Grainger Earnings Surpass Estimates in Q1, Revenues Rise Y/Y

Core Insights - W.W. Grainger, Inc. reported Q1 2025 earnings per share of $9.86, exceeding the Zacks Consensus Estimate of $9.46, with a year-over-year improvement of 2% [1] - Quarterly revenues increased by 1.7% year over year to $4.31 billion, although it fell short of the Zacks Consensus Estimate of $4.33 billion [1] - Daily sales rose by 3.3% compared to the prior-year quarter, surpassing the predicted increase of 2.7% [1] Segment Performance - The High-Touch Solutions N.A. segment's daily sales grew by 1.3% year over year, driven by volume growth and a favorable product mix, compared to a predicted growth of 1.7% [2] - The Endless Assortment segment saw a significant daily sales increase of 12%, attributed to strong performance at MonotaRO and Zoro, exceeding the predicted growth of 6.7% [2] Financial Metrics - Cost of sales rose by 1.1% year over year to $2.6 billion, while gross profit increased by 2.5% to $1.71 billion, resulting in a gross margin of 39.7%, up from 39.4% in the prior year [3] - Operating income rose by 0.4% year over year to $672 million, with an operating margin of 15.6%, slightly down from 15.8% in the previous year [3] Cash Flow and Balance Sheet - Cash and cash equivalents decreased to $0.67 billion from $1.04 billion at the end of 2024, with cash flow from operating activities at $646 million, down from $661 million year over year [4] - Long-term debt remained stable at $2.28 billion as of March 31, 2025, and the company returned $380 million to shareholders through dividends and share buybacks in Q1 [4] 2025 Outlook - The company maintains its 2025 net sales forecast between $17.6 billion and $18.1 billion, with expected sales growth of 2.7-5.2% and daily sales growth of 4-6.5% [5] - Earnings per share are projected to be in the range of $39.00 to $41.50 [5] Stock Performance - Over the past year, Grainger's shares have increased by 11.8%, contrasting with an 8.5% decline in the industry [6] Peer Performance - MSC Industrial Direct reported adjusted earnings per share of 72 cents, beating estimates but showing a 39% year-over-year decline, with revenues down 4.7% [9][10] - Hillenbrand, Inc. reported adjusted earnings per share of 60 cents, also beating estimates but with a 21% year-over-year decline in earnings, and revenues down 8.8% [10][11]