falsedesktopGWW2020-09-30000027713520000028{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Illinois\t\t\t\t\t36-1150280\n(State or other jurisdiction of incorporation or organization)\t\t\t\t\t(I.R.S. Employer Identification No.)\n100 Grainger Parkway\tLake Forest\tIllinois\t\t60045-5201\n(Address of principal executive offices)\t\t\t\t\t(Zip Code)\n\t\t847\t535-1000\n(Registrant's telephone number including area code)\t\t\t\t\t\t\t\t\t\t\t\nNot Applicable\t\t\t\t\t\t\t\t\t\t\t\n(Former name or former address if changed since last report)\t\t\t\t\t\t\t\t\t\t\t\n", "q10k_tbl_1": "\tTABLE OF CONTENTS\t\n\t\tPage No.\n\tPART I FINANCIAL INFORMATION\t\nItem 1:\tFinancial Statements (Unaudited)\t\n\tCondensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30 2020 and 2019\t4\n\tCondensed Consolidated Statements of Comprehensive Earnings for the Three and Nine Months Ended September 30 2020 and 2019\t5\n\tCondensed Consolidated Balance Sheets as of September 30 2020 and December 31 2019\t6\n\tCondensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30 2020 and 2019\t7\n\tCondensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30 2020 and 2019\t8\n\tNotes to Condensed Consolidated Financial Statements\t10\nItem 2:\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t21\nItem 3:\tQuantitative and Qualitative Disclosures About Market Risk\t34\nItem 4:\tControls and Procedures\t34\n\tPART II OTHER INFORMATION\t\nItem 1:\tLegal Proceedings\t35\nItem 1A:\tRisk Factors\t35\nItem 2:\tUnregistered Sales of Equity Securities and Use of Proceeds\t36\nItem 6:\tExhibits\t36\nSignatures\t\t37\nEXHIBITS\t\t\n", "q10k_tbl_2": "\tThree Months Ended\t\t\tNine Months Ended\n\tSeptember 30\t\t\tSeptember 30\n\t2020\t2019\t2020\t2019\nNet sales\t3018\t2947\t8856\t8639\nCost of goods sold\t1944\t1848\t5645\t5324\nGross profit\t1074\t1099\t3211\t3315\nSelling general and administrative expenses\t694\t761\t2467\t2234\nOperating earnings\t380\t338\t744\t1081\nOther (income) expense:\t\t\t\t\nInterest expense net\t23\t20\t72\t60\nOther net\t(5)\t(4)\t(16)\t(18)\nTotal other expense net\t18\t16\t56\t42\nEarnings before income taxes\t362\t322\t688\t1039\nIncome tax provision\t106\t78\t118\t261\nNet earnings\t256\t244\t570\t778\nLess: Net earnings attributable to noncontrolling interest\t16\t11\t43\t32\nNet earnings attributable to W.W. Grainger Inc.\t240\t233\t527\t746\nEarnings per share:\t\t\t\t\nBasic\t4.43\t4.27\t9.74\t13.46\nDiluted\t4.41\t4.25\t9.70\t13.40\nWeighted average number of shares outstanding:\t\t\t\t\nBasic\t53.6\t54.1\t53.6\t55.0\nDiluted\t53.9\t54.4\t53.8\t55.2\nCash dividends paid per share\t1.53\t1.44\t4.41\t4.24\n", "q10k_tbl_3": "\tThree Months Ended\t\t\tNine Months Ended\n\tSeptember 30\t\t\tSeptember 30\n\t2020\t2019\t2020\t2019\nNet earnings\t256\t244\t570\t778\nOther comprehensive earnings (losses):\t\t\t\t\nForeign currency translation adjustments net of reclassification\t24\t(17)\t30\t6\nPostretirement benefit plan reclassification net of tax benefit of $1 $1 $3 and $3 respectively\t(2)\t(2)\t(8)\t(7)\nOther\t0\t0\t4\t0\nTotal other comprehensive earnings (losses)\t22\t(19)\t26\t(1)\nComprehensive earnings net of tax\t278\t225\t596\t777\nLess: Comprehensive earnings (losses) attributable to noncontrolling interest\t\t\t\t\nNet earnings\t16\t11\t43\t32\nForeign currency translation adjustments\t5\t(1)\t6\t2\nTotal comprehensive earnings (losses) attributable to noncontrolling interest\t21\t10\t49\t34\nComprehensive earnings attributable to W.W. Grainger Inc.