(By Balaseshan) W.W. Grainger Inc. (NYSE:GWW), a supplier of maintenance, repair and operating products, reported better than expected quarterly earnings on higher sales, improved margins and positive operating leverage. Further, the company narrowed its full year earnings forecast.
Net earnings rose 12 percent to $191 million for the second quarter. Earnings per share (EPS) were $2.63, up from $2.34 last year. Excluding the tax benefit in 2011, earnings per share grew 18 percent.
Sales increased 12 percent to $2.25 billion. Analysts, on average, had expected EPS of $2.62 on revenue of $2.27 billion for the quarter.
The latest quarter sales growth consists of 5 percentage points from acquisitions and a 2 percentage point decline attributable to unfavorable foreign exchange. Organic sales for the quarter increased 9 percent including 6 percentage points from volume and 3 percentage points from price.
Sales for the United States segment increased 7 percent, driven by 4 percent volume growth and 3 percentage points from price. The sales increase in U.S. was led by strong growth in heavy, light manufacturing, retail, commercial, government, natural resources and reseller end markets.
Second quarter sales for Acklands-Grainger increased 9 percent, 14 percent in local currency, which consisted of 12 percent volume growth and 2 percent from price. The sales increase in Canada was led by strong growth to customers in the commercial services, oil and gas, contractor and utilities end markets.
Gross margin for the second quarter increased to 43.5 percent from 43.1 percent.
Looking ahead into the fiscal 2012, the company narrowed its EPS guidance to range of $10.50 to $10.80 from previous forecast of $10.40 to $10.80, while Street analysts predict $10.65. The company reiterated its 2012 sales growth outlook 12 percent to 14 percent, while Street predicts 12.50 percent growth.
GWW ended Tuesday's regular session at $188.97. The stock has been trading between $124.33 and $221.84 for the past 52 weeks.