From Motors to Mobile

Transcription

2013 FACT BOOK
Contents
. . . . . . . . . . . . . . . . . . .
1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
From Motors to Mobile .
Fast Facts
. . . . . . . . . . . . . . .
4
About the Company
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
W.W. Grainger, Inc., with 2012 sales of $9 billion, is North America’s
leading broad-line supplier of maintenance, repair and operating
(MRO) products, with an expanding global presence.
Creating Shareholder Value
Supply Chain
. . . . . . . . . . . . . . . . . . . . . .
8
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Investing for Growth
eCommerce .
United States .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
10
. . . . . . . . . . . . . . . . . . . .
12
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
International Overview.
Priority Markets:
Canada
Japan .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Europe .
Mexico
Brazil .
Sustainability
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
21
. . . . . . . . . . . . . . . . . . . . .
22
A Great Company to Work For .
Community Relations
Supplier Relationships
. . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets .
25
. . . . . . . . . . . . .
26
. . . .
27
. . . . . . . . . . . . . .
28
Consolidated Statements of Cash Flows .
Historical Financial Summary.
. . . . .
30
. . . . . . . . . . . . . . . . .
31
. . . . . . . . . . . . . . . . . . . . . . .
32
Executive and Operating Management .
Compensation Practices .
. . . . . . . . . . . . . . . . . . .
32
. . . . . . . . . . . . . . . . . . . .
33
Corporate Governance .
Company Information .
For more information on Grainger, visit www.grainger.com/investor.
24
. . . . . .
Consolidated Statements of Earnings .
Board of Directors .
20
Grainger is a business-to-business distributor of products used to
maintain, repair or operate facilities. Millions of businesses and
institutions worldwide rely on Grainger for pumps, motors, hand
tools, janitorial supplies, fasteners and much more. These customers
represent a broad collection of industries including healthcare,
manufacturing, government and hospitality. They place orders
over the phone, at local branches, online, by fax and using mobile
devices. More than 4,000 manufacturers supply Grainger with more
than 1 million products that are stocked in Grainger’s branches and
distribution centers or sourced through a network of suppliers.
Forward-Looking Statements
The 2013 Fact Book contains statements that are not historical in nature but concern future results and business plans, strategies and objectives, and other matters that may be deemed
to be “forward-looking statements” under federal securities laws. Grainger cannot guarantee that any forward-looking statement will be realized, although Grainger does believe that its
assumptions underlying its forward-looking statements are reasonable. Achievement of future results is subject to risks and uncertainties which could cause Grainger’s results to differ
materially from those which are presented.
The forward-looking statements should be read in conjunction with the company’s most recent annual report and Form 10-K as well as other reports filed with the Securities and
Exchange Commission containing a discussion of the company’s business and of the various factors that may affect it. Caution should be taken not to place undue reliance on Grainger’s
forward-looking statements and Grainger undertakes no obligation to publicly update the forward-looking statements, whether as a result of new information, future events or otherwise.
When William Grainger started his business
in 1927, he created a catalog of available
motors to advertise to his customers. Listing 41 products over eight pages, the
catalog measured 3.5 x 6 inches and was designed to fit in a jacket pocket.
Over the next 85 years, the company he founded expanded its product offering
to more than 500,000 products offered through a 4,000-page catalog. Worldwide,
Grainger provides two million customers with more than 1 million products. And
with the introduction of the mobile phone application, Grainger returns to its
roots by having the product offering fit in one’s pocket.
From a catalog to a smartphone,
Grainger always maintains a focus on
how to improve the experience for its
customers, the ones who get it done.
W.W. GRAINGER, INC. AND SUBSIDIARIES
1
Fast Facts (AS OF 12/31/12)
$9 billion
in sales in 2012
41
MORE THAN
1 MILLION
consecutive years of
dividend increases
PRODUCTS AVAILABLE
$1BILLION
IN SALES IN 2012
FOR ACKLANDS–GRAINGER
(CANADA)
2012 Sales by Customer Category
(Total Company)
$561 MILLION
MORE THAN
RETURNED TO
SHAREHOLDERS IN THE
FORM OF DIVIDENDS
AND SHARE REPURCHASES
IN 2012
4,700
20.4 percent
18%
18%
15%
12%
9%
9%
7%
6%
4%
2%
Commercial
Heavy Manufacturing
Government
Contractor
Light Manufacturing
Other
Retail/Wholesale
Natural Resources
Reseller
Transportation
2012 Sales by Product Category
(Total Company)
Awards and
Recognitions
• Named one of FORTUNE
Magazine’s 100 Best
®
Companies to Work For
in 2013
average annual
total shareholder return
(2008 – 2012)
• Winner, Canada’s 10 Most
Admired Cultures Award
Grainger’s common stock is
listed on the New York and
Chicago stock exchanges
under the trading symbol
• 2012 CIO 100 Award –
CIO Magazine
GWW
7%
7%
6%
6%
6%
3%
3%
2%
2%
2%
Safety and Security
Material Handling
Metalworking
Cleaning and Maintenance
Pumps, Plumbing and
Test Equipment
Electrical
Hand Tools
HVAC
Lighting
Other
Fluid Power
Power Tools
Motors
Power Transmission
Specialty Brands
2 W.W. GRAINGER, INC. AND SUBSIDIARIES
29
DISTRIBUTION
CENTERS
715
branches
22,400
team members
• Ranked No.1, Wholesalers,
Diversified, FORTUNE
Magazine’s Most Admired
Companies
15th largest
e-retailer in the
United States and Canada
17%
13%
10%
8%
8%
KEY SUPPLIERS
15
LEED-CERTIFIED
BUILDINGS
Multiple
$9 million +
sales days in 2012
for U.S. eCommerce
Grainger operates in
22 countries and serves
customers in more than
150 countries through its
export business.
(AS OF 12/31/12)
UNITED STATES
CANADA
JAPAN
MRO market size: > $118 billion
Doing business as:
Acklands – Grainger Inc.
Doing business as:
MonotaRO Co., Ltd.
Market share: 8 percent
Market share: < 1 percent
Branches: 172
Branches: 0
Doing business as:
Fabory Group*
Distribution centers: 6
Website:
www.acklandsgrainger.com
(English and French)
Website:
www.monotaro.com
Customers served in 2012:
More than 400,000
Branches: 369
Websites:
www.grainger.com
www.imperialsupplies.com
www.techni-tool.com
www.zorotools.com
More than 1.4 million
Approximately 40,000
EUROPE
(Belgium, Czech Republic, France,
Hungary, The Netherlands, Poland,
Portugal, Romania, Slovakia,
United Kingdom)
Branches: 142
Website:
www.fabory.com (Multilingual)
More than 100,000
*ALTHOUGH FABORY GROUP IS HEADQUARTERED
IN EUROPE, IT ALSO HAS LIMITED OPERATIONS IN
NORTH AMERICA AND ASIA.
MEXICO
BRAZIL
Branches: 19
Branches: 0
Website:
www.grainger.com.mx
Website:
www.grainger.com.br
More than 35,000
Approximately 1,500
LATIN AMERICA
(Colombia, Costa Rica, Dominican
Republic, Panama, Puerto Rico**)
Branches: 13
Website:
www.grainger.com
More than 13,000
**ALTHOUGH PUERTO RICO IS A U.S.
TERRITORY, THE COMPANY MANAGES THIS
BUSINESS AS A PART OF LATIN AMERICA.
ASIA
(China, India)
Doing business as: Grainger
China, Grainger Industrial Supply
India Private Limited
Branches: 0
Regional warehouses: 18
Websites:
www.grainger.cn
www.graingerindia.com
More than 10,000
3
Creating Shareholder Value
Grainger has proven its ability to gain share, expand margins and generate strong cash flow through the economic cycle.
The value creation opportunity for shareholders remains attractive given the highly fragmented market and a business model
and strategy that speak to customers’ needs. Grainger is well positioned to generate attractive returns to shareholders
regardless of the economy.
B
y remaining focused on customer needs, Grainger also
delivers for its shareholders. The company’s strong
track record of creating value for investors has been
accomplished by delivering strong sales growth and consistently
expanding margins, while prudently managing the capital invested
in the business. By delivering on these three key metrics, Grainger
has met its goal over the past five
Total Shareholder Return
Percent (average annual)
years of producing top quartile
8
6
20
2
returns for shareholders.
10 Years
(1998–2007)
5 Years
(2008–2012)
GWW
S&P 500
For the five years ended
2012, Grainger’s average total
shareholder return topped
20 percent, versus 2 percent for
the S&P 500. This performance
places Grainger at No. 32 and
in the 93rd percentile among
companies in the S&P 500.
Grainger’s track record is also impressive when compared to
industry peers. The Dow Jones U.S. Industrial Suppliers Total Stock
Market Index, an industry-specific benchmark, delivered a five-year
cumulative return of 98 percent, versus 153 percent for Grainger.
3 – 5 YEAR FINANCIAL TARGETS
Organic Sales Growth
8 –12 percent
Annual Operating Margin Expansion
30– 60 basis points
Grainger has a blueprint for running a healthy, successful
business. The company’s leadership team has proven its ability
to manage through economic cycles, gain market share, expand
margins and generate strong cash flow.
Market Fragmentation
North America
6%
Sales
Dollars in billions
6.9
6.2
7.2
8.1
2008
2009
2010
2011
9.0
Grainger
24%
Other Top 10 Distributors
70%
All Other Distributors
2012
Comparison of Five-Year Cumulative Total Return
Percent
2007
2008
2009
2010
200
2011
2012
Accelerating Sales Growth Through Share Gain
Despite its leadership position, Grainger has relatively low
market share in the global MRO market, which is estimated
at $570 billion. In North America alone, Grainger’s industryleading market share is about 6 percent in a large and
fragmented market. In both mature and emerging markets,
Grainger has ample opportunity to grow organically and
through acquisition as the market consolidates.
150
100
50
0
-50
-100
W.W. Grainger, Inc.
S&P 500 Stock Index
Dow Jones U.S. Industrial Suppliers Total Stock Market Index
A HISTORICAL LOOK
W.W. Grainger, Inc., became a publicly traded company on March 29, 1967, with an initial public
offering of shares on the Chicago Stock Exchange under the symbol “GWW.” The first issuance
was for 720,000 shares, offered at $19 per share, and all sold within a few hours. At year-end 1967,
there were approximately 3,450 registered shareholders. A $1,900 investment (100 shares at
$19 per share) was worth $1,473,324 as of Dec. 31, 2012.
Expanding Margins
Operating Margin
Percent
11.4
10.7
12.0
13.0
13.8*
12.6
2008
2009
2010
2011
2012
The company has targeted
an average of 30 to 60 basis
points in operating margin
expansion per year for the next
three to five years. Grainger
has a proven track record
of expanding operating
margins through better
gross margins and improved
expense leverage.
GROSS MARGIN EXPANSION Improvements in gross profit
margins have primarily been generated by effective product
cost management. Grainger leverages its scale position in the
channel to ensure competitive product cost. In addition to this
favorable price/cost relationship, Grainger has been successful
at increasing the mix of private label products. Strong growth
of exclusive brands, such as Dayton , Condor and Westward ,
have contributed to achieving this goal.
®
®
®
Direct sourcing from low-cost countries provides Grainger with
an additional venue for expanding gross profit margins. This
program enables Grainger to offer quality products to customers
across the globe at a variety of price points. Grainger Global
Sourcing works with hundreds of manufacturers worldwide to
develop these products. Grainger has promoted its globally
sourced exclusive brands through seller education, increased
marketing and product line expansion. Since 2007, Grainger has
grown its exclusive brand SKU count by more than 200 percent.
Grainger has been successful at driving
better productivity throughout the company with a robust
continuous improvement program. For example, in the
distribution business, travel time is waste. Team members
have been charged with identifying new ways to re-engineer
work through standardized processes that eliminate steps and
reduce variability. In 2013 alone, the company is forecasting
an incremental $165 million in productivity savings that will
be used to fund $135 million in growth investments.
EXPENSE LEVERAGE
Earnings per Share – Diluted
Dollars
5.97
5.62
6.93
9.07
2009
2010
2011
Cash from
Operations
Cash Flow from Operations
Dollars in millions
Uses of Cash
530
732
596
746
816
2008
2009
2010
2011
2012
4,000
63 percent
returned to
shareholders
3,000
2,000
1,000
Share Repurchases
Acquisitions
Dividends
Capital Expenditures
Increasing Cash Flow
One of Grainger’s hallmarks is consistent cash flow generation.
Strong working capital management, coupled with a steady
track record of growth and margin expansion, has enabled the
company to increase its cash flow over the past three years. In
2012, Grainger reported record cash flow from operations of
$816 million.
Since 2008, Grainger has returned about two-thirds of operating
cash flow to shareholders in the form of dividends and share
repurchases. In 2012, the company paid $220 million in dividends,
which reflected the 21 percent increase in the quarterly dividend
announced in April 2012, representing the 41st consecutive year
of increased dividends. Grainger is among only three percent of
S&P 500 companies that have increased their dividends for more
than four decades. Since 2007, Grainger has grown its dividend at
a compound annual rate of 18 percent, which exceeds the rate of
earnings growth during the same period. In addition, Grainger
returned $341 million to shareholders in 2012 in the form of
share repurchases. Since 2007, the company’s repurchase program
has resulted in a 13 percent net reduction in common shares
outstanding, from 79 million to 69 million shares.