\t257\t215\t547\t743\n", "q10k_tbl_4": "\tAs of\t\nASSETS\t(Unaudited) September 30 2020\tDecember 31 2019\nCURRENT ASSETS\t\t\nCash and cash equivalents\t859\t360\nAccounts receivable (less allowances for credit losses of $26 and $21 respectively)\t1485\t1425\nInventories - net\t1780\t1655\nPrepaid expenses and other current assets\t120\t104\nPrepaid income taxes\t29\t11\nTotal current assets\t4273\t3555\nPROPERTY BUILDINGS AND EQUIPMENT - NET\t1394\t1400\nDEFERRED INCOME TAXES\t11\t11\nGOODWILL\t369\t429\nINTANGIBLES - NET\t224\t304\nOTHER ASSETS\t312\t306\nTOTAL ASSETS\t6583\t6005\nLIABILITIES AND SHAREHOLDERS' EQUITY\t\t\nCURRENT LIABILITIES\t\t\nShort-term debt\t0\t55\nCurrent maturities of long-term debt\t12\t246\nTrade accounts payable\t836\t719\nAccrued compensation and benefits\t201\t228\nAccrued contributions to employees' profit sharing plans\t48\t85\nAccrued expenses\t324\t318\nIncome taxes payable\t20\t27\nTotal current liabilities\t1441\t1678\nLONG-TERM DEBT (less current maturities)\t2388\t1914\nDEFERRED INCOME TAXES AND TAX UNCERTAINTIES\t112\t106\nOTHER NON-CURRENT LIABILITIES\t267\t247\nSHAREHOLDERS' EQUITY\t\t\nCumulative preferred stock - $5 par value - 12000000 shares authorized; none issued nor outstanding\t0\t0\nCommon Stock - $0.50 par value -300000000 shares authorized; issued 109659219 shares\t55\t55\nAdditional contributed capital\t1214\t1182\nRetained earnings\t8694\t8405\nAccumulated other comprehensive earnings (losses)\t(134)\t(154)\nTreasury stock at cost - 55991169 and 55971691 shares respectively\t(7698)\t(7633)\nTotal W.W. Grainger Inc. shareholders' equity\t2131\t1855\nNoncontrolling interest\t244\t205\nTotal shareholders' equity\t2375\t2060\nTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY\t6583\t6005\n", "q10k_tbl_5": "\tNine Months Ended\t\n\tSeptember 30\t\n\t2020\t2019\nCASH FLOWS FROM OPERATING ACTIVITIES:\t\t\nNet earnings\t570\t778\nProvision for credit losses\t18\t7\nDeferred income taxes and tax uncertainties\t9\t19\nDepreciation and amortization\t137\t171\nNet losses (gains) from sales of assets and business divestitures\t104\t(5)\nImpairment of goodwill intangibles and long-lived assets\t177\t0\nStock-based compensation\t36\t32\nSubtotal\t481\t224\nChange in operating assets and liabilities:\t\t\nAccounts receivable\t(145)\t(119)\nInventories\t(222)\t18\nPrepaid expenses and other assets\t(29)\t(15)\nTrade accounts payable\t145\t50\nAccrued liabilities\t(13)\t(137)\nIncome taxes - net\t(19)\t(16)\nOther non-current liabilities\t19\t(13)\nSubtotal\t(264)\t(232)\nNet cash provided by operating activities\t787\t770\nCASH FLOWS FROM INVESTING ACTIVITIES:\t\t\nAdditions to property buildings equipment and intangibles\t(152)\t(163)\nProceeds from sales of assets and business divestitures\t22\t16\nOther\t(2)\t2\nNet cash used in investing activities\t(132)\t(145)\nCASH FLOWS FROM FINANCING ACTIVITIES:\t\t\nBorrowings under lines of credit\t12\t22\nPayments against lines of credit\t(65)\t(18)\nProceeds from long-term debt\t1583\t0\nPayments of long-term debt\t(1361)\t(48)\nProceeds from stock options exercised\t47\t19\nPayments for employee taxes withheld from stock awards\t(16)\t(10)\nPurchases of treasury stock\t(101)\t(600)\nCash dividends paid\t(246)\t(242)\nOther - net\t0\t2\nNet cash used in financing activities\t(147)\t(875)\nExchange rate effect on cash and cash equivalents\t(9)\t(2)\nNET CHANGE IN CASH AND CASH EQUIVALENTS\t499\t(252)\nCash and cash equivalents at beginning of year\t360\t538\nCash and cash equivalents at end of period\t859\t286\n", "q10k_tbl_6": "\tCommon Stock\tAdditional Contributed Capital\tRetained Earnings\tAccumulated Other Comprehensive Earnings (Losses)\tTreasury Stock\tNoncontrolling Interest\tTotal\nBalance at January 1 2019\t55\t1134\t7869\t(171)\t(6966)\t172\t2093\nStock-based compensation\t0\t3\t0\t0\t3\t0\t6\nPurchases of treasury stock\t0\t0\t0\t0\t(135)\t0\t(135)\nNet earnings\t0\t0\t253\t0\t0\t9\t262\nOther comprehensive earnings (losses)\t0\t0\t0\t3\t0\t(2)\t1\nCapital