6 See Supplemental Information for GAAP to non-GAAP reconciliations on pages 7 to 9.
6
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)
The company supplemented the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, which the company refers to as “adjusted” measures, including adjusted gross profit, adjusted gross margin, adjusted SG&A, adjusted SG&A to net sales, adjusted operating earnings, adjusted operating margin, reported EBITDA, and adjusted EBITDA. Adjusted measures exclude items that may not be indicative of core operating results. The company believes that these non-GAAP measures provide meaningful information to assist shareholders in understanding financial results and assessing prospects for future performance. Management believes adjusted gross profit, adjusted gross margin, adjusted SG&A, adjusted SG&A to net sales, adjusted operating earnings, adjusted operating margin, reported EBITDA and adjusted EBITDA are important indicators of operations because they exclude items that may not be indicative of our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported results. These non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. The company strongly encourages investors and shareholders to review company financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Note: The reconciliations provided in the immediately following tables for reported gross profit to adjusted gross profit are on a total company level and are comprised of the adjustments indicated in the tables below. The reconciliations for reported gross profit to adjusted gross profit on a segment level contain the same adjustments as the adjustments specified for the applicable segment as provided in the immediately following tables for the applicable period reported. Therefore, no separate reconciliation is provided for segment information. The reconciliations for reported SG&A to adjusted SG&A and reported EBITDA to adjusted EBITDA, on a total company and segment levels, respectively, contain the same adjustments in the same amounts presented in the reported gross profit to adjusted gross profit and reported operating earnings to adjusted operating earnings tables. Therefore, no separate reconciliation is provided.
In millions
Three Months Ended 2020
Mar. 31
Gross Margin
June 30
Gross Margin
Sept. 30
Gross Margin
Dec. 31
Gross Margin
Total company gross profit reported
$
1,121
37.4%
$
1,016
35.8%
$
1,074
35.6%
$
1,027
34.9%
Total company gross profit adjusted
$
1,121
37.4%
$
1,016
35.8%
$
1,074
35.6%
$
1,027
34.9%
In millions
Three Months Ended 2019
Mar. 31
Gross Margin
June 30
Gross Margin
Sept. 30
Gross Margin
Dec. 31
Gross Margin
Total company gross profit reported
$
1,095
39.1%
$
1,121
38.7%
$
1,099
37.3%
$
1,082
38.0%
Restructuring, net (High- Touch Solutions (N.A.))
1
0.1
—
—
—
—
(1)
—
Total company gross profit adjusted
$
1,096
39.2%
$
1,121
38.7%
$
1,099
37.3%
$
1,081
38.0%
7
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)
In millions
Year Ended December 31,
2018
Gross Margin
2019
Gross Margin
2020
Gross Margin
Total company gross profit reported
$
4,348
38.7%
$
4,397
38.3%
$
4,238
35.9%
Restructuring, net (High- Touch Solutions (N.A.))
(1)
—
—
—
—
—
Restructuring, net (Other)
1
—
—
—
—
—
Subtotal
—
—
—
—
—
—
Total company gross profit adjusted
$
4,348
38.7%
$
4,397
38.3%
$
4,238
35.9%
Note: The reconciliations provided in the immediately following tables for reported operating earnings to adjusted operating earnings are on a total company level, and are comprised of the adjustments indicated in the tables below. The reconciliations for reported operating earnings to adjusted operating earnings on a segment level, and as classified as “Other”, contain the same adjustments as the adjustments specified for the applicable segment, or for “Other”, as provided in the immediately following tables for the applicable period reported. Therefore, no separate reconciliation is provided for segment information. The reconciliations for reported SG&A to adjusted SG&A and reported EBITDA to adjusted EBITDA, on a total company and segment levels, respectively, contain the same adjustments in the same amounts presented in the reported gross profit to adjusted gross profit and reported operating earnings to adjusted operating earnings tables. Therefore, no separate reconciliation is provided.
In millions
Three Months Ended 2020
Mar. 31
Operating Margin
June 30
Operating Margin
Sept. 30
Operating Margin
Dec. 31
Operating Margin
Total company operating earnings reported
$
159
5.3%
$
205
7.3%
$
380
12.6%
$
275
9.4%
Restructuring, net (High-Touch Solutions (N.A.))
7
1
(1)
11
Restructuring, net (Endless Assortment)
—
—
—
9
Other:
Impairment charges
177
—
—
—
Fabory divestiture
—
109
—
—
Grainger China divestiture
—
—
(5)
—
Subtotal - other
177
109
(5)
—
Subtotal - total company
184
6.1
110
3.8
(6)
(0.2)
20
0.6
Total company operating earnings adjusted
$
343
11.4%
$
315
11.1%
$
374
12.4%
$
295
10.0%
8
W.W. Grainger, Inc.
Recast Financial Statements — Supplemental Information (Unaudited)