Shares Outstanding
Millions of shares
Dividends Paid
Dollars per share
74.8
72.3
69.4
70.0
69.5
1.55
1.78
2.08
2.52
3.06
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Return on Invested Capital **
Percent
10.43*
29.8
24.9
29.8
31.9
9.52
2008
Cash Generation/Deployment
(2008 – 2012) Dollars in millions
2012
31.5*
29.1
2008
2009
2010
2011
2012
* Lower number represents reported figure; upper number represents adjusted figure, which excludes
unusual items as reported by the company in its 2012 quarterly earnings releases.
** See footnote on page 29.
Grainger’s history of consistently increasing dividends pays
off in more ways than one. Consider an investor who bought
100 shares at $70 per share in 2009. That $7,000 investment
resulted in a $306 dividend in 2012, representing an effective
yield of 4.4 percent on the original investment.
5
Supply Chain
Customers count on Grainger to have the right products, in the right place, at the right time to meet their critical business needs.
Serving two million customers with more than 1 million products takes deep expertise and disciplined execution to consistently
deliver superior results. Grainger continues to invest in its supply chain capabilities across all of its businesses, developing a
powerful global platform for profitable growth.
H
aving a broad range of products available to meet
customer needs is central to Grainger’s mission. The
company is aggressively expanding its product line to
capture even more of its customers’ MRO spend. For example,
in the United States the company’s product line has more than
quadrupled over the past five years, providing customers with easy
access to a nearly endless assortment of both in-stock and less
frequently purchased drop-ship items. Grainger Mexico has more
than doubled the number of products available to its customers by
improving the efficiency of its in-country network and leveraging
shipping from Grainger’s U.S. distribution centers. With best-inclass inventory management and deployment practices, Grainger
is able to maintain product availability and inventory turns while
continually adding new products to meet customer needs.
capabilities closer to its Asian supplier base. At the same time,
GGS evaluates its supply network to help minimize risk and
ensure access to low-cost products throughout the world.
Purchasing Leverage
Grainger works closely with its suppliers on product cost as well as
service enhancements such as cycle time and quality improvements.
As Grainger aggregates more of its product purchases across the
globe, it is realizing even greater scale advantages. Grainger’s global
businesses continually evaluate purchasing processes on product
lines such as hand tools to enhance both cost and service. The
company also leverages the specialized fastener expertise of its
European business, Fabory Group, to improve the cost and delivery
of its overall fastener offering (see Fastener House sidebar on page 13).
Grainger Global Sourcing
Adding more private label products is a key priority for Grainger.
These products – which include the Dayton , Condor , Westward ,
LumaPro and Tough Guy brands – offer customers high-quality,
low-cost options and typically carry higher gross profit margins.
The engine behind much of the company’s private label offer
is Grainger Global Sourcing (GGS), which works with 650
suppliers in 30 countries to
Global Sourcing — External Sales
Percent of total company sales
provide Grainger’s businesses
8.2
8.8
9.4
9.9
10.1
access to high-quality options.
In 2012, GGS introduced the
Condor brand to Grainger’s
European business and
expanded this product offering
in Canada. To reduce cycle
time and ensure quality, GGS
continues to build product
2008
2009
2010
2011
2012
engineering and inspection
®
®
®
®
®
OFFERING A NEARLY ENDLESS ASSORTMENT
Availability matters when it comes to MRO products. When a
mission-critical part goes down, oftentimes the item is needed
immediately. That’s why Grainger’s supply chain expertise is a
competitive advantage. Through effective network design and
smart stocking decisions, the company offers customers a nearly
endless assortment of products while effectively managing its own
inventory costs. Through a combination of products stocked in a
Grainger facility, drop-shipped direct from a supplier or sourced
specifically for a customer, Grainger is able to serve as a one-stop
shop for customers’ MRO needs.
To ensure customer satisfaction, Grainger has a comprehensive
supplier drop-ship certification program that clearly identifies order
transparency and shipping requirements. Drop-ship is one of the
service attributes suppliers are measured against each year. This
service helps provide customers with exceptional availability on
slower moving items or products that are typically made to order.
Stocked
Drop-shipped
Sourced
Grainger has continued to expand its offering through a combination of
stocked, drop-shipped and sourced items so customers have convenient
access to a nearly endless assortment of products.
NORTH AMERICAN DISTRIBUTION NETWORK
Grainger makes substantial investments each year to strengthen its supply chain infrastructure. Highlights in 2012 included:
Edmonton
Vancouver
Saskatoon
Winnipeg
Seattle
Dartmouth
Richmond Hill
Minneapolis
(Relocating in 2014)
Janesville
San Francisco
Chicago
Cleveland
Kansas City
Los Angeles
Acklands–Grainger
relocated its distribution
center (DC) in Saskatoon,
Saskatchewan, to a new,
larger facility that is double
the size of the original DC.
Robbinsville
Denver
Greenville
Dallas
Memphis
Jacksonville
Acklands–Grainger completed
the purchase of land for a new
distribution center outside of
Toronto. The existing DC in
Richmond Hill will relocate to
the new facility, which is
designed to house 500,000
products and provide branch
replenishment and direct
shipping to customers in
eastern Canada.
Monterrey
KEY
Super Regional DC
Regional DC
Market DC
Grainger’s new central stocking distribution center outside
Chicago in Minooka, Ill., began operations in late 2012. The
1 million square-foot facility includes a goods-to-person
system that stores up to 500,000 items and delivers product
to team members positioned in ergonomic workstations.
This process increases team member safety and productivity,
while improving order accuracy.
Grainger celebrated the grand opening
in May of its 820,000 square-foot
distribution center in Patterson, Calif.,
near San Francisco. With the capacity
for 350,000 items, the new DC provides
next-day service to customers on much
of the West Coast.
A HISTORICAL LOOK
GLOBAL BEST PRACTICES
For Grainger, the supply chain thrives on operational excellence.
This means having team members who are highly engaged in
continuous improvement efforts. In the distribution centers,
these efforts pay off with a strong and improving safety record,
better inventory and order accuracy, and a variety of cycle
time improvements.
Best practice sharing across facilities and businesses has
contributed to better productivity throughout the global
supply chain.
In 2012, teams from the Global Supply Chain department
supported other Grainger teams around the world. These projects
included: the design, construction and inventory transition of the
new distribution center in Saskatoon, Saskatchewan; the design
and engineering of the upcoming distribution center near Toronto;
the expansion of the distribution center in Monterrey, Mexico,
which nearly doubled the facility’s capacity for product line
expansion; and the establishment of inbound supplier cross docks
near Toronto to improve cost and service on inbound freight.
Grainger has been an industry leader in innovation, a tradition that
continues with the opening of the state-of-the-art distribution center
in Minooka, Ill. In1981, Grainger introduced one of the first large-scale
automated storage and
retrieval systems (ASRS)
in a distribution center.
The 84,000 square-foot
structure was equivalent
to a 250,000 square-foot
conventional warehouse
and featured a series of
cranes that efficiently
and safely moved pallets
of product through the
structure. The company
continues to make
infrastructure investments
that are designed for
improved productivity, service
and team member safety.
7
Investing for Growth
Investing in proven growth initiatives allows Grainger to build strength in core competencies and drive share gain. It’s part of a
commitment to deliver outstanding service to customers and outpace the competition for years to come. By listening to customers
and responding to their evolving needs, Grainger invests in the growth drivers noted below, along with eCommerce and international
expansion, that best position the company for success in a competitive marketplace.
G
rainger has established the following growth drivers:
Product Line Expansion
Grainger has grown from 41 products in 1927 to
a one-stop shop with more than 1 million products available
worldwide. Meeting customer demand with a large and growing
MRO assortment is a competitive advantage for Grainger.
Product line expansion isn’t an event – it’s how Grainger
runs and grows the business.
The company monitors customer demand for every product
to ensure stocking in the proper location. Customers count
on Grainger to have the right products in stock to meet critical
business needs, so products are stocked according to their
popularity (see sidebar on page 6). Establishing a repeatable,
predictable delivery performance for direct-shipped items
generates confidence from the customer that Grainger will
always come through in a time of need.
A broad selection gives customers access to the products they
need. The 2013 U.S. catalog contains more than 570,000 SKUs.
Product Line Expansion — SKUs in U.S. Catalog
Thousands
82
115
139
183
233
307
354
413
574
Territory Sales Representatives extend the value proposition to medium-sized
businesses that previously didn’t have an in-person relationship with Grainger.
Grainger started a Territory Sales Representative (TSR) program
in 2009 to strengthen relationships with medium-sized businesses,
hiring more than 600 TSRs since then. TSRs are located in more
than 30 markets in the United States. With TSRs, Grainger expects
to make inroads and extend its value proposition with new and
existing customers. Internationally, Grainger added more than
100 sales representatives in the Latin America and Canadian
businesses in 2012.
Inventory Management
Grainger’s 85 years of inventory management experience is an asset
when partnering with customers on inventory solutions. Today,
customers are looking for more than just a product; they are looking
for a holistic solution that includes services. Distributors that can
provide customized solutions will differentiate themselves from the
competition, and Grainger offers the KeepStock suite of solutions
to help customers manage and maintain the right inventory level.
®
2005
2006
2007
2008
2009
2010
2011
2012
2013
Sales Force Expansion
Distribution is a relationship business. Customers need to know
that their partner understands their unique needs, so connecting
with customers is a differentiating factor. Calling on customers in
person allows Grainger to understand each business and help it
meet its productivity needs.
Grainger knows that sales representatives work, and the company
is adding new sales staff at all levels. This enables Grainger to
deepen relationships with larger customers and reach out to
medium-sized customers in previously underserved markets.
In addition, Grainger is moving to a vertically aligned sales force
to address the unique needs of customers in specific industries.
Secure dispensing machines, one of the seven solutions in
the KeepStock suite, illustrates Grainger’s improved capabilities.
The lead time required to design, fill and deliver a machine has
been cut from 10 weeks to
U.S. KeepStock Installations
In thousands
two weeks. Getting secure
29
40
50
100
machines and other offerings
60
to the customer faster makes
Grainger more competitive
in the arena of inventory
10
solutions. Grainger also offers
40
40
inventory solutions to
businesses outside the United
States, including Canada,
2011
2012
2013E
FUTURE
Europe and Latin America.
®
eCommerce
Grainger has been a pioneer in business-to-business eCommerce, launching the Grainger.com® website in 1995 and becoming one
of the first business-to-business companies to conduct sales via the Internet in 1996. Today, eCommerce accounts for more than
30 percent of company sales, or $2.7 billion in 2012.
A
s more customers leverage technology to enhance
productivity, eCommerce has become Grainger’s
fastest growing and
eCommerce Revenue
most profitable channel. The
Percentage of total company sales
15
30
40–50
company’s eCommerce sales
are growing more than twice
the rate of the rest of the
business, increasing 23 percent
in 2012 versus 2011. The
company recently opened
an eCommerce office in
downtown Chicago to help
2005
2012
2015E
attract and retain top talent in
the web and mobile fields. This team is helping drive significant
improvements for eCommerce customers.
Creating the Best User Experience
Over the past two years, Grainger has
introduced a number of enhanced
capabilities that are improving the
online customer experience, which
in turn helps boost order conversion
rates and increases average order size.
Grainger ranked 15th in
the United States and
Canada of the Top 100
e-retailers of 2012.
(SOURCE: INTERNET RETAILER’S
TOP 500 GUIDE)
and can be used by different brands and in different geographies.
The company expects that all U.S. customers will be migrated to
the new platform by the end of 2013.
Mobile
Grainger launched its mobile website in late 2011 to reach
businesses and institutions where maintenance and purchasing
professionals are on the go. Research indicates that approximately
60 percent of Grainger’s customers use smartphones. The mobile
site allows customers to access Grainger’s extensive product
offering no matter where they are: on the job site, on the plant
floor or in the maintenance shop. Mobile sales grew more than
50 percent quarter-over-quarter for the last three quarters of 2012.
Mobile now accounts for 5 percent of Grainger’s website traffic
and more than 20 percent of all online searches.
In 2012, the company launched a new mobile application for all
smartphone users, which averaged 3,200 downloads per week.
Using the mobile app, customers can log into their account, view
pricing, confirm local product availability, approve pending orders
and check out – with the product ready for pickup at their nearest
Grainger branch or shipped directly to their office or job site. More
than 25 percent of mobile transactions are will-call orders placed
for product pickup at the nearest Grainger branch.
PRODUCT RATINGS AND REVIEWS allows customers to share
their experiences and learn from other customers who bought
similar products.
GUEST CHECKOUT makes it easy for non-registered customers
to quickly place orders for needed supplies.
CLICK TO CALL/CHAT offers the same great service on Grainger.com®
that customers have come to expect over the phone and at the
company’s branches. Through this capability, Grainger provides
real-time technical product support and service that helps customers
get the products they need. With usage increasing 200 percent in
one year, Grainger added 30 Click to Chat agents in 2012 and
expects to offer a mobile chat function in early 2013.
Zoro Tools
Leveraging the eCommerce expertise of both Grainger.com and
MonotaRO, the company launched Zoro Tools in 2011 to meet the
low-touch, low-cost needs of smaller customers. With impressive
year-over-year growth, this single channel model offers new
opportunities to gain share, while leveraging Grainger’s existing
distribution network.
LEVERAGING EMARKETING TO DRIVE WEBSITE TRAFFIC
In two years, Grainger has increased its investment in keywords
from 10,000 to more than 5.6 million today.