contribution\t0\t0\t0\t0\t0\t2\t2\nCash dividends paid ($1.36 per share)\t0\t0\t(77)\t0\t0\t0\t(77)\nBalance at March 31 2019\t55\t1137\t8045\t(168)\t(7098)\t181\t2152\nStock-based compensation\t0\t15\t0\t0\t9\t0\t24\nPurchases of treasury stock\t0\t0\t0\t0\t(265)\t0\t(265)\nNet earnings\t0\t0\t260\t0\t0\t12\t272\nOther comprehensive earnings (losses)\t0\t0\t0\t12\t0\t5\t17\nCash dividends paid ($1.44 per share)\t0\t0\t(79)\t0\t0\t(7)\t(86)\nBalance at June 30 2019\t55\t1152\t8226\t(156)\t(7354)\t191\t2114\nStock-based compensation\t0\t9\t0\t0\t3\t0\t12\nPurchases of treasury stock\t0\t0\t0\t0\t(200)\t0\t(200)\nNet earnings\t0\t0\t233\t0\t0\t11\t244\nOther comprehensive earnings (losses)\t0\t0\t0\t(18)\t0\t(1)\t(19)\nCash dividends paid ($1.44 per share)\t0\t0\t(79)\t0\t0\t0\t(79)\nBalance at September 30 2019\t55\t1161\t8380\t(174)\t(7551)\t201\t2072\n", "q10k_tbl_7": "\tCommon Stock\tAdditional Contributed Capital\tRetained Earnings\tAccumulated Other Comprehensive Earnings (Losses)\tTreasury Stock\tNoncontrolling Interest\tTotal\nBalance at January 1 2020\t55\t1182\t8405\t(154)\t(7633)\t205\t2060\nStock-based compensation\t0\t10\t0\t0\t13\t0\t23\nPurchases of treasury stock\t0\t0\t0\t0\t(100)\t0\t(100)\nNet earnings\t0\t0\t173\t0\t0\t12\t185\nOther comprehensive earnings (losses)\t0\t0\t0\t(63)\t0\t3\t(60)\nCash dividends paid ($1.44 per share)\t0\t0\t(78)\t0\t0\t0\t(78)\nBalance at March 31 2020\t55\t1192\t8500\t(217)\t(7720)\t220\t2030\nStock-based compensation\t0\t6\t0\t0\t11\t0\t17\nPurchases of treasury stock\t0\t0\t0\t0\t0\t(1)\t(1)\nNet earnings\t0\t0\t114\t0\t0\t15\t129\nOther comprehensive earnings (losses)\t0\t0\t0\t66\t0\t(2)\t64\nCash dividends paid ($1.44 per share)\t0\t0\t(78)\t0\t0\t(9)\t(87)\nBalance at June 30 2020\t55\t1198\t8536\t(151)\t(7709)\t223\t2152\nStock-based compensation\t0\t16\t0\t0\t11\t0\t27\nNet earnings\t0\t0\t240\t0\t0\t16\t256\nOther comprehensive earnings (losses)\t0\t0\t0\t17\t0\t5\t22\nCash dividends paid ($1.53 per share)\t0\t0\t(82)\t0\t0\t0\t(82)\nBalance at September 30 2020\t55\t1214\t8694\t(134)\t(7698)\t244\t2375\n", "q10k_tbl_8": "\tThree Months Ended September 30\t\t\t\t\t\n\t2020\t\t\t\t\t2019\n\tU.S.\tCanada\tTotal Company (2)\tU.S.\tCanada\tTotal Company (2)\nGovernment\t23%\t8%\t17%\t20%\t5%\t15%\nHeavy Manufacturing\t15%\t19%\t15%\t18%\t20%\t17%\nLight Manufacturing\t12%\t6%\t10%\t12%\t6%\t10%\nTransportation\t5%\t8%\t4%\t6%\t8%\t5%\nHealthcare\t9%\t-%\t7%\t7%\t-%\t5%\nCommercial\t8%\t11%\t6%\t10%\t9%\t8%\nRetail/Wholesale\t10%\t3%\t8%\t9%\t4%\t7%\nContractors\t9%\t11%\t7%\t9%\t11%\t8%\nNatural Resources\t2%\t29%\t3%\t3%\t33%\t4%\nOther (1)\t7%\t5%\t23%\t6%\t4%\t21%\nTotal\t100%\t100%\t100%\t100%\t100%\t100%\nPercent of Total Company Revenue\t73%\t4%\t100%\t73%\t4%\t100%\n", "q10k_tbl_9": "\tNine Months Ended September 30\t\t\t\t\t\n\t2020\t\t\t\t\t2019\n\tU.S.\tCanada\tTotal Company (2)\tU.S.\tCanada\tTotal Company (2)\nGovernment\t22%\t9%\t16%\t19%\t6%\t14%\nHeavy Manufacturing\t16%\t18%\t15%\t19%\t20%\t17%\nLight Manufacturing\t13%\t6%\t10%\t13%\t6%\t11%\nTransportation\t5%\t9%\t5%\t5%\t8%\t5%\nHealthcare\t10%\t-%\t7%\t7%\t-%\t5%\nCommercial\t8%\t10%\t7%\t10%\t9%\t8%\nRetail/Wholesale\t10%\t4%\t8%\t8%\t4%\t7%\nContractors\t9%\t10%\t7%\t10%\t11%\t8%\nNatural Resources\t2%\t29%\t3%\t3%\t32%\t4%\nOther (1)\t5%\t5%\t22%\t6%\t4%\t21%\nTotal\t100%\t100%\t100%\t100%\t100%\t100%\nPercent of Total Company Revenue\t73%\t4%\t100%\t73%\t5%\t100%\n", "q10k_tbl_10": "\tAs of\t\n\tSeptember 30 2020\tDecember 31 2019\nLand\t331\t332\nBuilding structures and improvements\t1321\t1329\nFurniture fixtures machinery and equipment\t1875\t1832\nProperty buildings and equipment\t3527\t3493\nLess: Accumulated depreciation and amortization and