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W.W. Grainger posts Q2 results, raises FY EPS guidance, shares rally

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Maintenance and repair product supplier W.W. Grainger (NYSE:GWW) reported record second-quarter profit Wednesday, on increased sales from better pricing and more efficient products, and increased its full-year earnings guidance.

The news sent shares up 6.64 per cent, trading at $201.51 as at 10:10 am ET.

For the three months that ended June 30, the company posted earnings of $191 million, or $2.63 per share, versus $170 million or $2.34 per share in the same quarter of 2011.

Grainger noted that the 2011 second quarter included a 12-cent-per-share benefit primarily from the settlement of tax examinations.  Excluding the tax benefit in 2011, earnings per share increased 18 per cent in the recent quarter.

Grainger reported revenue of $2.25 billion, up 12 per cent compared to $2 billion in the second quarter of 2011.

Analysts polled by Thomson Reuters recently projected earnings of $2.62 per share, on revenue of $2.27 billion.

“We are confident that our investments in expanding our product offering, enhancing our eCommerce platform, increasing our sales force and growing our inventory management solutions, provide value to our customers,” said Grainger's chairman, president and CEO, Jim Ryan.

“As such, we reiterate our 2012 sales guidance of 12 to 14 per cent growth and are increasing our earnings per share (EPS) guidance to a new range of $10.50 to $10.80.”

The company's previous 2012 earnings per share guidance was for a range of $10.40 to $10.80.

Gross margin rose to 44.4 per cent in the latest period, from 43.1 percent in the second quarter of 2011.

The company said the increase was driven by price inflation in its US segment, strong sales growth in its Canadian segment and by strong earnings growth in Japan and Mexico.

Grainger, considered an industrial bellwether, said that sales in the second quarter increased 12 per cent partially on acquisitions, which were offset by unfavorable foreign exchange impact.

Sales in the company’s US business segment increased seven per cent in the quarter, while sales in its Canadian business unit rose nine per cent.

Grainger said sales for the "other" businesses segment, which includes operations in Asia, Europe and Latin America, increased 84 per cent versus the prior year period.

The company noted that this increase was primarily due to the incremental sales from the business in Europe, Fabory, acquired in August 2011, and the business in Brazil, AnFreixo, acquired in April 2012.  

Excluding acquisitions, sales for this segment increased 21 per cent, primarily the result of strong revenue growth in Japan.

W.W. Grainger, with 2011 sales of $8.1 billion, is a broad line supplier of maintenance, repair and operating products.

Quick facts: W.W. Grainger

Price: 350.11 USD

NYSE:GWW
Market: NYSE
Market Cap: $18.79 billion
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