AUTO-REORDER allows customers to choose a desired frequency for
repeat purchases and have orders automatically generated, saving
them time, money and effort.
Digital advertising produces a better than 6:1 return for every
advertising dollar spent.
Next Generation eCommerce Platform
Grainger is in the process of converting to a new eCommerce
platform that provides more flexibility, making it easier to make
real-time enhancements to the site. The new platform is scalable,
Banner ads generate over 50 million impressions per month,
yielding a 10:1 return on every advertising dollar spent.
9
United States
For 85 years, Grainger has been helping businesses and institutions in the United States improve the way they purchase and manage
the supplies needed to keep their facilities running efficiently and their employees safe. Grainger’s multichannel business model and
world-class distribution network provide customers nationwide with easy access to more than 1 million products, helping them
consolidate their MRO purchases and take cost out of their business.
G
rainger has more than 14,000 U.S. team members who
are passionate about helping customers get the products
they need to get their jobs done. The company provides
products across more than 30 categories including safety, security,
material handling, pumps, plumbing, test equipment, cleaning,
maintenance, HVAC and much more.
Multichannel Model
Grainger’s strength is in its multichannel business model, which
allows customers to get the products they want, when they want
them, how they want them. This model includes:
Grainger has more
than 2,600 sales representatives who are skilled at identifying
ways to help large and medium-sized businesses save time and
money by better managing their MRO inventory. The company’s
sales team works with a variety of customers in industries
including manufacturing, government, healthcare, hospitality,
transportation and natural resources.
KNOWLEDGEABLE SALES REPRESENTATIVES
Grainger uses several different sales coverage models including:
• Corporate and Major Account representatives who work
primarily with large customers looking to standardize
purchasing across multiple facilities.
• Account Managers who use a consultative approach to
helping businesses and government institutions reduce total
purchasing costs.
• Territory Sales Representatives who primarily call on mediumsized customers who value Grainger’s multichannel model,
broad product offering and service capabilities.
eCommerce is the glue that holds the multichannel
model together. In addition to the Grainger.com® website,
customers also utilize Grainger’s online Order Management
System, which automates the purchasing and approval process,
making it easier for customers to manage their department’s MRO
spend. Grainger’s eProcurement solutions help larger customers
with buyers across multiple locations connect electronically with
Grainger, resulting in end-to-end integration that enhances
efficiency and lowers purchasing costs.
ECOMMERCE
Grainger provides a
suite of inventory management solutions under its KeepStock®
offering. From customer-managed inventory solutions like
labeling, scanning and mobile capabilities to vendor-managed
inventory solutions like on-site support, vending machines and
on-site branches, Grainger’s KeepStock program meets customers’
INVENTORY MANAGEMENT SOLUTIONS
®
Secure dispensing machines, one of the KeepStock suite of inventory
management solutions, reduce consumption by up to 40 percent through
controlled inventory access, saving customers time and money.
unique needs. The company ended 2012 with approximately
40,000 KeepStock installations in the United States, a 30 percent
increase versus 2011. An additional 10,000 installations are
projected for 2013.
EXTENSIVE BRANCH NETWORK Grainger’s branch network plays
a critical role in providing customers immediate access to needed
supplies. The company has more than 360 U.S. locations stocked
with inventory tailored to meet the just-in-time and emergency
needs of local businesses. The branches are backed up by a network
of distribution centers that carry more than 500,000 products.
Grainger’s off-site customer service centers
provide 24/7 telephone support, including technical product
support, as well as online support through the company’s Click
to Call/Chat capabilities on Grainger.com.
SERVICE CENTERS
Strategic Acquisitions
Grainger remains largely driven by organic growth but sees the
opportunity to augment this growth, and the capabilities to serve
customers, through acquisitions. In December 2012, Grainger
acquired Techni-Tool, Inc. and its affiliate Wassco Inc., leading
specialist distributors serving manufacturing customers. This
acquisition helps Grainger provide more of the products, services
and technical support needed by manufacturers in the electronics,
aerospace, telecommunications and medical industries. The
company expects to continue to make strategic acquisitions that
extend its capabilities and help customers consolidate more of
their MRO purchases with Grainger.
2012 Sales by Customer Category –
United States
21%
17%
17%
12%
10%
7%
7%
5%
3%
1%
Commercial
Government
Heavy Manufacturing
Contractor
Light Manufacturing
Other
Retail
Reseller
Natural Resources
Transportation
2012 Sales by Product Category –
United States
KEY
Branch
Distribution Center
(As of 12/31/12)
RESPONDING TO HURRICANE SANDY
Grainger has a long and proven history of helping customers prepare for, respond to and
recover from disasters. The company once again answered the call when Hurricane Sandy
devastated communities in coastal New York and New Jersey.
Grainger’s national emergency response team kicked into high gear in the days leading up to
the storm, working with suppliers to get shipments of needed products to the affected areas and
coordinating efforts between the company’s sales, customer service and supply chain teams.
Many of the company’s local team members
overcame damage to their homes and personal
property to stand with customers, helping them
get critical supplies in their time of greatest
need. Grainger’s support before, during and
after Hurricane Sandy helped position the
company to play a lead role in rebuilding
efforts in the months following the storm.
The company supplied customers with a variety
of critical supplies throughout the ordeal, including
Court Carruthers, Senior Vice President and
generators used to help healthcare customers
President, Grainger U.S., talks with Account
maintain operations during the power outage in
Manager Stephen Sacco at Grainger’s temporary
New York City, and air moving equipment used
store in lower Manhattan. Grainger opened the
store to provide immediate supplies to customers
to dry out the north tube of the Holland Tunnel.
after Hurricane Sandy.
In addition, Grainger provided thousands of
recovery-related products to customers at a critical time, including chain saws, gas cans, extension
cords, wet vacs, water and trash pumps, flashlights, batteries, space heaters and sanitizing supplies.
To help customers and contractors in the Financial District, Grainger opened a temporary store
in lower Manhattan to better position core cleanup products.
Grainger also reinforced its commitment to the community by donating $100,000 to the
American Red Cross to assist in relief efforts. Individual team members made a difference by
utilizing the company’s Matching Charitable Gifts Program, which provides a three-to-one
match for contributions to qualified nonprofit organizations, and by volunteering time through
the American Red Cross Ready When the Time Comes® program (see more on page 22).
Once again, Grainger demonstrated its commitment to being a trusted partner that customers
and communities can rely on in good times and bad.
15% Safety and Security
13% Material Handling
10% Cleaning and
Maintenance
10% Pumps, Plumbing
and Test Equipment
8% Electrical
8% HVAC
8% Metalworking
7% Lighting
6% Hand Tools
4% Fluid Power
3% Power Tools
3% Power Transmission
3% Specialty Brands
2% Motors
HELPING HOSPITALS SUCCEED
Hospitals and healthcare facilities are
focused on improving patient satisfaction
while keeping overall costs low, and Grainger
is there to help. Just ask the team at The
University of Pittsburgh Medical Center
(UPMC) that leveraged KeepStock® on-site
to implement a more streamlined purchasing
process and realize efficiency gains.
Previously, the maintenance staff placed
orders daily, often resulting in duplicate
orders. Other inefficiencies included repetitive
purchasing of items that couldn’t be located
quickly and decentralized storage practices.
The benefits of KeepStock implementation
were clear: Within the first year, UPMC saw
a 25 percent reduction in supply costs, the
near-elimination of emergency parts runs by
staff and improved clarity in the invoicing
process. Repairs and replacements have
also become more predictable and efficient
as parts are in the right place.
In addition, the program significantly
decreased the time spent on supply-related
activities, allowing more time for
maintenance tasks, leading to greater
internal customer and patient satisfaction.
UPMC’s success is just one example of how
Grainger helps hospitals stay productive and
improve the bottom line.
11
International Overview
Grainger made its first international acquisition in 1996 with the purchase of Acklands Limited in Canada. Since that time,
the company has significantly grown its international presence and now has operations in 22 countries and serves customers
in more than 150 countries through its export operation. Having robust global capabilities is essential to best meet the needs of
customers and capture share in a $570 billion global MRO market.
W
ith such a significant growth opportunity in the core
U.S.-based business, why focus on global expansion?
The company sees four primary reasons.
CUSTOMER PULL
In an era of increasing globalization, existing Grainger customers
regularly ask for support in helping them maintain safe, productive
workplaces around the world. Customers know how challenging
this work can be, particularly in markets where the distribution
of MRO products is less mature and where the services they’re
accustomed to are not yet established. Having a trusted partner
like Grainger matters.
SHARING TALENT ACROSS BORDERS
As Grainger expands globally, the company is finding new ways
to share expertise in different countries.
HIGHER GROWTH MARKETS
Global operations allow Grainger to diversify economic risk
across a broad set of geographic regions. It also gives the company
access to markets with significantly higher growth rates than the
United States.
PURCHASING LEVERAGE
In this industry, purchasing scale matters. Global expansion gives
Grainger stronger leverage for all of its businesses, ultimately
resulting in a more cost-effective product offering.
ACCESS TO IDEAS AND TALENT
Operating globally gives Grainger access to diverse talent and
expertise that otherwise would be difficult, if not impossible,
to leverage. This knowledge comes in the form of market
intelligence, customer relationships, buying expertise and
product knowledge.
With operations in North America, Asia, Europe and Latin America,
Grainger believes it’s important to have a framework to determine
whether and where further expansion is warranted. The following
four dimensions are used to evaluate and prioritize investment
among existing markets:
The first is materiality. To have a significant presence in a
given market requires there be significant latent MRO potential.
For example, the overall continent of Europe, which includes
countries where Grainger does not currently operate, has an
estimated MRO market potential of $155 billion, greater than
that of the United States.
Relevance is the second filter and speaks to how relevant
Grainger’s core capabilities of helping customers save time and
money in finding and managing MRO products are in a given
At the highest levels of the company, leaders have rotated roles
between the United States and international businesses, to
become well versed in all aspects of the business and develop
a global mindset. In the Latin America region, several leaders
whose careers began in Mexico are now leading teams in other
countries, providing great leverage and expertise sharing at
the region level. In addition, the company is increasingly using
short-term international assignments as a means to develop
high-potential talent and foster collaboration across borders.
Short-term assignments and best practice sharing in the supply
chain, finance, sales and other teams have proven highly
effective in developing talent and sharing expertise at the
local level.
market. Grainger has learned that the structure and maturity
of a market as measured by GDP per capita is a good indicator of
where its offering will be compelling. Mid-developed economies
($5,000–$25,000 of GDP per capita) and developed economies
(greater than $25,000 of GDP per capita) are best suited for
Grainger’s traditional value proposition.
The third element is advantage. This relates to where Grainger
can achieve an advantaged position relative to competition, which
requires both scale through high local share and some local
tailoring of the product offering.
The fourth dimension is risk versus reward. With a proud
history of operating with the highest levels of ethics and integrity,
maintaining and building upon the company’s reputation is
paramount. Consideration is given to political, security and
economic risk, which is arguably the most important filter used
to evaluate expansion opportunities.
INTERNATIONAL PRIORITY MARKETS
CANADA
JAPAN
EUROPE
MEXICO
BRAZIL
Priority Markets
Additional Markets
Using the criteria noted, Grainger believes it is in the right
markets at this time. In addition, five of the markets have
emerged as priorities for the company, offering the greatest
potential for long-term market leadership. These priority
markets are Canada, Japan, Europe, Mexico and Brazil. These
markets offer exceptional growth potential as the company
currently has single-digit share in each of these markets.
Along with the five priority global markets, Grainger intends
to continue to nurture and grow its existing locations. In
Latin America, for example, Grainger has focused on building
its physical presence throughout the region to provide businesses
with service above and beyond what had been available
previously. In addition to its focus on Mexico and Brazil,
the company now has operations in Colombia, Costa Rica,
Dominican Republic, Panama and Puerto Rico and will be
opening in Peru in early 2013. In these countries, Grainger is
focused on ensuring it has a competitively advantaged broad
product offering with local availability while leveraging the
company’s global scale.
Grainger’s businesses in Canada, Japan* and Mexico have
proven successful, and the company intends to increase
support to accelerate the continued growth of those operations.
Brazil offers a very attractive opportunity, and with its recent
entrance into the market through the acquisition of AnFreixo
S.A., now known as Grainger Brazil, the company has set its
sights on becoming the country’s leading industrial distributor.
Europe remains attractive to Grainger through its Fabory
operations, offering a stable presence in the Netherlands,
Belgium and France and access to the high-growth economies
of Central and Eastern Europe.
FASTENER HOUSE
Grainger’s acquisition of Fabory is a great
example of how the company seeks to leverage
the expertise and talent of the companies it
acquires to benefit the overall organization.
With more than 50,000 unique fasteners in
its offering, Fabory possesses specialization in
fasteners that Grainger did not previously have.
Fabory gives Grainger a competitive position
against other fastener distributors through
strategic sourcing capabilities and an expanded fastener offering.
The company has already realized significant cost savings on a
limited assortment of fasteners in the United States and Canada
and is in the process of establishing Fabory as the sourcing center
for all nonbranded fasteners for the company. This move should
bring Grainger a more comprehensive and competitive offering at
a lower cost across key fastener categories.