impairment\t2133\t2093\nProperty buildings and equipment net\t1394\t1400\n", "q10k_tbl_11": "\tUnited States\tCanada\tOther businesses\tTotal\nBalance at January 1 2019\t192\t120\t112\t424\nTranslation\t0\t6\t(1)\t5\nBalance at December 31 2019\t192\t126\t111\t429\nImpairment\t0\t0\t(58)\t(58)\nTranslation\t0\t(3)\t1\t(2)\nBalance at September 30 2020\t192\t123\t54\t369\n", "q10k_tbl_12": "\t\tSeptember 30 2020\t\t\t\t\tDecember 31 2019\n\tWeighted average life\tGross carrying amount\tAccumulated amortization\tNet carrying amount\tGross carrying amount\tAccumulated amortization\tNet carrying amount\nCustomer lists and relationships\t11.8 years\t222\t168\t54\t401\t301\t100\nTrademarks trade names and other\t14.2 years\t35\t21\t14\t36\t20\t16\nNon-amortized trade names and other\tIndefinite\t27\t0\t27\t100\t38\t62\nCapitalized software\t4.2 years\t665\t536\t129\t626\t500\t126\nTotal intangible assets\t6.7 years\t949\t725\t224\t1163\t859\t304\n", "q10k_tbl_13": "\tAs of September 30 2020\t\t\tAs of December 31 2019\n\tCarrying Value\tFair Value (3)\tCarrying Value\tFair Value (3)\n4.60% senior notes due 2045\t1000\t1287\t1000\t1194\n3.75% senior notes due 2046\t400\t456\t400\t416\n4.20% senior notes due 2047\t400\t489\t400\t449\n1.85% senior notes due 2025 (1)\t500\t524\t0\t0\nBritish pound term loan\t0\t0\t170\t170\nEuro term loan\t0\t0\t123\t123\nJapanese Yen term loan (2)\t85\t85\t0\t0\nCanadian dollar revolving credit facility\t0\t0\t46\t46\nOther\t40\t40\t42\t42\nSubtotal (4)\t2425\t2881\t2181\t2440\nLess: Current maturities\t(12)\t(12)\t(246)\t(246)\nDebt issuance costs and discounts net of amortization\t(25)\t(25)\t(21)\t(21)\nLong-term debt (less current maturities)\t2388\t2844\t1914\t2173\n", "q10k_tbl_14": "\tThree Months Ended September 30\t\t\tNine Months Ended September 30\n\t2020\t2019\t2020\t2019\nFederal income tax\t76\t67\t145\t218\nStates income taxes net of federal benefit\t12\t9\t23\t28\nForeign rate difference\t12\t4\t18\t14\nForeign subsidiaries tax impacts non operating\t5\t0\t(71)\t0\nChange in valuation allowance\t4\t2\t8\t5\nOther net\t(3)\t(4)\t(5)\t(4)\nIncome tax expense\t106\t78\t118\t261\nEffective tax rate\t29.3%\t24.2%\t17.3%\t25.1%\n", "q10k_tbl_15": "\tThree Months Ended September 30 2020\t\t\t\t\n\tU.S.\tCanada\tTotal Reportable Segments\tOther businesses\tTotal\nTotal net sales\t2347\t116\t2463\t687\t3150\nIntersegment net sales\t(131)\t0\t(131)\t(1)\t(132)\nNet sales to external customers\t2216\t116\t2332\t686\t3018\nSegment operating earnings\t354\t2\t356\t44\t400\n", "q10k_tbl_16": "\tThree Months Ended September 30 2019\t\t\t\t\n\tU.S.\tCanada\tTotal Reportable Segments\tOther businesses\tTotal\nTotal net sales\t2277\t129\t2406\t673\t3079\nIntersegment net sales\t(131)\t0\t(131)\t(1)\t(132)\nNet sales to external customers\t2146\t129\t2275\t672\t2947\nSegment operating earnings\t343\t0\t343\t30\t373\n", "q10k_tbl_17": "\tNine Months Ended September 30 2020\t\t\t\t\n\tU.S.\tCanada\tTotal Reportable Segments\tOther businesses\tTotal\nTotal net sales\t6823\t352\t7175\t2065\t9240\nIntersegment net sales\t(382)\t0\t(382)\t(2)\t(384)\nNet sales to external customers\t6441\t352\t6793\t2063\t8856\nSegment operating earnings\t1012\t(4)\t1008\t(56)\t952\n", "q10k_tbl_18": "\tNine Months Ended September 30 2019\t\t\t\t\n\tU.S.