Grainger Earnings & Sales Miss Estimates in Q4, Increase Y/Y

Core Viewpoint - W.W. Grainger, Inc. reported mixed financial results for the fourth quarter of 2024, with adjusted earnings per share (EPS) slightly missing estimates, while sales showed modest growth but also fell short of expectations [1][3]. Financial Performance - Adjusted EPS for Q4 2024 was $9.71, missing the Zacks Consensus Estimate of $9.75 [1]. - Quarterly sales increased by 5.9% year over year to $4.23 billion, but missed the Zacks Consensus Estimate of $4.24 billion [3]. - Daily sales rose 4.2% from the prior-year quarter, surpassing the predicted increase of 3.8% [3]. Segment Performance - The High-Touch Solutions N.A. segment's daily sales grew by 2.3% year over year, driven by growth across all geographies, although it fell short of the predicted 5% organic growth [4]. - The Endless Assortment segment saw a significant daily sales increase of 13.3%, attributed to customer acquisitions and growth at MonotaRO, exceeding the expected 8.7% organic growth [5]. Operational Metrics - Cost of sales rose by 5.1% year over year to $2.56 billion, while gross profit increased by 7.2% to $1.68 billion, resulting in a gross margin of 39.6%, up from 39.1% in the prior year [6]. - Selling, general, and administrative expenses increased by 3.7% to $1.04 billion, with operating income rising 19% to $663 million, leading to an operating margin of 15% compared to 13.9% in the previous year [6]. Cash Flow and Balance Sheet - Cash and cash equivalents at the end of 2024 were $1.04 billion, up from $0.67 billion at the end of 2023 [7]. - Cash flow from operating activities was $2.11 billion in 2024, compared to $2.03 billion in the previous year [7]. - Long-term debt stood at $2.28 billion as of December 31, 2024, slightly up from $2.27 billion at the end of 2023 [8]. Annual Performance - Adjusted EPS for 2024 rose by 23.6% year over year to $38.96, beating the Zacks Consensus Estimate of $38.95 [9]. - Total sales improved by 4.2% year over year to $17.17 billion, aligning with the company's guidance of $17.1-$17.3 billion [9]. Future Outlook - For 2025, the company expects net sales between $17.6 billion and $18.1 billion, with sales growth projected at 2.7-5.2% and EPS anticipated to be between $39.00 and $41.50 [10]. Stock Performance - Over the past year, GWW shares have increased by 23%, significantly outperforming the industry average growth of 5.9% [11].