Grainger has also taken a closer look at its business operations
in India and China. These growing economies offer growth
potential on a long-term time
horizon, and Grainger has
managed accordingly. In 2012,
the company announced
changes to the businesses in
India and China to improve
long-term performance. In
India, for example, Grainger
has fine-tuned its business
model to directly serve
end-user customers and
increase profitability. In both
India and China, Grainger intends to continue providing
outstanding service to local and multinational customers.
The key to global success is a tireless focus on winning more
customers to create a commanding lead in market share, while
choosing wisely where to invest. Grainger is convinced that
this approach will maximize returns, mitigate risk and create a
worldwide collaborative culture to leverage best practices.
* Grainger operates in Japan through a 52 percent ownership stake in MonotaRO.
13
Priority Markets – Canada
Acklands–Grainger reached an important milestone in 2012. For the first time in its 123-year history, the business crossed the
$1 billion mark in annual sales. This milestone is a reflection of the team’s dedication to customers, team members and communities.
This continued strong performance has allowed the company to invest in building new distribution centers and upgrading information
systems while expanding eCommerce, customer coverage, services and products.
A
cklands–Grainger sees great opportunity in the
$14 billion MRO market of Canada. With 8 percent
market share, Acklands–Grainger has the highest share
of any Grainger business. The business is strong in customer
markets including oil and gas, construction, utilities and the
natural resources market in western Canada, but significant
potential remains, particularly in eastern Canada.
The expansion will cross all product categories, including
additions in new product segments such as plumbing, lab
supplies and electrical. The team expects to leverage the
North American offering available through the U.S. network
to provide customers with even more solutions. A significant
portion of this increase will come through private brands,
providing high-quality products with attractive margins.
As Acklands–Grainger sets its sights on its next chapter, it is
intent on achieving $2 billion in annual sales far faster than its
first billion dollar year. Through a combination of organic and
acquired growth, the team is focused on the following initiatives:
Services
Distribution Center (DC) and IT Investments
Acklands–Grainger is in the midst of a multiyear program to boost
the supply chain infrastructure. The effort began a few years ago
with the DC improvements in British Columbia and has continued
with the new facility in Saskatchewan (see map on page 7).
The team is investing in the infrastructure needed to support a
much larger organization, improving productivity, enhancing
customer service and investing in proven growth drivers to
accelerate profitable growth. Included are plans to build up the
IT infrastructure and invest in the distribution center network
to improve capacity and availability. In 2012, the company
purchased land in the Toronto area to begin construction of a
new distribution center that is expected to be more operationally
efficient and provide additional capacity to serve customers in
eastern Canada.
Product Line Expansion
With more room to grow, the business is able to more aggressively
expand its product line, particularly in products used in the
facilities maintenance arena, a category less penetrated in Canada
than elsewhere. Nearly 120,000 products will be featured in the
2013 catalog, an increase of
15 percent versus 2012.
Plans are under way to
more than double the
web offering in 2013 to
broaden relevance and
reach new and existing
customers as well as help
customers consolidate
their purchases with
Acklands–Grainger.
The Acklands–Grainger team is also expanding its services
offering. The technical services offering helps maximize
workforce productivity, helps reduce the risk of injury and
minimizes costly downtime by offering a one-stop solution.
For more than 20 years, the Canadian team has provided
customers with a suite of inventory management solutions,
ranging from on-site branches to vending machines. This is
particularly relevant to customers across Canada, including
natural resource customers who leverage automated dispensing
solutions in mining operations located below the earth’s surface,
saving time and improving workforce safety and productivity.
Acklands–Grainger’s KeepStock offering allows customers
to better manage their MRO spend, have the right inventory
in the places they need it and limit use of controlled items to
authorized team members.
SM
eCommerce
eCommerce is a key productivity tool for customers, providing
convenience, control and improved purchasing and invoice
processes. The team offers three solutions: core website
functionality, enhanced website capabilities (including customer
order workflow management) and integrated eCommerce. In
2013, the business intends to refine and enhance the eCommerce
customer experience by leveraging functionality that exists
elsewhere in Grainger.
Accelerating Profitability and Productivity
While growing the top line, the team is also focused on actions
to further enhance profitability, including accelerating the
private label brand offering, improving the cost structure and
strategically pricing the offering. To fund ongoing growth over
the next several years, the Acklands–Grainger team is committed
to leveraging continuous improvement principles to take cost
out of the business through more stable, simple processes that
can be standardized across the network for an even better
customer experience.
2012 Sales by Customer Category –
Canada
31% Agriculture
and Mining
17% Contractor
9% Transportation
9% Retail/Wholesale
8% Heavy Manufacturing
8% Commercial
7% Government
7% Other
4% Light Manufacturing
2012 Sales by Product Category –
Canada
37%
16%
15%
15%
7%
KEY
Branch
5%
3%
1%
1%
Safety and Security
Metalworking
Hand Tools
Material Handling
Cleaning and
Maintenance
Power Tools
Electrical
Fluid Power
HVAC
Distribution Center
(As of 12/31/12)
A HISTORICAL LOOK
What is today Acklands – Grainger traces
its roots back to 1889 and a woodworker
from Lanark County, Ontario, named
Dudley Ackland.
CONTINUOUS IMPROVEMENT
A significant shift is under way at
Acklands – Grainger to build a culture of
continuous improvement (CI) across all levels.
The team in Canada has fully embraced CI to
deliver on its growth and productivity goals.
They’ve also found that CI is a powerful driver
for delivering value to customers and engaging
team members.
In 2012, the Acklands – Grainger team completed
several Kaizen and Value Stream events to teach
team members how to use basic CI tools.
Highlights included improvements in the outbound
shipping process from distribution centers that
helped reduce errors by more than 30 percent.
Process enhancements achieved during the year
also contributed to reducing cycle time for
delivering KeepStock Secure® vending machines
to customers by more than 50 percent.
By using CI to develop all team members, the
company expects to deliver incremental value
to customers and a more efficient and safer
workplace for team members.
Attracted by the promise of the New West,
Ackland left his position as manager of a
successful carriage factory in Port Elgin,
Ontario, to set up a farm implement and
wagon repair business with his son in
Winnipeg, Manitoba. In 1905 the company was legally incorporated as D. Ackland & Son
Limited. It was the only firm on the prairies of Canada producing parts for carriages and
buckboards. It also manufactured farm machinery and a variety of other goods and
equipment to meet the needs of settlers flooding into the West.
In 1919, with the advent of the automobile and
mechanized farm equipment, the company began
to serve this new market by adding replacement
parts and accessories to its product offering. The
company also expanded into welding equipment
and industrial products, keeping pace with the
economic expansion of the prairie provinces.
In the 1960s and 1970s, Acklands Limited
(as it was known at the time) launched its first
private brand, Westward®, and set its sights on aggressive expansion in Ontario and Quebec
to balance its traditional strength in the West.
In 1996 Acklands Limited was purchased by W.W. Grainger, Inc. and became
Acklands – Grainger Inc. This was Grainger’s first international purchase, and since then,
Acklands – Grainger has grown steadily, both organically and through acquisitions.
15
Priority Markets – Japan
Grainger is a 52 percent stakeholder in MonotaRO Co. Ltd., a leading eCommerce direct marketer. With more than $57 billion
in MRO potential in Japan, Grainger is focused on aggressively growing its presence through the single channel business model
it operates. The company serves more than 400,000 mostly small and medium-sized customers across a full range of industries,
with more than 80 percent of its transactions conducted online.
M
onotaRO started as a direct
marketer in 2002 and has
enjoyed rapid, sustained
growth since then. With about 1 percent
market share of a fragmented market,
MonotaRO is continuing its profitable
growth journey by focusing on three key
growth drivers:
MonotaRO uses
a blend of eCommerce and traditional
marketing including paid search, search
engine optimization, flyers and faxes to
attract new customers. The company
adds thousands of new customers
monthly who are drawn to MonotaRO’s
broad product offering, attractive prices
and delivery capabilities. The company
also focuses on acquiring larger customers
with tools such as workflow routing and
reporting capabilities.
CUSTOMER ACQUISITION
MonotaRO®, Osaka Spirit®, and Otokomae®.
Private brand sales now comprise nearly
30 percent of total sales in Japan and
are expected to become an even larger
contributor to sales moving forward. To
support the continued expansion of its
product offering, MonotaRO plans to
open a new distribution center in 2013
with 450,000 square feet available to
accommodate 100,000 additional products
available to customers within two days.
MonotaRO has
become known for its expertise in using
sophisticated data analytics to understand
customer buying behaviors and respond
with a full line of products offered at the
same price for all customers. Leveraging
advanced techniques will continue to
be a core component that helps drive
MonotaRO’s growth.
based on previous buying behavior of like
customers. The company is also leveraging
data to explore purchasing trends that help
the company evaluate additional products
for cross-product promotions and private
label opportunities.
GDP Growth
Sales Growth
Key to
MonotaRO’s value proposition is the
access to a broad assortment of national
and private label brands. The company
continues to add to its product offering,
including fasteners and factory automation
product lines, while expanding the
company’s private label brands,
2012
-0.7%
+25%
+2.3%
+25%
DATABASE MARKETING
Operating Margin
Percent
Data analytics techniques include predictive
analytics that anticipate customer demand
PRODUCT LINE EXPANSION
2011
3.1
5.2
8.4
9.4
2009
2010
2011
2012
JAPAN
KEY
Distribution Center
(As of 12/31/12)
Priority Markets – Europe
Grainger acquired Fabory Group, a Europe-based fastener distributor, in August 2011. This business is enabling Grainger to pursue
growth in both mature (Western Europe) and emerging (Central and Eastern Europe) markets, while gaining more scale and
relevance in fastener purchasing and distribution. With an MRO market size of $35 billion in the countries where Fabory operates,
there is great potential in the Eurozone.
T
hroughout Europe, Fabory
Group is known as the Masters
in Fasteners. Founded in 1947,
Fabory Group serves small businesses,
MRO professionals, original equipment
manufacturers (OEM) and technical
wholesalers across Europe. Over the
last several decades, Fabory Group has
expanded its geographic reach to include
small operations in North America and
Asia and now operates more than 140
locations in 14 countries.
Fabory Group’s products and services
range from standard and specialized
fasteners to tools and industrial supplies.
Robotic arms at the Tilburg, Netherlands, distribution center retrieve fasteners and other products with speed
and precision.
More than 65 percent of sales are from
higher margin fasteners, producing gross
profit margins in excess of 50 percent.
Customers have access to more than
80,000 products in Fabory Group’s offering
through a variety of channels, including
shops, sales representatives and a
multilingual website. Fabory will likely
expand its shop presence in Central and
Eastern Europe over the next several years.
POLAND
UNITED
KINGDOM
NETHERLANDS
BELGIUM
CZECH
REPUBLIC
SLOVAKIA
ROMANIA
FRANCE
HUNGARY
PORTUGAL
KEY
Branch
Distribution Center
(As of 12/31/12)
It’s also investing in its eCommerce
platform to provide customers new and
convenient ways to conduct business.
Similar to other Grainger business units,
Fabory is focused on product line expansion
in both mature and emerging markets as an
additional driver of growth. In Fabory’s
case, the emphasis is on selling name brand
and private label safety products and tools
to customers where it already has strong
relationships built through its fastener
offering. Over time, Fabory plans to broaden
its product offering across a growing range
of industrial supplies, becoming a trusted
source for businesses to get the fasteners
and industrial supplies needed for both
MRO and OEM applications.
Another avenue of growth for Fabory has
been its vendor-managed inventory (VMI)
program. Since it was developed more than
20 years ago, Fabory Group’s VMI systems
have helped thousands of customers
concentrate on their core business while
removing inefficiencies and cost. Today,
more than 2,500 customers are on the
Fabory VMI platform. Given the weak
economy in Europe, Grainger took action
in late 2012 to lower the cost structure
of the business, closing six shops while
continuing to invest in the growth areas
of Central and Eastern Europe.
17
Priority Markets – Mexico
Starting with a team of just 12 people in a storefront location outside of Monterrey, Grainger Mexico began operations in 1996 by
leveraging the U.S. product offering and focusing on local manufacturing customers. Since its humble beginnings, the team has built
a national presence and is now Mexico’s leading MRO distributor. Grainger Mexico is expanding its leadership by making strategic
investments to support continued growth.
M
exico offers strong growth
potential, a highly fragmented
MRO market, proximity to
the U.S. supply chain infrastructure, a
similar product offering to the United States
and strong recognition of the Grainger
brand. Additionally, MRO-intensive
industries such as manufacturing and
hospitality align closely with Grainger’s
product offering and expertise.
Customers in Mexico value working with
a partner that offers a wide variety of
products at an attractive price, with
proximity to their business and services
that help them take cost out of their
operations. To meet these needs, Grainger
Mexico is focused on three areas to
expand its presence and differentiate
its offering:
launched a new catalog comprised
Grainger Mexico was
of 29,000 non-stocked products
Product expansion remains
named to the Súper
available for two-day delivery
an important growth driver,
Empresas list in 2012 by
Expansión Magazine.
from the U.S. distribution center
positioning Grainger Mexico
in Dallas, Texas.
as a single source to meet the
MRO needs of customers. The Grainger
SERVICES Inventory management solutions
Mexico team is aggressively adding new
are a fast-growing service offering in Mexico
products to better serve specific customer
and an area of continued focus for the
segments. The addition of private label
business. Grainger Mexico continues to
products, such as the Contender® hand tool take advantage of partnerships with the
line, offers businesses high-quality products U.S. business to build and strengthen these
service competencies.
at attractive price points. In 2012, the team
PRODUCT LINE EXPANSION
Today, Grainger Mexico reaches 90 percent of
MRO customers next day through…
• 16 branches
• 3 master branches
• 1 distribution center (LEED Gold Certified building in Monterrey)
• Call center professionals
With a robust
branch network, Grainger Mexico is
expanding its sales force to meet the
evolving needs of its customers, including
adding sales representatives with specific
industry expertise, such as automotive,
food and beverage, mining, oil and gas, and
hospitality. Grainger Mexico is leveraging
the Territory Sales Representative model,
focused on serving small and medium-sized
businesses, and adding more corporate
account managers to serve large customers.