\tCanada\tTotal Reportable Segments\tOther businesses\tTotal\nTotal net sales\t6648\t400\t7048\t1969\t9017\nIntersegment net sales\t(376)\t0\t(376)\t(2)\t(378)\nNet sales to external customers\t6272\t400\t6672\t1967\t8639\nSegment operating earnings\t1088\t(4)\t1084\t87\t1171\n", "q10k_tbl_19": "\tThree Months Ended September 30\t\t\tNine Months Ended September 30\n\t2020\t2019\t2020\t2019\nOperating earnings:\t\t\t\t\nTotal operating earnings for reportable segments\t356\t343\t1008\t1084\nOther businesses\t44\t30\t(56)\t87\nUnallocated expenses\t(20)\t(35)\t(208)\t(90)\nTotal consolidated operating earnings\t380\t338\t744\t1081\n\tAs of\t\t\t\n\tSeptember 30 2020\tDecember 31 2019\t\t\nAssets:\t\t\t\t\nUnited States\t3044\t2668\t\t\nCanada\t166\t173\t\t\nAssets for reportable segments\t3210\t2841\t\t\nOther current and noncurrent assets\t2676\t3003\t\t\nUnallocated assets\t697\t161\t\t\nTotal consolidated assets\t6583\t6005\t\t\n", "q10k_tbl_20": "\tThree Months Ended September 30\t\t\t\t\n\t\t\tPercent Increase/(Decrease)\tAs a Percent of Net Sales\t\n\t2020\t2019\t\t2020\t2019\nNet sales\t3018\t2947\t2.4%\t100.0%\t100.0%\nCost of goods sold\t1944\t1848\t5.2%\t64.4%\t62.7%\nGross profit\t1074\t1099\t(2.2)%\t35.6%\t37.3%\nSelling general and administrative expenses\t694\t761\t(8.7)%\t23.0%\t25.9%\nOperating earnings\t380\t338\t12.4%\t12.6%\t11.4%\nOther expense net\t18\t16\t15.2%\t0.6%\t0.5%\nIncome taxes\t106\t78\t36.2%\t3.5%\t2.6%\nNet earnings\t256\t244\t4.6%\t8.5%\t8.3%\nNoncontrolling interest\t16\t11\t37.1%\t0.5%\t0.4%\nNet earnings attributable to W.W. Grainger Inc.\t240\t233\t3.0%\t8.0%\t7.9%\n", "q10k_tbl_21": "\tThree Months Ended\t\t\n\tSeptember 30 2020\t\t\n\t2020\t2019\tFav/(Unfav)%\nSG&A reported\t694\t761\t9%\nRestructuring net of branch gains (Canada)\t(1)\t1\t\nGrainger China divestiture (Unallocated expense)\t(5)\t0\t\nTotal restructuring net and business divestiture\t(6)\t1\t\nSG&A adjusted\t700\t760\t8%\n", "q10k_tbl_22": "\t2020\t2019\tFav/(Unfav) %\nOperating earnings reported\t380\t338\t12%\nTotal restructuring net and business divestiture\t(6)\t1\t\nOperating earnings adjusted\t374\t339\t10%\n", "q10k_tbl_23": "\t2020\t2019\tFav/(Unfav)%\nNet earnings attributable to W.W. Grainger Inc. reported\t240\t233\t3%\nTotal restructuring net business divestiture and tax (1)\t6\t0\t\nNet earnings attributable to W.W. Grainger Inc. adjusted\t246\t233\t5%\n", "q10k_tbl_24": "\tNine Months Ended September 30\t\t\t\t\n\t\t\tPercent Increase/(Decrease)\tAs a Percent of Net Sales\t\n\t2020\t2019\t\t2020\t2019\nNet sales\t8856\t8639\t2.5%\t100.0%\t100.0%\nCost of goods sold\t5645\t5324\t6.0%\t63.7%\t61.6%\nGross profit\t3211\t3315\t(3.1)%\t36.3%\t38.4%\nSelling general and administrative expenses\t2467\t2234\t10.4%\t27.9%\t25.9%\nOperating earnings\t744\t1081\t(31.2)%\t8.4%\t12.5%\nOther expense net\t56\t42\t34.7%\t0.6%\t0.5%\nIncome taxes\t118\t261\t(54.5)%\t1.3%\t3.0%\nNet earnings\t570\t778\t(26.9)%\t6.4%\t9.0%\nNoncontrolling interest\t43\t32\t30.8%\t0.5%\t0.4%\nNet earnings attributable to W.W. Grainger Inc.\t527\t746\t(29.4)%\t6.0%\t8.6%\n", "q10k_tbl_25": "\tNine Months Ended September 30\t\t\n\t\t\tFav/(Unfav)%\n\t2020\t2019\t\nSG&A reported\t2467\t2234\t(10)%\nRestructuring net of branch gains (U.S.)\t6\t0\t\nRestructuring net of branch gains (Canada)\t1\t(1)\t\nImpairment charges (Other businesses)\t177\t0\t\nFabory divestiture (Other businesses)\t(7)\t0\t\nFabory divestiture (Unallocated expense)\t116\t0\t\nGrainger China divestiture (Unallocated expense)\t(5)\t0\t\nTotal restructuring net impairment charges and business divestitures\t288\t(1)\t\nSG&A adjusted\t2179\t2235\t3%\n", "q10k_tbl_26": "\t2020\t2019\tFav/(Unfav)%\nOperating earnings reported\t744\t1081\t(31)%\nTotal restructuring net impairment charges and business divestitures\t288\t0\t\nOperating earnings adjusted\t1032\t1081\t(5)%\n", "q10k_tbl_27": "\t2020\t2019\tFav/(Unfav) %\nNet earnings attributable to W.W. Grainger Inc. reported\t527\t746\t(29)%\nTotal restructuring net impairment charges business divestitures and tax (1)\t153\t0\t\nNet earnings attributable to W.W. Grainger Inc. adjusted\t680\t746\t(9)%\n", "q10k_tbl_28": "Period\tTotal Number of Shares Purchased (A)\tAverage Price Paid per Share (B)\tTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (C)\tMaximum Number of Shares That May Yet be Purchased Under the Plans or Programs\nJuly 1 - July 31\t180\t341.05\t0\t2742555\nAugust 1 - August 31\t0\t\t0\t2742555\nSeptember 1 - September 30\t770\t361.75\t0\t2742555\nTotal\t950 (D)\t\t0\t\n", "q10k_tbl_29": "EXHIBIT NO.