc. 16
Slide 17: Q3 2023 Segment Highlights: High-Touch Solutions - N.A.
Appendix Q3 2023 Segment Highlights: High-Touch Solutions - N.A. HTS - U.S. HTS - Canada ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +8.5% Daily +110 bps +6.2% +140 bps Daily $2,972 $3,175 41.0% 42.1% $151 32.8% 34.2% $144 Q3’22 Q3’23 Q3’22 Q3’23 Q3’22 Q3’23 Q3’22 Q3’23 Local day
Slide 18: Q3 2023 Segment Highlights: Endless Assortment
Q3 2023 Segment Highlights: Endless Assortment (1) MonotaRO Zoro - U.S. ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +8.7% +1.2% Daily +80 bps +380 bps Daily -160 bps 26.9% 27.7% 34.4% 32.8% Q3’22 Q3’23 Q3’22 Q3’23 $448 41.4% $276 $276 $418 37.7% Op. Margin Op. Margin +30 bps -250
Slide 19: Q3 2023 Sales Performance: High-Touch Solutions - U.S.
Q3 2023 Sales Performance: High-Touch Solutions - U.S. (1) (1) Large Customers Mid-sized Customers 20% 20% 19% 17% 16% 14% 11% 10% 10% 7% Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Note: FY’22 large customer daily sales growth was 20% Note: FY’22 mid-size customer daily sales growth
Slide 20: Sales Growth By Customer End Market: HTS - U.S.
Sales Growth By Customer End Market: HTS - U.S. Q3’23 5 Quarter Trend Commercial Services UP Mid-Single Digits Contractors UP Low-Double Digits Government UP Mid-Teens Healthcare UP High-Single Digits Manufacturing UP Mid-Single Digits Retail UP High-Single Digits Transportation UP High-Teens Utilit
Slide 21: 2023 Full Year Supplemental Guidance
Appendix 2023 Full Year Supplemental Guidance Adj. Operating Margin: Narrowing HTS-N.A. outlook, Cash Flow: Increasing operating cash flow and share repurchase while maintaining EA expectations outlook on improved earnings 2020A 2021A 2022A 2023 Guidance ($ millions) 2020A 2021A 2022A 2023 Guidance
Slide 22: 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 23: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Sales growth for the three months ended September 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.
Slide 24: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Income statement adjustments for the three months ended September 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
Slide 25: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Income statement adjustments for the three months ended September 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
Slide 26: 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 27: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Key metrics for the three months ended September 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 t
Slide 28: 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. 28