SALES FORCE EXPANSION
• An eCommerce channel that comprises 22 percent
of total sales
MEXICO
MEXICO
KEY
Branch
Distribution Center
(As of 12/31/12)
Team members celebrated a successful year at
Grainger Mexico’s annual customer show in
Mexico City.
Priority Markets – Brazil
With more than half of the total MRO potential in Latin America, Brazil is a key market for Grainger. The country enjoys robust growth
through infrastructure investments and a strong natural resource base. Many Grainger customers from North America operate in Brazil
and understand the value of partnering with the company. Grainger has set the goal of being the leading MRO distributor in the market,
through strong organic growth and potential acquisitions.
G
rainger formally entered the
Brazil market in April 2012
through the acquisition of
AnFreixo S.A., now known as Grainger
Brazil. AnFreixo has served Brazil since
1943 and is a leading broad-line
distributor of MRO supplies. Grainger
Brazil operates from its distribution
center in São Paulo and is building a
team of sales professionals with a
strong eCommerce platform. Customers
are mostly large and medium-sized
businesses from the mining, metallurgy,
agribusiness, infrastructure, and oil and
gas segments.
To accelerate growth and capture the
significant opportunity ahead, Grainger
Brazil is focused on building its strategic
advantage by offering a broad product line
and having same- or next-day availability.
The team is aggressively building its
sales force and product offering while
Grainger Brazil team members are focused on serving the local São Paulo market with a broad product line.
leveraging company scale. On the sales
force side, the company plans to add field
and inside sales representatives in the
São Paulo area with an emphasis on
BRAZIL
SALES VOLUME BY
REGION – 2012
69% Southeast region
13% Midwest region
9% Northeast region
7% North region
2% South region
São Paulo
serving large corporate accounts. This
process began in 2012 with the addition
of about 30 new sales representatives, and
further hiring is planned for 2013.
A broad product line is key to ensuring
Grainger Brazil has a compelling offer that
helps businesses keep their operations
running safely and
Brazil is the seventhproductively. The
largest economy in
company added
the world, with 2012
3,500 products
GDP of $2.25 trillion
to its offering in
(in U.S. dollars).
2012, and 10,000
more SKUs are expected in 2013 in
categories such as health and safety and
material maintenance. Product line
expansion is also intended to introduce
a greater assortment of private brands.
From a geographic standpoint, São Paulo
and the surrounding metropolitan area
remain the focus, as the company grows
its presence in that specific market. This
will require a reliable logistics network
to provide same- and next-day service.
19
Sustainability
Sustainability at Grainger means doing business the right way. It means an everyday commitment to valuing the planet and
performance for the bottom line. Grainger is committed to operating the business in a way that helps preserve the environment.
The company partners with customers by offering products and services that help them achieve their own sustainable operations
goals and encourages team members to embrace sustainability.
I
n 2012, Grainger publicly disclosed for the first time its carbon
footprint, a measure of greenhouse gas emissions. Grainger
is among 3,000 organizations in 60 countries that disclose
their greenhouse gas emissions and climate change strategies to
the Carbon Disclosure Project (CDP). The reporting by the CDP
provides transparency into an organization’s sustainability
practices and identifies risks that affect employees, customers,
investors and ultimately, business performance. Reporting carbon
emissions is a growing trend for companies and an indicator of a
commitment to sustainability.
Grainger received a score of 73 on a 100-point scale, which
exceeds the average score of 70 for S&P 500 companies that
participated in the project. Grainger is the first MRO distributor
to publicly disclose its carbon footprint via the CDP, another
demonstration of its
commitment to leadership
in the industry.
Grainger’s LEED-certified headquarters
features a sunlit atrium.
The majority of Grainger’s
carbon footprint is comprised
of energy consumed in
distribution centers, branches
and corporate offices. Grainger
invests in energy-efficient
facilities, which then have
a direct effect on the
carbon footprint.
For example, Acklands–Grainger has initiated a lighting
efficiency program, updating more than 100 facilities in the
last four years. The U.S. operation conducts a similar program
that resulted in a 15 percent decrease in energy consumption
at 50 upgraded facilities during the same time period.
For 2013, Grainger will set carbon emissions reduction targets that
balance the growth of the organization with investments that aim
to increase efficiency in operations
and result in a healthier future for
the organization and the planet.
It’s important to Grainger that team
members connect to the issue of
sustainability. Grainger launched a
program aimed at educating team
members about what sustainability
means to the business and
encouraged them to interact
and share their ideas. Grainger’s
“Right Idea” initiative provided
team members with the opportunity
to share best practices with others
across the network.
Grainger published a Corporate
Social Responsibility report
and website in March 2013,
highlighting the company’s
commitment to sustainability.
Grainger offers more than 18,000 green products on Grainger.com®.
Grainger sold more than 380,000 LED lamps and fixtures in 2012.
SM
Grainger Lighting Services , which provides lighting and lighting
controls retrofit services, has saved customers 209 million kilowatt
hours and $22 million on electric bills since 2010. That’s enough
energy to power more than 17,500 homes for a year.*
In 2012, Grainger distribution centers in the United States recycled
303 tons of cardboard and 22 tons of plastic wrap per facility for a
total recycling rate of 72 percent.
* Source: EPA Clean Energy Calculations and References Guide. The calculations
and information are estimates based on certain assumptions and do not constitute
a guarantee of future savings. All calculations based on estimated 15-year life
from the installation of energy efficient measures identified for a given project.
CONTINUING TO LEED
Grainger is committed to building LEED-certified facilities and opened three such facilities in 2012:
FACILITY
SIZE
LOCATION
CERTIFICATION
NOTES
Patterson, Calif.
Minooka, Ill.
St. Laurent, Quebec
NC Gold
CI Platinum
NC Silver
Opened in May 2012
Largest LEED CI Platinum facility in the world
Grainger’s first LEED-certified property in Canada
(SQUARE FEET)
Distribution Center
Distribution Center
Branch
820,000
1,000,000
42,000
NC = New Construction, CI = Commercial Interiors
A Great Company to Work For
Grainger has known for 85 years that to be the first choice of customers, it has to be the workplace of choice for industry-leading
talent. Today, Grainger builds upon that proud heritage as it welcomes new hires around the world and continuously develops team
members to create a unified team wired on service – to customers, communities and each other. Grainger has been ranked a great
workplace in the United States, Canada and Mexico based on team member feedback.
L
yna Smith (below) reflects the excitement Grainger’s
22,000 team members feel as they see the company
innovate and invest to serve more customers with
excellence. Grainger has put in place a host of well-defined
programs and processes that help accelerate talent excellence.
It starts with attracting, developing and retaining the right
talent for the right roles.
From the on-boarding process on Day One, to career development
and reward and recognition programs, Grainger pays close
attention to ensuring outstanding execution on everything that
shapes and maintains a great team member experience. An
inclusive work environment, well-defined behaviors that drive
performance, a relentless focus on ethics and integrity, and
clearly defined business goals guide and inspire team members
and help them deliver their best every day and in emergencies.
As the company expands internationally, tools such as a common
performance management system, best practice sharing and
“stretch” assignments create a team that shares a common vision
and learns from diverse cultures and colleagues.
Performance is rewarded through competitive compensation and
benefits tailored to specific markets. In the United States, the
company continues its Profit Sharing Trust (PST) for eligible team
members. Established in 1941 by the company’s founder as a way
to share with those who generate the profit, the PST helps team
members plan their financial future while requiring no individual
contributions. Today, only a handful of U.S. companies have a
comparable retirement savings vehicle.
Resource Groups (BRGs).
Grainger’s current BRGs include
Women, African American,
Latino, Asian Pacific Islander,
Administrative Professional and
Generational groups, and more
than 3,000 team members
participate. The company has
recently expanded the horizon
with the addition of Pride and
Veterans BRGs. Inclusion and
Diversity is a business imperative
Grainger has been recognized
by several organizations as a
at Grainger, and the BRGs are a
top workplace.
key to helping grow, attract and
retain diverse talent to better serve a changing customer base.
At its core, a workplace is defined by more than policies and
programs. It delivers results when team members have a shared
passion and commitment for what they do every day, and are
inspired to go that extra mile to bring the best solution to the
customer. It becomes a great place to work when team members
have each other’s backs and are eager to collaborate and offer
support when needed.
Team members also have ample opportunities to grow professionally
and personally through mentor relationships and by taking
leadership roles in Grainger’s community programs and Business
Whether it is a friendly smile and knowledgeable help when
meeting a customer; expertise in packaging the right products,
solutions or support; lending a team member a hand; or going
above and beyond when a disaster like Hurricane Sandy strikes,
Grainger’s people are committed to making a difference. It is
no wonder that team member engagement survey results are
so impressive, outpacing other high-performing companies in
several dimensions.
“I’ve been with Grainger for six years. What
gets me ‘jazzed’ is to see the culture change
before my eyes. I see the organization making
leaps in its effort to attract and retain diverse
talent. I’m witnessing us make the critical
shifts related to acquisitions and global
growth. I am watching the implementation
of transformational leadership, as Grainger’s commitment to
customer satisfaction extends itself to team member satisfaction.
All of this is happening while we maintain impressive growth and
increase market share! Yeah, I’m pretty ‘jazzed’ to be a part of
the family!”
“I recently celebrated 39 years with
Acklands–Grainger. I have had a variety of roles
here and have grown tremendously thanks to many
mentors and the volunteer work I have been able to
do in the community. I want to continue to learn
and share my experiences with others in the
company. I am proud that I have become a coach to
a number of others and want to ensure that I spend time helping them
excel and achieve their career aspirations. Great teammates, supportive
leaders, a culture of ethics and integrity, good benefits and the
opportunity to develop has made Acklands–Grainger the only
workplace for me for four solid decades!”
LYNA SMITH, INTERNATIONAL ACCOUNTS RELATIONSHIP MANAGER,
NILES, ILL.
PETER BAKER, SAFETY SPECIALIST, ACKLANDS – GRAINGER, KELOWNA,
BRITISH COLUMBIA
21
Community Relations
Grainger has a proud history of leading the way in corporate citizenship by improving the local communities where customers
and team members live and work. Grainger champions innovative programs and forms strategic partnerships to address disaster
preparedness, technical education and volunteer involvement. These initiatives, in addition to the company's three-to-one
Matching Charitable Gifts Program, are the hallmark of the company’s pledge to exemplify good corporate citizenship.
S
ervice and reliability are at the core of Grainger’s business
and at the heart of the company’s commitment to disaster
preparedness and response across the globe. Grainger has
core strengths in emergency response and proudly fills a niche that
is vital to keeping businesses and communities up and running.
Ready When the Time Comes®
The American Red Cross has learned from years of national
disaster experience that no organization, no matter how strong,
can go it alone. Grainger is the national founding sponsor of the
award-winning American Red Cross Ready When the Time Comes®
(RWTC) volunteer program in the United States and Canada,
and more than 1,400 employees, their families and friends have
become trained Red Cross disaster response volunteers. In 2012,
the RWTC program completed a successful multiyear launch with
more than 14,000 volunteers from 450 companies in 60 markets
in the United States, Puerto Rico and Canada.
Grainger team members, volunteering through the RWTC program,
provided assistance in response to the Colorado and Oklahoma
wildfires and Hurricane Sandy. Grainger also contributed more
than $175,000 in cash and products to the American Red Cross
to assist the victims of the hurricane.
Volunteer Connection
Grainger has made a $3 million commitment as the national
launch sponsor of American Red Cross Volunteer Connection, a
next-generation volunteer management system that will improve
recruitment, management and deployment processes for the
500,000 Red Cross volunteers across the country. Overall,
“Following Hurricane Sandy, I was
assigned to an emergency response
detail because I have a New York
State food handlers certificate. It
was really sad. Many of the people
I met were still shell-shocked by
everything. They were very happy
to meet me because they had not
met many local volunteers. A local face made them open up.
Being able to talk about local sports helped bring some life back
to the people. The greatest part was seeing everyone pull together.”
JACQUELINE GUDMAND, SALES ASSOCIATE AND RWTC VOLUNTEER,
ELMSFORD, N.Y.
2012 CORPORATE SOCIAL RESPONSIBILITY SNAPSHOT
• Donated more than $5.8 million to cultural, education, health
and human service organizations.
• Conducted a record-breaking United Way campaign in Canada,
with more than $400,000 raised from 400 team members.
• Supported 138 students pursuing degrees in the industrial
®
trades with scholarships and Westward toolkits.
• Donated nearly $16.4 million in products to charities including
educational and humanitarian relief organizations.