\tDESCRIPTION\n31.1\tCertification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\n31.2\tCertification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\n32\tCertification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\n101.INS\tXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.\n101.SCH\tXBRL Taxonomy Extension Schema Document.\n101.CAL\tXBRL Taxonomy Extension Calculation Linkbase Document.\n101.DEF\tXBRL Taxonomy Extension Definition Linkbase Document.\n101.LAB\tXBRL Taxonomy Extension Label Linkbase Document.\n101.PRE\tXBRL Taxonomy Extension Presentation Linkbase Document.\n104\tCover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).\n"}{"bs": "q10k_tbl_4", "is": "q10k_tbl_2", "cf": "q10k_tbl_5"}None
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission file number 1-5684
W.W. Grainger, Inc.
(Exact name of registrant as specified in its charter)
Illinois
36-1150280
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
100 Grainger Parkway,
Lake Forest,
Illinois
60045-5201
(Address of principal executive offices)
(Zip Code)
847
535-1000
(Registrant’s telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock
GWW
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐
Emerging Growth Company ☐
1
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
There were 53,668,050 shares of the Company’s Common Stock, par value $0.50, outstanding as of September 30, 2020.
2
TABLE OF CONTENTS
Page No.
PART I FINANCIAL INFORMATION
Item 1:
Financial Statements (Unaudited)
Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2020 and 2019
(In millions of dollars and shares, except for per share amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Net sales
$
3,018
$
2,947
$
8,856
$
8,639
Cost of goods sold
1,944
1,848
5,645
5,324
Gross profit
1,074
1,099
3,211
3,315
Selling, general and administrative expenses
694
761
2,467
2,234
Operating earnings
380
338
744
1,081
Other (income) expense:
Interest expense, net
23
20
72
60
Other, net
(5)
(4)
(16)
(18)
Total other expense, net
18
16
56
42
Earnings before income taxes
362
322
688
1,039
Income tax provision
106
78
118
261
Net earnings
256
244
570
778
Less: Net earnings attributable to noncontrolling interest
16
11
43
32
Net earnings attributable to W.W. Grainger, Inc.
$
240
$
233
$
527
$
746
Earnings per share:
Basic
$
4.43
$
4.27
$
9.74
$
13.46
Diluted
$
4.41
$
4.25
$
9.70
$
13.40
Weighted average number of shares outstanding:
Basic
53.6
54.1
53.6
55.0
Diluted
53.9
54.4
53.8
55.2
Cash dividends paid per share
$
1.53
$
1.44
$
4.41
$
4.24
The accompanying notes are an integral part of these financial statements.
4
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In millions of dollars)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Net earnings
$
256
$
244
$
570
$
778
Other comprehensive earnings (losses):
Foreign currency translation adjustments, net of reclassification
24
(17)
30
6
Postretirement benefit plan reclassification, net of tax benefit of $1, $1, $3, and $3, respectively
(2)
(2)
(8)
(7)
Other
—
—
4
—
Total other comprehensive earnings (losses)
22
(19)
26
(1)
Comprehensive earnings, net of tax
278
225
596
777
Less: Comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings
16
11
43
32
Foreign currency translation adjustments
5
(1)
6
2
Total comprehensive earnings (losses) attributable to noncontrolling interest
21
10
49
34
Comprehensive earnings attributable to W.W. Grainger, Inc.
