With the help of new products and services and investments in e-commerce, W.W. Grainger (NYSE:GWW) booked a stronger-than-expected 59% increase in first-quarter profit, sending its shares soaring nearly 3% Monday morning.
The Lake Forest, Ill.-based company posted net earnings of $158 million, or $2.18 a share, compared with $99 million, or $1.31, in the same quarter last year, ahead of average analyst estimates polled by Thomson Reuters of $1.80 a share.
Revenue for the facilities maintenance distributor was $1.9 billion, up 13% from $1.7 billion a year ago, beating the Street’s view of $1.85 billion.
The results were negatively impacted by expenses related to the tax treatment of retiree healthcare benefits following the passage of the Patient Protection and Affordable Care Act, partially offset by beneficial charges related to its paid time off policy.
Grainger CEO Jim Ryan called the period an “exceptional strong quarter” for the company, as it continues to reap benefits from its strategic investments, such as expanding product lines, providing new services and investing further in e-commerce. It also is continuing with its expansion plan into emerging markets.
During the period, daily sales increased 11%, with volume up 7%. Sales in the U.S. climbed 9%, led by manufacturing, while Canada grew 25% on higher volumes and demand for heavy manufacturing, agriculture and mining, forestry, oil and gas, transportation and government.
Given the strong sales growth, Ryan said Grainger is lifting its 2011 sales growth forecast to a range of 7% to 10% with earnings between $8.10 and $8.60 a share. The company previously predicted sales growth of 5% to 9% with earnings in the range of $7.15 to $7.90 a share.