• Provided $3 million in matching gifts to more than 2,000
charitable organizations to increase the contributions of
1,887 U.S. team members.
more than 30,000 people applied to help the American Red Cross
through Volunteer Connection, even prior to its formal launch in
March 2013. The system was put to the test during Hurricane
Sandy to organize, train and deploy new volunteers, with more
than 11,000 new applications in the first month after the storm.
Technical Education
Just as Grainger is experiencing growth and innovation,
opportunities in the skilled trades are growing and changing faster
than people realize. The jobs of today and tomorrow offer exciting,
long-term career opportunities that require advanced problemsolving skills, along with science, technology and math knowledge.
Grainger’s vision is to create an environment that elevates
awareness about the need and importance of these jobs.
HURRICANE SANDY VOLUNTEER RESPONSE
• QUEENS, N.Y. – Distributed meals through a special
vehicle that goes into disaster areas for individuals who
do not go to shelters or when a shelter hasn’t been set up.
• JERSEY CITY, N.J. – Created 10,000 care bags consisting
of basic emergency supplies.
• NORFOLK, VA. – Conducted disaster assessments in
neighborhoods damaged by the storm.
• BOSTON, MASS. – Created, assembled and distributed
care packages consisting of food staples.
• CHICAGO, ILL. – Answered telephones during the
American Red Cross and CBS Chicago Cares – Sandy
Relief Telethon, which raised more than $550,000.
“I am an Army Veteran of Operation
Iraqi Freedom and an enthusiastic
student. After my active duty, I came
home and began working in smelting
operations. While working on the
smelting pots, things would break or stop
working. This is when I discovered my
love of being able to fix things to make them work. Once I graduate,
I plan to go to work for one of the many industrial employers we
are fortunate to have in this fine community. In the long term, I
would like to move my family into the kind of house they deserve.”
GLOBAL VALUES. LOCAL PARTNERS.
Grainger’s culture of engaging the local community is
important in all parts of the world. Team members and
businesses support a multitude of programs and partners
making a difference.
CHARLES MAITLEN, 2012 RECIPIENT OF THE GRAINGER TOOLS FOR
®
TOMORROW SCHOLARSHIP, PELLISSIPPI STATE COMMUNITY COLLEGE,
KNOXVILLE, TENN.
Grainger works closely with the American Association for
Community Colleges (AACC) and the Aspen Institute’s Skills for
America’s Future to build greater awareness of the need for and
value of technical education, to provide visibility to the importance
and opportunities in the industrial-trade professions, and to
highlight the training and education community colleges offer.
Grainger Tools for Tomorrow® Scholarship Program
In 2006, Grainger partnered with AACC and introduced the
Grainger Tools for Tomorrow® scholarship to support individuals
entering the skilled trades workforce. This scholarship program
continued to grow in 2012, offering $2,000 scholarships to each
of two qualified students
SKILLED TRADES
entering their final year of
AWARENESS MONTH
technical education at 100
Grainger designated October
select community colleges.
2012 as “Skilled Trades
One-half of the scholarships
Awareness Month” to increase
are earmarked for veterans
the visibility of those who work
of the U.S. armed forces.
in the skilled trades and to
celebrate the innovative
accomplishments
and the significant
opportunities that
exist within these
fields. The Grainger
Industry Innovators
contest was designed to educate
the public on the value and
opportunity in the skilled trades,
salute customers and support
Grainger Tools for Tomorrow®
scholarship program recipients
and all those interested in
pursuing careers in the trades.
Grainger Matching
Charitable Gifts Program
The three-to-one Grainger
Matching Charitable Gifts
Program was introduced
to U.S. team members in
1981 and remains one of
the company’s cornerstone
community giving
initiatives. Grainger is
proud to be part of the
less than 1 percent of U.S.
companies that match
contributions at this
three-to-one rate.
Acklands–Grainger has trained more than 160 Ready When the Time
Comes volunteers in five markets in Canada. Team members in
Edmonton (pictured here) and Richmond Hill received training in 2012.
®
UNITED WAY In 2012, Acklands–Grainger in Canada
raised more than $400,000 for the United Way. This is
Acklands–Grainger’s 13th year of supporting the United Way,
and to date contributions totaling nearly $1.4 million have been
raised through team member donations, company matches and
fundraising efforts.
EASTER SEALS Acklands–Grainger has been involved with
Easter Seals for several years, providing both financial and
volunteerism support. The team participated in the Vancouver
24-Hour Relay to send more than 950 children with disabilities to
one-week camps around the province. Acklands–Grainger was the
top fundraising team for 2012 with more than $25,000 raised.
CENTRE OF HOPE To help individuals struggling with
homelessness, Acklands–Grainger team members donated
more than 460 items of winter clothing to the Centre of Hope’s
Below Zero campaign.
RONALD MCDONALD CHARITY Instead of receiving Christmas
gifts, Fabory team members made a donation to the Ronald
McDonald Charity, including gifts for families staying at a Ronald
McDonald House during the holidays.
CARITAS Grainger Mexico assisted Caritas in 2012, an
organization focused on the poor and marginalized population,
with excess product donations of more than $800,000.
TELETÓN Team members from Grainger Mexico supported
the annual Centro de Rehabilitación Infantil Teletón campaign
to support children with cancer and autism. Grainger Mexico
contributed nearly $200,000, which included product donations
and cash contributions.
23
Supplier Relationships
At Grainger, supplier relationships are true partnerships. With more than one million products available through its worldwide
operations, Grainger relies on its supplier partners for the products to meet customers’ current MRO needs and anticipate future
ones. By partnering with Grainger, suppliers have access to two million businesses and institutions.
D
oing business around the world requires supplier
partners that excel at delivering quality products in
the right place, at the right time. Team members in
Grainger’s world-class supply chain not only identify the right
suppliers, but work with them to ensure their practices meet
the needs of customers today and in the future.
Each year Grainger hosts multiple supplier events in North
America to share the company’s strategy and demonstrate
opportunities for partnership in specific countries and around the
world. In the United States and Mexico, suppliers are recognized
for their achievements in on-time shipping, responsiveness,
cost effectiveness and product quality at the annual Partners in
Performance event. Being recognized as a Partner in Performance
is a significant honor, as less than 1 percent of Grainger’s 4,700
suppliers receive this award.
A HISTORICAL LOOK
Grainger is committed to
building long-standing
relationships with suppliers.
In fact, Grainger’s tie with
Broan-NuTone LLC,
manufacturer of exhaust
fans and heating equipment,
Henry Broan (right), who developed
dates back to 1932. That
Broan’s original kitchen ventilation fan,
the Motordor®, meets with colleagues.
was the year Henry Broan
formed what was then known
as Midwest Manufacturing Company, in Milwaukee, Wis.
By chance, Broan attended a meeting of a trade association of
electrical distributors, where William Grainger spoke about the
company’s mission and products. After the meeting the two men
discussed some new concepts Broan was developing. One of the
ideas was a kitchen wall exhaust fan with a second motor that
opened the door to the outside when the fan’s electric switch was
engaged. The only existing fan model had a manually operated door.
Grainger liked the idea, and Broan made him a prototype. The
result: a fan that would become Motordor® fan model 11C. Grainger
purchased 6,000 units, a sizeable order for Broan’s company.
Broan did not have the cash to purchase the motors required, so
Grainger arranged to have another company supply the motors on
credit. Grainger’s word was enough to convince the motor company
to wait for payment until after the fans were sold.
Cotterman Co., a manufacturer of industrial and commercial ladders, received
the top supplier of the year award for 2012, marking its second win in a row.
Cotterman provides Grainger with more than 900 items with a two-day lead
time, all made to order and shipped 99 percent on time.
Broan-NuTone LLC still produces the successor to that original fan,
and that product, stock number 4C707, appears to this day in the
Grainger catalog.
PARTNERS IN PERFORMANCE AWARDS
United States
Mexico
Outstanding Recognition Winners
General Award Winners
Outstanding Recognition Winners
Supplier of the Year
Cotterman Co.
Air Conditioning Products Co.
Cotterman Co.
CRC Industries
EXAIR Corporation
Georgia Pacific Consumer Products, L.P.
GOJO Industries, Inc.
Hi Temp Products of Canada Inc.
Oz Lifting Products, LLC
Philips Lighting Electronics NA
Port-A-Cool, LLC
Riptron Inc.
Shop-Vac Corporation
Southwire Company
Stenner Pump Company, Inc.
Superior Manufacturing Group
The Marcom Group, Ltd.
Supplier of the Year
MSA México
Carrier
Grane Transportation
New Supplier
Plastic Supply of PA
Green/Sustainability
General Electric Lighting
International
Milwaukee Electric Tool Corporation
Best New Supplier
GEBESA
Demand and Supply Chain
Urrea Herramientas Profesionales
Sales and Marketing Efforts
Milwaukee (Techtronic Industries
México)
Achievement and Contribution
Walter de México
Supplier Development
3M de México
Commitment
CARSSA
On Time Delivery
FedEx
Efficiency in Transportation
Garov
General Award Winners
W.H. Brady
MAPA Spontex
Calzado Industrial Duramax
Rubbermaid Commercial Products
Consolidated Statements of Earnings
For the Years Ended December 31,
(In thousands of dollars, except per share amounts)
Net sales
Cost of merchandise sold
Gross profit
Warehousing, marketing and administrative expenses
Operating earnings
Other income and (expense):
Interest income
Interest expense
Equity in net income (loss) of unconsolidated entities
Gain on sale of investment in unconsolidated entity
Other non-operating income
Other non-operating expense
Total other income and (expense)
Earnings before income taxes
Income taxes
Net earnings
Less: Net earnings attributable to noncontrolling interest
Net earnings attributable to W.W. Grainger, Inc.
Earnings per share:
Basic
Diluted
Weighted average number of shares outstanding:
Basic
Diluted
2012
2011
2010
$8,950,045
5,033,885
3,916,160
2,785,035
1,131,125
$8,078,185
4,567,393
3,510,792
2,458,363
1,052,429
$7,182,158
4,176,474
3,005,684
2,145,209
860,475
2,660
(16,078)
—
—
1,866
(1,784)
(13,336)
1,117,789
418,940
698,849
8,968
$ 689,881
2,068
(9,091)
314
7,639
709
(2,541)
(902)
1,051,527
385,115
666,412
7,989
$ 658,423
1,215
(8,187)
(182)
—
1,608
(1,151)
(6,697)
853,778
340,196
513,582
2,717
$ 510,865
$
$
$
$
$
$
9.71
9.52
9.26
9.07
7.05
6.93
69,811,881
71,181,733
69,690,854
71,176,158
70,836,945
72,138,858
Diluted Earnings Per Share:
Net earnings as reported
Earnings allocated to participating securities
Net earnings available to common shareholders
$ 689,881
(12,181)
$ 677,700
$ 658,423
(12,654)
$ 645,769
$ 510,865
(11,294)
$ 499,571
Weighted average shares adjusted for dilutive securities
Diluted earnings per share
71,181,733
$
9.52
71,176,158
$
9.07
72,138,858
$
6.93
2012
2011
2010
Sales
United States
Canada
Other Businesses
Intersegment sales
Net sales to external customers
$6,925,842
1,105,782
1,006,762
(88,341)
$8,950,045
$6,501,343
992,823
647,666
(63,647)
$8,078,185
$6,020,069
820,941
389,621
(48,473)
$7,182,158
Operating earnings
United States
Canada
Other Businesses
Unallocated expenses
Operating earnings
$1,132,722
127,412
20,289
(149,298)
$1,131,125
$1,066,324
107,582
30,984
(152,461)
$1,052,429
$ 920,222
46,836
11,661
(118,244)
$ 860,475
Segment Information
(In thousands of dollars)
25
Consolidated Balance Sheets
As of December 31,
Assets
Current Assets
Cash and cash equivalents
Accounts receivable (less allowances for doubtful accounts of
$19,449 and $18,801, respectively)
Inventories — net
Prepaid expenses and other assets
Deferred income taxes
Prepaid income taxes
Total current assets
Property, Buildings and Equipment
Land
Buildings, structures and improvements
Furniture, fixtures, machinery and equipment
Less: Accumulated depreciation and amortization
Property, buildings and equipment – net
Deferred income taxes
Goodwill
Other assets and intangibles – net
Total Assets
Liabilities and Shareholders’ Equity
Current Liabilities
Short-term debt
Current maturities of long-term debt
Trade accounts payable
Accrued compensation and benefits
Accrued contributions to employees’ profit sharing plans
Accrued expenses
Income taxes payable
Total current liabilities
Long-term debt (less current maturities)
Deferred income taxes and tax uncertainties
Employment-related and other noncurrent liabilities
Shareholders’ equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding
Common stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued
Additional contributed capital
Retained earnings
Accumulated other comprehensive earnings (losses)
Treasury stock, at cost – 40,180,724 and 39,696,367 shares, respectively
Total W.W. Grainger, Inc. shareholders’ equity
Noncontrolling interest
Total shareholders’ equity
Total Liabilities and Shareholders’ Equity
2012
2011
$ 452,063
$ 335,491
940,020
1,301,935
110,414
55,967
40,241
2,900,640
888,697
1,268,647
100,081
47,410
54,574
2,694,900
265,224
1,224,044
1,271,166
2,760,434
1,615,861
1,144,573
51,536
543,670
374,179
$5,014,598
252,161
1,186,002
1,127,159
2,565,322
1,505,027
1,060,295
100,830
509,183
350,854
$4,716,062
$
79,071
18,525
428,782
165,450
170,434
204,800
12,941
1,080,003
467,048
119,280
230,901
$ 119,970
221,539
477,648
207,010
159,950
178,652
23,156
1,387,925
175,055
100,218
328,585
—
54,830
812,573
5,278,577
53,578
(3,175,646)
—
54,830
700,826
4,806,110
(28,738)
(2,904,243))
3,023,912
93,454
3,117,366
$5,014,598
2,628,785
95,494
2,724,279
$4,716,062
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2012
2011
2010
$ 698,849
9,504
12,343
159,049
55,500
—
$ 666,412
4,761
1,666
149,200
54,020
(7,639)
$ 513,582
6,718
(5,553)
149,678
49,796
—
(45,953)
(14,872)
8,346
(54,314)
(58,673)
(9,349)
45,795
9,970
(85,083)
(219,680)
(24,228)
86,395
50,718
16,827
45,680
7,059
(127,790)
(80,545)
(8,806)
36,219
49,576
(1,503)
18,128
(3,055)
Net cash provided by operating activities
816,195
746,108
596,445
Cash flows from investing activities:
Additions to property, buildings and equipment
Proceeds from sale of property, buildings and equipment
Cash paid for business acquisitions, net of cash acquired
Other – net
(249,860)
8,530
(64,808)
482
(196,942)
7,278
(359,296)
13,892
(127,124)
6,508
(62,072)
13,529
Net cash used in investing activities
(305,656)
(535,068)
(169,159)
Cash flows from financing activities:
Borrowings under lines of credit
Payments against lines of credit
Proceeds from issuance of long-term debt
Payments of long-term debt and commercial paper
Proceeds from stock options exercised
Excess tax benefits from stock-based compensation
Purchase of treasury stock
Cash dividends paid
161,160
(205,006)
300,000
(219,950)
72,084
57,885
(340,532)
(220,077)
218,885
(194,325)
172,464
(179,296)
84,337
52,098
(151,082)
(180,527)
35,297
(29,799)
200,000
(239,122)
86,528
25,650
(504,803)
(152,338)
Net cash used in financing activities
(394,436)
(177,446)
(578,587)
Cash flows from operating activities:
Net earnings
Provision for losses on accounts receivable
Deferred income taxes and tax uncertainties
Depreciation and amortization
Stock-based compensation
Gain on investment in unconsolidated entities
Change in operating assets and liabilities – net of business acquisitions:
Accounts receivable
Inventories
Prepaid expenses and other assets
Trade accounts payable
Other current liabilities
Current income taxes payable
Accrued employment-related benefits costs
Other – net
Exchange rate effect on cash and cash equivalents
469
(11,557)
4,884
116,572
335,491
22,037
313,454
(146,417)
459,871
Cash and cash equivalents at end of year
$ 452,063
$ 335,491
$ 313,454
Supplemental cash flow information:
Cash payments for interest (net of amounts capitalized)
Cash payments for income taxes
$
$
$
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
16,028
383,698
8,996
312,616
8,188
319,754
27
Historical Financial Summary
2012
Financial
Summary ($000)
Net sales
Earnings before income taxes and
cumulative effect of accounting change
Income taxes
Earnings before cumulative effect of accounting change
Cumulative effect of accounting change
Net earnings attributable to W.W. Grainger, Inc.
Working capital
Additions to property, buildings and equipment and
capitalized software
Depreciation and amortization
Current assets
Total assets
Shareholders’ equity
Cash dividends paid
Long-term debt (less current maturities)
Per Share ($)
Earnings – basic
Earnings – diluted
Cash dividends paid
Book value
Year-end stock price
Ratios
Percent of return on average shareholders’ equity
Percent of return on average total capitalization
Earnings before income taxes and cumulative effect
of accounting change as a percent of net sales
Earnings before cumulative effect of accounting
change as a percent of net sales
Cash dividends paid as a percent of net earnings
Total debt as a percent of total capitalization
Current assets as a percent of total assets
Current assets to current liabilities
Average inventory turnover – FIFO
Average inventory turnover – LIFO
Other Data
Average number of shares outstanding – basic
Average number of shares outstanding – diluted
Number of employees
Number of outside sales representatives
Number of branches
Number of products in the Grainger® catalog issued February 1
2010
$8,950,045
$8,078,185
$7,182,158
1,117,789
418,940
689,881
—
689,881
1,603,748
1,051,527
385,115
658,423
—
658,423
1,438,375
853,778
340,196
510,865
—
510,865
1,162,318
249,860
145,612
2,900,640
5,014,598
3,117,366
220,077
467,048
196,942
137,211
2,694,900
4,716,062
2,724,279
180,527
175,055
127,124
137,793
2,238,071
3,904,377
2,287,670
152,338
420,446
9.71
9.52
3.06
44.87
202.37
9.26
9.07
2.52
38.94
187.19
7.05
6.93
2.08
32.97
138.11
23.6
20.5
26.3
22.2
22.6
18.7
12.5
13.0
11.9
7.7
31.9
15.3
57.8
2.7
2.8
3.9
8.1
27.4
15.9
57.1
1.9
3.0
4.0
7.1
29.8
17.8
57.3
2.6
3.1
4.4
69,811,881
71,181,733
22,413
4,157
715
410,000
69,690,854
71,176,158
21,446
4,029
711
354,000
70,836,945
72,138,858
18,596
3,079
607
307,000
Note: See the company’s current and prior years’ Form 10-K for changes in accounting and unusual items.
2011
2009
2008
2007
$6,221,991
$6,850,032
$6,418,014
707,337
276,565
430,466
—
430,466
1,026,690
773,218
297,863
475,355
—
475,355
1,064,094
142,414
140,974
2,131,515
3,726,332
2,227,199
134,684
437,500
2006
2005
2004
2003
2002
$5,883,654
$5,526,636
$5,049,785
$4,667,014
$4,643,898
681,861
261,741
420,120
—
420,120
1,021,663
603,023
219,624
383,399
—
383,399
852,472
532,674
186,350
346,324
—
346,324
1,290,188
445,139
158,216
286,923
—
286,923
1,108,384
381,090
154,119
226,971
—
226,971
926,773
397,837
162,349
235,488
(23,921)
211,567
898,681
194,975
135,137
2,144,109
3,515,417
2,033,805
121,504
488,228
197,423
127,882
1,800,817
3,094,028
2,098,108
113,093
4,895
136,764
114,884
1,862,086
3,046,088
2,177,615
97,896
4,895
157,247
105,671
1,985,539
3,107,921
2,288,976
82,663
4,895
160,758
96,305
1,744,416
2,809,573
2,067,970
71,243
—
80,486
88,629
1,633,413
2,624,678
1,845,135
67,281
4,895
144,052
92,811
1,484,947
2,437,448
1,667,698
66,467
119,693
5.70
5.62
1.78
30.81
96.83
6.07
5.97
1.55
27.20
78.84
5.01
4.91
1.34
26.40
87.52
4.36
4.24
1.11
25.90
69.94
3.87
3.78
0.92
25.51
71.10
3.18
3.13
0.79
22.83
66.62
2.50
2.46
0.74
20.27
47.39
2.30
2.24
0.72
18.21
51.55
20.2
16.4
23.0
20.3
19.7
19.2
17.2
17.2
15.9
15.9
14.7
14.2
12.9
12.3
12.9
13.6
11.4
11.3
10.6
10.2
9.6
8.8
8.2
8.6
6.9
31.3
19.1
57.2
2.7
2.7
3.8
6.9
25.6
20.7
61.0
2.8
2.9
4.1
6.6
26.9
5.0
58.2
2.2
3.1
4.3
6.5
25.5
0.4
61.1
2.6
3.1
4.4
6.3
23.9
0.4
63.9
2.9
3.2
4.5
5.7
24.8
0.5
62.1
2.7
3.3
4.6
4.9
29.6
7.5
62.2
2.3
2.9
4.4
5.1
31.4
7.2
60.9
2.5
3.2
4.5
73,786,346
74,891,852
18,006
2,845
612
233,000
76,579,856
77,887,620
18,334
2,433
617
183,000
82,403,958
84,173,381
18,036
2,386
610
139,000
87,838,723
90,523,774
17,074
1,805
593
115,000
89,568,746
91,588,295
16,732
2,507
589
82,400
90,206,773
91,673,375
15,523
2,154
582
82,300
90,731,013
92,394,085
14,701
1,741
575
88,400
91,982,430
94,303,497
15,236
1,650
576
98,700
NOTE ON ROIC
Prior to January 2011, ROIC was calculated using annual operating earnings divided by a 13-point (monthly) average for net working assets. Moving forward,
ROIC will be calculated using a 5-point (quarterly) average for net working assets to provide greater transparency. Net working assets are working assets minus
working liabilities defined as follows: working assets equal total assets less cash equivalents (non-operating cash), deferred taxes and investments in
unconsolidated entities, plus the LIFO reserve. Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to
employees’ profit sharing plans and accrued expenses.
29
Executive and Operating Management
James T. Ryan
Chairman, President
and Chief Executive
Officer
Laura D. Brown
Senior Vice President,
Communications and
Investor Relations
Mr. Ryan was named Chairman in April 2009, and
President and Chief Executive Officer in June 2008.
He has been President of Grainger since 2006 and
was named Chief Operating Officer and appointed to
the Board of Directors in February 2007.
Ms. Brown was named Senior Vice President,
Communications and Investor Relations in July
2010. She is responsible for Grainger’s internal and
external communications, community relations and
investor relations.
Mr. Ryan has held a number of other key roles since
joining Grainger in 1980. They include Group
President; Executive Vice President, Marketing,
Sales and Service; President, Grainger.com; Vice
President, Information Services; and President,
Grainger Parts.
Ms. Brown most recently served as Vice President,
Global Business Communications. Since joining the
company in 2000, she has held roles of increasing
responsibility in the finance, marketing, and investor
relations organizations. Prior to joining Grainger, Ms.
Brown was a vice president at Baxter International
and Alliant Food Service.
Mr. Ryan serves on the Board of Trustees of the
Chicago Museum of Science and Industry and
DePaul University, and is a Business Advisory
Council member for the Farmer School of Business
at Miami University, Oxford, Ohio. He is also a
member of the Civic Committee of the Commercial
Club of Chicago, the Economic Club of Chicago and
the Business Roundtable.
Timothy M. Ferrarell
Senior Vice President
and Chief Information
Officer
Mr. Ferrarell was named Senior Vice President
and Chief Information Officer in June 2007. He is
responsible for enhancing customers’ experiences
through the company’s process improvement and
business system integration efforts.
Prior to this role, Mr. Ferrarell had served as
Senior Vice President, Enterprise Systems,
since June 2001, and took on responsibility for
Enterprise Processes in 2006. He joined the
company in 1983, and has served in a variety of
senior leadership capacities within marketing,
product line development, product management,
and quality and business planning.
Mr. Ferrarell serves on the Board of Trustees for
Lewis University.
Ms. Brown is a 2012 Fellow of the Leadership
Greater Chicago program. Ms. Brown currently
serves on the Illinois Board of Make-A-Wish, and is a
member of the finance committee.
Joseph C. High
and Chief People
Officer
Mr. High joined Grainger as Senior Vice President and
Chief People Officer in June 2011. He is responsible
for aligning business strategies with people initiatives
to build high-performing leaders and teams that meet
the needs of diverse customers with excellence, while
driving company success and shareholder value.
Before joining Grainger, Mr. High was the Senior Vice
President of Human Resources at Owens Corning in
Toledo, Ohio. Prior to that role, he was head of Human
Resources for ConocoPhillips in Houston. Mr. High
also served as an Officer at Rockwell Automation and
Cummins Engine Company.
Mr. High has served on the Board at Outward Bound, a
premier provider of experience-based outdoor
leadership programs for teens, adults and
professionals, and was a Trustee of the University of
Toledo. He is currently a member of the Executive
Leadership Council, a premier leadership organization
comprised of senior African-American corporate
executives from Fortune 500 companies dedicated to
inclusion and development of young leaders.
Court D. Carruthers
Senior Vice President;
President, Grainger U.S.
Mr. Carruthers was named Senior Vice President
and President, Grainger U.S. in January 2012.
He is responsible for the company’s U.S. operations.
Previously, Mr. Carruthers served as Senior Vice
President and President, Grainger International,
overseeing the company’s operations in Canada,
Europe, Asia and Latin America.
Mr. Carruthers joined the company in 2002,
serving in sales and branch leadership roles in
Canada before being promoted to President,
Acklands–Grainger Inc. in 2006. Prior to joining
Grainger, Mr. Carruthers held a number of sales
leadership and business development roles in the
transportation industry.
Mr. Carruthers is a member of the University of
Alberta Business Advisory Council and previously
served as Director of Kids Help Phone and Markham
Stouffville Hospital Foundation, as well as Past Chair
of the United Way of York Region Campaign.
John L. Howard
and General Counsel
Mr. Howard joined Grainger and was named Senior
Vice President and General Counsel in January 2000.
His responsibilities include supporting all of the
company’s legal functions, business development and
administrative services.
Before joining Grainger, Mr. Howard served as Vice
President and General Counsel for Tenneco
Automotive, a subsidiary of Tenneco, Inc. Prior
assignments included Vice President, Law at Tenneco.
From 1990 to 1993, Mr. Howard served in The White
House as counsel to the Vice President of the United
States. From 1984 to 1990, he held a variety of legal
positions within the federal government, including
Associate Deputy Attorney General in the U.S.
Department of Justice.
Mr. Howard served a five-year term as Chairman,
Special Panel on Appeals. He also served a two-year
term on the Federal Reserve Bank of Chicago’s
Seventh District Advisory Council. He currently serves
on the board of directors of the Chicago Botanic
Garden as a Vice Chairman.
Ronald L. Jadin
and Chief Financial
Officer
D G Macpherson
President, Global Supply
Chain and Corporate
Strategy
Michael A. Pulick
President, Grainger
International
Mr. Jadin was named Senior Vice President and
Chief Financial Officer for Grainger in March 2008.
His responsibilities include financial planning and
analysis, financial reporting, internal audit, treasury
operations and financial services.
Mr. Macpherson was named Senior Vice President and
President, Global Supply Chain and Corporate Strategy
in December 2011. He is responsible for the company’s
overall business strategy as well as the performance of
the Global Supply Chain organization.
Mr. Jadin also served as Vice President and
Controller since November 2006. Prior to that,
he was Vice President, Finance, for Grainger
Industrial Supply, as well as Director of Financial
Planning and Analysis for the company.
Mr. Macpherson oversees the performance of Grainger’s
U.S. product management, inventory, distribution, and
sourcing capabilities as well as global sourcing,
purchasing, and transportation efforts. His team also
provides specialized supply chain expertise to each
of Grainger’s international businesses. In addition,
Mr. Macpherson is leading an initiative to improve the
IT systems for the company’s businesses in Canada
and Latin America. Mr. Macpherson joined Grainger in
2008 from Boston Consulting Group (BCG) where he
was Partner and Managing Director since 2002.
Mr. Pulick was named Senior Vice President and
President, Grainger International in January 2012.
In this role, he is responsible for overseeing
Grainger’s operations outside the U.S., which
include approximately 7,000 team members in
more than 25 countries.
Prior to joining Grainger in 1998, he spent
15 years serving in financial analysis and
management capacities within General Electric.
Mr. Jadin volunteers at Habitat for Humanity and
his church.
Mr. Macpherson is a member of the board of directors
for the American Red Cross of Greater Chicago.
Prior to this role he served as Senior Vice President
and President, Grainger U.S. and was responsible for
all aspects of the company’s U.S. operations. Since
joining Grainger in 1999, Mr. Pulick has held a
number of roles with increased responsibility. Prior
to joining Grainger, Mr. Pulick held management
positions within General Electric’s Industrial Systems
business and its Motors, Appliances and Industrial
Controls business.
Mr. Pulick serves as a member of the Illinois Institute
of Technology’s Executive Board and Board of
Trustees and is also a former Junior Achievement
of Chicago board member.
Compensation Practices
Executive Compensation
The Company does not have employment agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Executive compensation is tied to performance; numeric criteria
are disclosed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Pay for Performance
Compensation Element
Link to Performance
Base Salary
Base salary increases are linked to
individual performance.
Annual Cash Incentives
Annual cash incentives are linked to achieving
predetermined Company objectives.
Long-Term Incentives
• Stock options are granted based on individual
performance and linked to stock price performance
for ten years.
The Company has the ability to claw back incentive compensation. . . . . . . . . . . . . . . . . . . . . Yes
CEO salary is no more than 2½ times salary of next highest paid named
executive officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Equity Compensation
All stock-based incentive plans have been approved by shareholders . . . . . . . . . . . . . . . . . Yes
The Company’s 2010 Incentive Plan does not allow reloads, repricing,
stock options issued at a discount to fair market value, or stock options
to be transferred by a participant for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Stock options are always awarded at an exercise price equal to the closing
price of the Company’s common stock reported for the business day
before the grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
• Performance shares are granted based on achieving
specific, predetermined Company objectives over the
three-year performance period.
Benefits
The profit sharing plan encourages financial
performance that drives increased shareholder value.
Ownership Guidelines
Officers are subject to ownership guidelines:
• CEO at least 6X salary
• Other senior officers at least 3X salary
Risk Mitigation
The Company’s incentive programs incorporate a
balance of risk mitigation components.
The Company has not misdated or backdated stock options resulting in
a restatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company discloses performance criteria in its stock-based
compensation plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Dividends are not available on performance shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company, in coordination with a proxy advisory firm, commits to an
appropriate burn rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
31
Board of Directors
Brian P. Anderson
Former Executive Vice President and
Chief Financial Officer, OfficeMax
Incorporated, Itasca, Ill.
(1, 2,* †)
John W. McCarter, Jr.
President Emeritus of the Field Museum
of Natural History, Chicago, Ill.
(2, 3)
James T. Ryan
Chairman, President and
Chief Executive Officer
V. Ann Hailey
President, Chief Executive Officer
and Chief Financial Officer,
Famous Yard Sale, Inc., New Albany, Ohio
(1,* 2)
Neil S. Novich
Former Chairman, President and
Chief Executive Officer, Ryerson Inc.,
Chicago, Ill.
(2, 3)
E. Scott Santi
President and Chief Executive Officer,
Illinois Tool Works Inc., Glenview, Ill.
(1, 2)
William K. Hall
Founding Partner, Procyon Advisors LLP,
Skokie, Ill.
(1, 2)
Michael J. Roberts
Former Global President and COO of
McDonalds Corporation,
CEO of LYFE Kitchen, Chicago, Ill.
(2, 3)
James D. Slavik
Chairman, Mark IV Capital, Inc.,
Newport Beach, Calif.
(2, 3)
Stuart L. Levenick
Group President, Caterpillar Inc.,
Peoria, Ill.
(2, 3*)
Gary L. Rogers
Former Vice Chairman,
General Electric Company, Fairfield, Conn.
(1, 2)
(1) Member of Audit Committee
(2) Member of Board Affairs and
Nominating Committee
(3) Member of Compensation Committee
* Committee Chair
† Lead Director
Corporate Governance
Independent Director Compensation
Board is elected by majority vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The majority of the Director pay package is in the form of Company equity . . . . . . . . . Yes
Majority of Directors independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The majority of the pay package is required to be held in the form
of Company equity for the entire duration of the Director’s service . . . . . . . . . . . . . . . . . . . . . Yes
Separate Chairman and CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No
Independent Lead Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Independent Board Affairs and Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Number of Board meetings held or scheduled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
All Directors elected annually . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company’s Director Stock Ownership Guidelines require Directors to
own Company equity worth at least 5X the annual retainer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Director pay package is regularly benchmarked to market and
reviewed by an Independent Compensation Consultant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Corporate governance guidelines (Operating Principles) approved by
the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company does not use stock options as part of the Director
pay package. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Board plays active role in risk oversight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company does not have a Director retirement program . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Independent Directors hold meetings without management present. . . . . . . . . . . . . . . . . . Yes
The Company does not offer perquisites to Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Board-approved succession plan in place. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The Company only reimburses for expenses relating to service as a Director
and for attending continuing education programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The performance of the Board is reviewed regularly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
The performance of each Committee is reviewed regularly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Board members conduct periodic individual self-evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
A Director who is an employee of the Company does not receive
any compensation for services as a Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Board orientation/education program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Directors must tender resignation upon a substantive change in career
(Criteria for Membership). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
All Directors are expected to attend annual shareholders meeting . . . . . . . . . . . . . . . . . . . . . Yes
All Directors attended at least 75 percent of Board and Committee meetings . . . . . . . . Yes
Charters for Audit, Compensation, and Board Affairs and
Nominating Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Disclosure Committee function for financial reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Independent Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Audit Committee has a financial expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Shareholder Rights
Company has a shareholder rights plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No
Shareholders have cumulative voting rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Shareholders may call special meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Employees may vote their shares in company-sponsored plans. . . . . . . . . . . . . . . . . . Yes
Auditors elected at most recent annual meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
All stock-based incentive plans have been approved by shareholders. . . . . . . . . . . . Yes
Independent Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
An independent tabulator tabulates shareholder votes. . . . . . . . . . . . . . . . . . . . . . . . . . . Yes
Board Compensation Committee has independent compensation consultant. . . . . . . Yes
Company posts its articles of incorporation and bylaws on website . . . . . . . . . . . . . . Yes
Company Information
Headquarters
W.W. Grainger, Inc.
100 Grainger Parkway
Lake Forest, IL 60045-5201
847.535.1000 Phone
847.535.0878 Fax
www.grainger.com
Media Relations Contact
Joseph Micucci
Director, Media Relations
847.535.0879
Investor Relations Contacts
Laura D. Brown
Senior Vice President, Communications
and Investor Relations
847.535.0409
William D. Chapman
Senior Director, Investor Relations
847.535.0881
Analyst Coverage (As of March 1, 2013)
Barclays Capital – Scott Davis
BB & T Capital Markets – Holden Lewis
Buckingham Research – Edward Wheeler
Citibank – Deane Dray
Cleveland Research Company – Adam Uhlman
Credit Suisse – Hamzah Mazari
FBR Capital Markets – Ajay Kejriwal
Janney Montgomery Scott LLC – John Baliotti
Longbow Research – Derek Jose
Morningstar – Basili Alukos
Oppenheimer & Company – Christopher Glynn
Raymond James – Sam Darkatsh
Robert W. Baird – David Manthey
S&P Capital IQ – Stewart Scharf
Stephens, Inc. – Matt Duncan
UBS – Robert Barry
Wells Fargo – Allison Poliniak-Cusic
William Blair & Company, LLC – Ryan Merkel
Wunderlich Securities, Inc. – Brent Rakers
Annual Meeting
The 2013 Annual Meeting of Shareholders
will be held at the company’s headquarters
in Lake Forest, Illinois, at 10:00 a.m. CDT on
Wednesday, April 24, 2013.
Expected Earnings Release Dates
First Quarter
April 16, 2013
Second Quarter
July 17, 2013
Third Quarter
October 16, 2013
Fourth Quarter
January 24, 2014
Mr. Chapman was named Senior Director,
Investor Relations, in April 2012. In this role,
he serves as the company’s primary contact
with the investment community. He had served
as Director, Investor Relations since 1999.
Mr. Chapman serves on the advisory board of
the Chicago Chapter of the National Investor
Relations Institute (NIRI) and is a past president
and chairman. He is also a member of the NIRI
National Senior Roundtable. In 2013, he was
recognized by Institutional Investor Magazine
as the top IR professional in the capital goods/
industrials sector, as voted by the sell-side.
Mr. Chapman serves as a director, past
president and current scholarship chairman of
the Wisconsin Alumni Association-Chicago
Chapter and is a former director of the
National Wisconsin Alumni Association.
Transfer Agent, Registrar and Dividend
Disbursing Agent
Instructions and inquiries regarding transfers,
certificates, changes of title or address, lost or
missing dividend checks, consolidation of accounts
and elimination of multiple mailings should be
directed to:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
800.446.2617
Auditors
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Common Stock Listing
The company’s common stock is listed on the
New York and Chicago stock exchanges under
the trading symbol GWW.
Trademarks
ACKLANDS – GRAINGER, CONDOR, CONTENDER,
FOR THE ONES WHO GET IT DONE, GRAINGER,
GRAINGER and Design, GRAINGER FOR THE ONES
WHO GET IT DONE and Design, GRAINGER IN
CHINESE CHARACTERS and Design, GRAINGER
LIGHTING SERVICES, GRAINGER Shipping Box
Design, GRAINGER TOOLS FOR TOMORROW,
GRAINGER.COM, GRAINGER.COM.MX,
KEEPSTOCK, LUMAPRO, TOUGH GUY and
WESTWARD are the trademarks or service marks
of W.W. Grainger, Inc., which may be registered in
the United States and/or other countries.
DAYTON is the trademark of Dayton Electric
Manufacturing Co., which may be registered in the
United States and/or other countries.
FABORY, FABORY MASTERS IN FASTENERS
and Design and MASTERS IN FASTENERS are the
trademarks of Fabory Nederland B.V., which may be
registered in the United States and/or other countries.
MONOTARO, OSAKA SPIRIT and OTOKOMAE are
the trademarks of MonotaRO Co., Ltd., which may be
TECHNI-TOOL is the trademark of Techni-Tool, Inc.,
which may be registered in the United States and/or
other countries.
ZORO TOOLS and ZORO TOOLS and Design are
the trademarks of Zoro Tools, Inc., which may be
All other trademarks and service marks are the
property of their respective owners.
The printer and paper utilized for this
report have been certified by the
Forest Stewardship Council (FSC),
which promotes environmentally
appropriate, socially beneficial and
economically viable management
of the world’s forests. This report is
on paper containing 30 percent
post-consumer recycled fiber.
Paper contains 30 percent fiber
derived from post-consumer waste.
Recyclable. Please recycle.
Grainger was recognized in 2013 by Institutional
Investor Magazine as having the top IR team in
the capital goods/industrials sector, as voted by
the sell-side.
DESIGN: Anonymous Design, Inc.
© 2013 W.W. Grainger, Inc.
33
Headquarters
W.W. Grainger, Inc.
100 Grainger Parkway
Lake Forest, IL 60045-5201
847.535.1000
www.grainger.com
8S5262

From Motors to Mobile

Transcription

Similar documents

Grainger Discount Program

EP and HLS Template

Grainger Market Particulars and Application Booklet

IN LINE IN LINE - Greeneville Sun Tearsheet System

2015 Jan - Jun Issue

complete issue - Library

2013 DCEA Service Directory - Douglas

SOCIAL

coupons! - Grainger Today