$
257
$
215
$
547
$
743
The accompanying notes are an integral part of these financial statements.
5
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars, except for share and per share amounts)
As of
ASSETS
(Unaudited) September 30, 2020
December 31, 2019
CURRENT ASSETS
Cash and cash equivalents
$
859
$
360
Accounts receivable (less allowances for credit losses of $26 and $21, respectively)
1,485
1,425
Inventories - net
1,780
1,655
Prepaid expenses and other current assets
120
104
Prepaid income taxes
29
11
Total current assets
4,273
3,555
PROPERTY, BUILDINGS AND EQUIPMENT - NET
1,394
1,400
DEFERRED INCOME TAXES
11
11
GOODWILL
369
429
INTANGIBLES - NET
224
304
OTHER ASSETS
312
306
TOTAL ASSETS
$
6,583
$
6,005
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt
$
—
$
55
Current maturities of long-term debt
12
246
Trade accounts payable
836
719
Accrued compensation and benefits
201
228
Accrued contributions to employees' profit sharing plans
48
85
Accrued expenses
324
318
Income taxes payable
20
27
Total current liabilities
1,441
1,678
LONG-TERM DEBT (less current maturities)
2,388
1,914
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES
112
106
OTHER NON-CURRENT LIABILITIES
267
247
SHAREHOLDERS' EQUITY
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding
—
—
Common Stock – $0.50 par value –300,000,000 shares authorized; issued 109,659,219 shares
55
55
Additional contributed capital
1,214
1,182
Retained earnings
8,694
8,405
Accumulated other comprehensive earnings (losses)
(134)
(154)
Treasury stock, at cost - 55,991,169 and 55,971,691 shares, respectively
(7,698)
(7,633)
Total W.W. Grainger, Inc. shareholders’ equity
2,131
1,855
Noncontrolling interest
244
205
Total shareholders' equity
2,375
2,060
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
6,583
$
6,005
The accompanying notes are an integral part of these financial statements.
6
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
Nine Months Ended
September 30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
$
570
$
778
Provision for credit losses
18
7
Deferred income taxes and tax uncertainties
9
19
Depreciation and amortization
137
171
Net losses (gains) from sales of assets and business divestitures
104
(5)
Impairment of goodwill, intangibles and long-lived assets
177
—
Stock-based compensation
36
32
Subtotal
481
224
Change in operating assets and liabilities:
Accounts receivable
(145)
(119)
Inventories
(222)
18
Prepaid expenses and other assets
(29)
(15)
Trade accounts payable
145
50
Accrued liabilities
(13)
(137)
Income taxes - net
(19)
(16)
Other non-current liabilities
19
(13)
Subtotal
(264)
(232)
Net cash provided by operating activities
787
770
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings, equipment and intangibles
(152)
(163)
Proceeds from sales of assets and business divestitures
22
16
Other
(2)
2
Net cash used in investing activities
(132)
(145)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under lines of credit
12
22
Payments against lines of credit
(65)
(18)
Proceeds from long-term debt
1,583
—
Payments of long-term debt
(1,361)
(48)
Proceeds from stock options exercised
47
19
Payments for employee taxes withheld from stock awards
(16)
(10)
Purchases of treasury stock
(101)
(600)
Cash dividends paid
(246)
(242)
Other - net
—
2
Net cash used in financing activities
(147)
(875)
Exchange rate effect on cash and cash equivalents
(9)
(2)
NET CHANGE IN CASH AND CASH EQUIVALENTS
499
(252)
Cash and cash equivalents at beginning of year
360
538
Cash and cash equivalents at end of period
$
859
$
286
The accompanying notes are an integral part of these financial statements.
7
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions of dollars, except for per share amounts)
(Unaudited)
Common Stock
Additional Contributed Capital
Retained Earnings
Accumulated Other Comprehensive Earnings (Losses)
Treasury Stock
Noncontrolling Interest
Total
Balance at January 1, 2019
$
55
$
1,134
$
7,869
$
(171)
$
(6,966)
$
172
$
2,093
Stock-based compensation
—
3
—
—
3
—
6
Purchases of treasury stock
—
—
—
—
(135)
—
(135)
Net earnings
—
—
253
—
—
9
262
Other comprehensive earnings (losses)
—
—
—
3
—
(2)
1
Capital contribution
—
—
—
—
—
2
2
Cash dividends paid ($1.36 per share)
—
—
(77)
—
—
—
(77)
Balance at March 31, 2019
$
55
$
1,137
$
8,045
$
(168)
$
(7,098)
$
181
$
2,152
Stock-based compensation
—
15
—
—
9
—
24
Purchases of treasury stock
—
—
—
—
(265)
—
(265)
Net earnings
—
—
260
—
—
12
272
Other comprehensive earnings (losses)
—
—
—
12
—
5
17
Cash dividends paid ($1.44 per share)
—
—
(79)
—
—
(7)
(86)
Balance at June 30, 2019
$
55
$
1,152
$
8,226
$
(156)
$
(7,354)
$
191
$
2,114
Stock-based compensation
—
9
—
—
3
—
12
Purchases of treasury stock
—
—
—
—
(200)
—
(200)
Net earnings
—
—
233
—
—
11
244
Other comprehensive earnings (losses)
—
—
—
(18)
—
(1)
(19)
Cash dividends paid ($1.44 per share)
—
—
(79)
—
—
—
(79)
Balance at September 30, 2019
$
55
$
1,161
$
8,380
$
(174)
$
(7,551)
$
201
$
2,072
The accompanying notes are an integral part of these financial statements.
8
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions of dollars, except for per share amounts)
(Unaudited)
Common Stock
Additional Contributed Capital
Retained Earnings
Accumulated Other Comprehensive Earnings (Losses)
Treasury Stock
Noncontrolling Interest
Total
Balance at January 1, 2020
$
55
$
1,182
$
8,405
$
(154)
$
(7,633)
$
205
$
2,060
Stock-based compensation
—
10
—
—
13
—
23
Purchases of treasury stock
—
—
—
—
(100)
—
(100)
Net earnings
—
—
173
—
—
12
185
Other comprehensive earnings (losses)
—
—
—
(63)
—
3
(60)
Cash dividends paid ($1.44 per share)
—
—
(78)
—
—
—
(78)
Balance at March 31, 2020
$
55
$
1,192
$
8,500
$
(217)
$
(7,720)
$
220
$
2,030
Stock-based compensation
—
6
—
—
11
—
17
Purchases of treasury stock
—
—
—
—
—
(1)
(1)
Net earnings
—
—
114
—
—
15
129
Other comprehensive earnings (losses)
—
—
—
66
—
(2)
64
Cash dividends paid ($1.44 per share)
—
—
(78)
—
—
(9)
(87)
Balance at June 30, 2020
$
55
$
1,198
$
8,536
$
(151)
$
(7,709)
$
223
$
2,152
Stock-based compensation
—
16
—
—
11
—
27
Net earnings
—
—
240
—
—
16
256
Other comprehensive earnings (losses)
—
—
—
17
—
5
22
Cash dividends paid ($1.53 per share)
—
—
(82)
—
—
—
(82)
Balance at September 30, 2020
$
55
$
1,214
$
8,694
$
(134)
$
(7,698)
$
244
$
2,375
The accompanying notes are an integral part of these financial statements.
9
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BACKGROUND AND BASIS OF PRESENTATION
W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and Europe. In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.
Consistent with the Company's strategic focus on broad line MRO distribution in key markets, Grainger divested the Fabory business in Europe (Fabory) on June 30, 2020 and the China business (China) on August 21, 2020. Accordingly, the Company's condensed consolidated statements of earnings, comprehensive earnings and cash flows and related notes include Fabory and China results through the respective dates of divestiture. The proceeds from these divestitures will be used to fund general corporate needs. During the second and third quarters of 2020, Grainger recognized a net loss of approximately $109 million and gain of $5 million (presented within Selling, general and administrative expenses (SG&A)) as a result of the Fabory and China divestitures, respectively, which included net accumulated foreign currency translation losses of $45 million, that were reclassified from Accumulated other comprehensive earnings (losses) (AOCE) to SG&A.
The Company's Condensed Consolidated Financial Statements (Financial Statements) and the related notes are unaudited and should be read in conjunction with the consolidated financial statements and associated notes for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 20, 2020 (the 2019 Form 10-K). The Condensed Consolidated Balance Sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by accounting principles generally accepted in the United States of America (U.S.) for complete financial statements.
The unaudited financial information reflects all adjustments (primarily consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the statements contained in this report.
2. UPDATE TO SIGNIFICANT ACCOUNTING POLICIES
Other than the implemented accounting policies related to the allowances for credit losses per the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13 (see Notes 3 and 5 to the Financial Statements), change in depreciation estimates (see Note 6 to the Financial Statements) and accounting for derivative instruments (see Note 9 to the Financial Statements), there have been no material changes to the Company’s significant accounting policies disclosed in the 2019 Form 10-K, Part II, Item 8.
3. NEW ACCOUNTING STANDARDS
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as modified by subsequently issued ASUs 2018-19, 2019-04, 2019-05, 2019-11 and 2020-02. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this ASU effective January 1, 2020. While the adoption of this ASU did not have a material impact on the Company's Financial Statements, it required changes to the Company’s process of estimating expected credit losses on trade receivables. See Note 5 to the Financial Statements for further information on the Company’s allowance for credit losses.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements.
In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions
10
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
between Topic 321, Topic 323 and Topic 815. This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on the Financial Statements.
4. REVENUE
Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Total service revenue is not material and accounted for approximately 1% of the Company's revenue for the three and nine months ended September 30, 2020 and 2019, respectively.
Grainger serves a large number of customers in diverse industries, which are subject to different economic and market specific factors. The Company's presentation of revenue by industry most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue and cash flows are affected by economic and market specific factors. The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: