COVER
COVER | 3 Months Ended |
Mar. 31, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2021 |
Document Transition Report | false |
Entity File Number | 1-5684 |
Entity Registrant Name | W.W. Grainger, Inc. |
Entity Incorporation, State or Country Code | IL |
Entity Tax Identification Number | 36-1150280 |
Entity Address, Address Line One | 100 Grainger Parkway, |
Entity Address, City or Town | Lake Forest, |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60045-5201 |
City Area Code | (847) |
Local Phone Number | 535-1000 |
Title of 12(b) Security | Common Stock |
Trading Symbol | GWW |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 52,110,145 |
Entity Central Index Key | 0000277135 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net sales | $ 3,084 | $ 3,001 |
Cost of goods sold | 1,991 | 1,880 |
Gross profit | 1,093 | 1,121 |
Selling, general and administrative expenses | 735 | 962 |
Operating earnings | 358 | 159 |
Other (income) expense: | ||
Interest expense, net | 21 | 21 |
Other, net | (6) | (4) |
Total other expense, net | 15 | 17 |
Earnings before income taxes | 343 | 142 |
Income tax provision (benefit) | 88 | (43) |
Net earnings | 255 | 185 |
Less: Net earnings attributable to noncontrolling interest | 17 | 12 |
Net earnings attributable to W.W. Grainger, Inc. | $ 238 | $ 173 |
Earnings per share: | ||
Basic (in dollars per share) | $ 4.51 | $ 3.20 |
Diluted (in dollars per share) | $ 4.48 | $ 3.19 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 52.3 | 53.6 |
Diluted (in shares) | 52.6 | 53.8 |
Cash dividends paid per share (in dollars per share) | $ 1.53 | $ 1.44 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 255 | $ 185 |
Other comprehensive earnings (losses): | ||
Foreign currency translation adjustments, net of reclassification | (35) | (58) |
Postretirement benefit plan gains (losses), net of tax benefit of $1 in both periods | (4) | (3) |
Other | 1 | 1 |
Total other comprehensive earnings (losses) | (38) | (60) |
Comprehensive earnings, net of tax | 217 | 125 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | ||
Net earnings | 17 | 12 |
Foreign currency translation adjustments | (18) | 3 |
Total comprehensive earnings (losses) attributable to noncontrolling interest | (1) | 15 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 218 | $ 110 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICAL) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Postretirement benefit plan reclassification, net of tax benefit | $ 1 | $ 1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 562 | $ 585 |
Accounts receivable (less allowances for doubtful accounts of $28 and $27, respectively) | 1,576 | 1,474 |
Inventories - net | 1,675 | 1,733 |
Prepaid expenses and other current assets | 121 | 127 |
Total current assets | 3,934 | 3,919 |
Property, buildings and equipment - net | 1,441 | 1,395 |
Goodwill | 388 | 391 |
Intangibles - net | 224 | 228 |
Other assets | 346 | 362 |
Assets, Total | 6,333 | 6,295 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 7 | 8 |
Trade accounts payable | 887 | 779 |
Accrued compensation and benefits | 219 | 307 |
Accrued expenses | 330 | 305 |
Income taxes payable | 88 | 42 |
Total current liabilities | 1,531 | 1,441 |
LONG-TERM DEBT (less current maturities) | 2,373 | 2,389 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 87 | 110 |
OTHER NON-CURRENT LIABILITIES | 262 | 262 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued | 55 | 55 |
Additional contributed capital | 1,248 | 1,239 |
Retained earnings | 8,948 | 8,779 |
Accumulated other comprehensive losses | (81) | (61) |
Treasury Stock, at cost - 57,549,074 and 57,134,828 shares, respectively | (8,354) | (8,184) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,816 | 1,828 |
Noncontrolling interest | 264 | 265 |
Total shareholders' equity | 2,080 | 2,093 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 6,333 | $ 6,295 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 28 | $ 27 |
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued | 0 | 0 |
Cumulative preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost | 57,549,074 | 57,134,828 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net earnings | $ 255 | $ 185 |
Provision for credit losses | 4 | 6 |
Deferred income taxes and tax uncertainties | (11) | (7) |
Depreciation and amortization | 43 | 45 |
Impairment of goodwill, intangible and long-lived assets | 0 | 177 |
Net (gains) losses from sale or redemption of assets | (5) | 3 |
Stock-based compensation | 8 | 9 |
Subtotal | 39 | 233 |
Change in operating assets and liabilities: | ||
Accounts receivable | (121) | (217) |
Inventories | 52 | 19 |
Prepaid expenses and other assets | (5) | (26) |
Trade accounts payable | 85 | 155 |
Accrued liabilities | (61) | (36) |
Income taxes, net | 55 | (62) |
Other non-current liabilities | (5) | (7) |
Subtotal | 0 | (174) |
Net cash provided by operating activities | 294 | 244 |
Cash flows from investing activities: | ||
Additions to property, buildings, equipment and intangibles | (73) | (50) |
Proceeds from sale or redemption of assets | 15 | 0 |
Other - net | 0 | (2) |
Net cash used in investing activities | (58) | (52) |
Cash flows from financing activities: | ||
Borrowings under lines of credit | 0 | 9 |
Payments against lines of credit | 0 | (45) |
Proceeds from long-term debt | 0 | 1,500 |
Payments of long-term debt | 0 | (345) |
Proceeds from stock options exercised | 8 | 19 |
Payments for employee taxes withheld from stock awards | (2) | (5) |
Purchases of treasury stock | (175) | (100) |
Cash dividends paid | (81) | (78) |
Net cash (used in) provided by financing activities | (250) | 955 |
Exchange rate effect on cash and cash equivalents | (9) | (15) |
Net change in cash and cash equivalents | (23) | 1,132 |
Cash and cash equivalents at beginning of year | 585 | 360 |
Cash and cash equivalents at end of period | $ 562 | $ 1,492 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Contributed Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock [Member] | Noncontrolling Interest [Member] |
Beginning balance at Dec. 31, 2019 | $ 2,060 | $ 55 | $ 1,182 | $ 8,405 | $ (154) | $ (7,633) | $ 205 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 23 | 10 | 13 | ||||
Purchases of treasury stock | (100) | (100) | |||||
Net earnings | 185 | 173 | 12 | ||||
Other comprehensive (losses) earnings | (60) | (63) | 3 | ||||
Cash dividends paid | (78) | (78) | |||||
Ending balance at Mar. 31, 2020 | 2,030 | 55 | 1,192 | 8,500 | (217) | (7,720) | 220 |
Beginning balance at Dec. 31, 2020 | 2,093 | 55 | 1,239 | 8,779 | (61) | (8,184) | 265 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 14 | 9 | 5 | ||||
Purchases of treasury stock | (175) | (175) | |||||
Net earnings | 255 | 238 | 17 | ||||
Other comprehensive (losses) earnings | (38) | (20) | (18) | ||||
Reclassification due to the adoption of ASU 2019-12 | 12 | 12 | |||||
Cash dividends paid | (81) | (81) | |||||
Ending balance at Mar. 31, 2021 | $ 2,080 | $ 55 | $ 1,248 | $ 8,948 | $ (81) | $ (8,354) | $ 264 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY (PARENTHETICAL) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Stockholders' Equity (Parentheticals) [Abstract] | ||
Cash dividends paid per share (in dollars per share) | $ 1.53 | $ 1.44 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | BACKGROUND AND BASIS OF PRESENTATION W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries. The Company's Condensed Consolidated Financial Statements (Financial Statements) and the related notes are unaudited and should be read in conjunction with the consolidated financial statements and associated notes for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2021 (2020 Form 10-K). The Condensed Consolidated Balance Sheet as of December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by accounting principles generally accepted in the United States of America (U.S.) for complete financial statements. The unaudited financial information reflects all adjustments (primarily consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the statements contained in this report. Changes to Reportable Segments Effective January 1, 2021, Grainger's two reportable segments are High-Touch Solutions (N.A.) and Endless Assortment. On March 8, 2021, the Company provided investors with segment summary historical financial information and segment historical data that is consistent with its new reportable segment structure and reflective of the intersegment accounting policies described in Note 10 - Segment Information. The Company's High-Touch Solutions (N.A.) segment provides value-added MRO solutions that are rooted in deep product knowledge and customer expertise. This segment includes the Grainger-branded businesses in the U.S., Canada, Mexico and Puerto Rico. The Company’s Endless Assortment segment provides a simple, transparent and streamlined experience for customers to shop millions of products online. This segment includes the Company’s Zoro Tools, Inc. (Zoro) businesses in the U.S. and U.K. and MonotaRO Co., Ltd. (MonotaRO), which operates predominately in Japan. The remaining international high-touch solutions businesses, operating primarily in the U.K., are classified as “Other” to reconcile to consolidated results. These businesses individually do not meet the criteria of a reportable segment. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the impact of this standard. In October 2020, the FASB issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Total service revenue is not material and accounted for approximately 1% of the Company's revenue for the three months ended March 31, 2021 and 2020, respectively. Grainger serves a large number of customers in diverse industries, which are subject to different economic and market specific factors. The Company's presentation of revenue by segment and industry most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue and cash flows are affected by economic and market specific factors. In addition, the segments have unique underlying risks associated with customer purchasing behaviors. In the High-Touch Solutions (N.A.) segment, more than two-thirds of revenue is derived from customer contracts whereas in the Endless Assortment segment, a majority of revenue is derived from spot buys. The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Three Months Ended March 31, 2021 2020 High-Touch Solutions (N.A.) Endless Assortment Total Company (2) High-Touch Solutions (N.A.) Endless Assortment Total Company (2) Contractors 9 % 15 % 10 % 10 % 15 % 10 % Commercial 9 % 15 % 10 % 9 % 15 % 10 % Government 19 % 3 % 16 % 17 % 3 % 14 % Healthcare 7 % 2 % 6 % 8 % 1 % 7 % Manufacturing 30 % 29 % 30 % 31 % 31 % 31 % Retail/Wholesale 9 % 10 % 9 % 8 % 11 % 8 % Transportation 5 % 3 % 5 % 5 % 3 % 5 % Others (1) 12 % 23 % 14 % 12 % 21 % 15 % Total 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 78 % 20 % 100 % 78 % 17 % 100 % (1) Others primarily includes revenue from industries and customers that are not material individually including agriculture, mining, natural resources and resellers not aligned to a major industry segment. (2) Total Company includes other businesses, which includes the Cromwell business in the U.K., as well as the Fabory and China businesses in the period prior to their divestitures in the second and third quarter of 2020, respectively. Other businesses account for approximately 2% of revenue for the three months ended March 31, 2021 and 5% of revenue for the three months ended March 31, 2020 , respectively. Total accrued sales returns were approximately $37 million and $31 million as of March 31, 2021 and December 31, 2020, respectively and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $48 million and $58 million as of March 31, 2021 and December 31, 2020 and are reported as part of Accrued expenses. The Company had no material unsatisfied performance obligations, contract assets or liabilities as of March 31, 2021 and December 31, 2020. |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, BUILDINGS AND EQUIPMENT | PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment consisted of the following (in millions of dollars): As of March 31, 2021 December 31, 2020 Land $ 328 $ 329 Building, structures and improvements 1,329 1,330 Furniture, fixtures, machinery and equipment 1,946 1,878 Property, buildings and equipment $ 3,603 $ 3,537 Less: Accumulated depreciation and amortization 2,162 2,142 Property, buildings and equipment, net $ 1,441 $ 1,395 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Grainger tests reporting units' goodwill and intangible assets for impairment annually during the fourth quarter and more frequently if impairment indicators exist. Accordingly, Grainger performs quarterly qualitative assessments of significant events and circumstances such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the current global outbreak of the Coronavirus (COVID-19 pandemic) and macro-economic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of reporting units' goodwill or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators during the three months ended March 31, 2021. As such, quantitative assessments were not required. The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars): High-Touch Solutions (N.A) Endless Assortment Other Total Balance at January 1, 2020 $ 318 $ 52 $ 59 $ 429 Acquisition — 15 — 15 Impairment — — (58) (58) Translation 3 3 (1) 5 Balance at December 31, 2020 321 70 — 391 Impairment — — — — Translation 1 (4) — (3) Balance at March 31, 2021 $ 322 $ 66 $ — $ 388 The cumulative goodwill impairments as of March 31, 2021, were $137 million and consisted of $32 million within High-Touch Solutions (N.A.) and $105 million in Other. During the first quarter of 2020, the Company recorded $58 million of impairment charges in Selling, general and administrative expenses (SG&A) in connection with the impairment of Fabory's goodwill. The impairment is presented in Other businesses in the table above. The Company divested Fabory during the second quarter of 2020. Grainger's current business portfolio had no impairments to goodwill for the three months ended March 31, 2021 and 2020. The balances in Intangible assets, net are as follows (in millions of dollars ): March 31, 2021 December 31, 2020 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/ impairment Net carrying amount Customer lists and relationships 11.8 years $ 221 $ 171 $ 50 $ 223 $ 171 $ 52 Trademarks, trade names and other 14.1 years 36 23 13 36 22 14 Non-amortized trade names and other Indefinite 26 — 26 28 — 28 Capitalized software 4.2 years 472 337 135 461 327 134 Total intangible assets 7.0 years $ 755 $ 531 $ 224 $ 748 $ 520 $ 228 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT There was no short-term debt as of March 31, 2021 and December 31, 2020. Long-term debt, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of March 31, 2021 As of December 31, 2020 Carrying Value Fair Value (4) Carrying Value Fair Value (4) 4.60% senior notes due 2045 (1) $ 1,000 $ 1,201 $ 1,000 $ 1,343 3.75% senior notes due 2046 (1) 400 422 400 479 4.20% senior notes due 2047 (1) 400 452 400 514 1.85% senior notes due 2025 (2) 500 515 500 526 Japanese Yen term loan (3) 81 81 87 87 Other 23 23 34 34 Subtotal 2,404 2,694 2,421 2,983 Less: Current maturities (7) (7) (8) (8) Debt issuance costs and discounts, net of amortization (24) (24) (24) (24) Long-term debt (less current maturities) $ 2,373 $ 2,663 $ 2,389 $ 2,951 (1) In the years 2015-2017, Grainger issued $1.8 billion in long-term debt (Senior Notes) to partially fund the repurchase of $2.8 billion in shares of the total $3 billion announced in April 2015. The remaining share repurchases were funded from internally generated cash. Debt was issued as follows: • In May 2017, $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually. • In May 2016, $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually. • In June 2015, $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually. The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20-25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $24 million associated with the issuance of the Senior Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Senior Notes. (2) In February 2020, the Company issued $500 million of unsecured 1.85% Senior Notes (1.85% Notes) and used the proceeds to repay the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility, and to fund general working capital needs. The 1.85% Notes mature in February 2025 and they require no principal payments until the maturity date and interest is payable semi-annually on February 15 and August 15, beginning in August 2020. Prior to January 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at a “make-whole” redemption price. This redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the 1.85% Notes plus 10 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the 1.85% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. On or after January 15, 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $5 million associated with the issuance of the 1.85% Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense, net over the term of the 1.85% Notes. In connection with the 1.85% Notes, in February 2020, the Company entered into derivative instrument agreements to manage its risks associated with interest rates on the 1.85% Notes and foreign currency fluctuations related to the financing of international operations. See Note 7 to the Financial Statements for further discussion of these derivative instruments and the Company's hedge accounting policies. (3) In August 2020, MonotaRO Co. LTD., the endless assortment business in Japan, entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024, and bears average interest at 0.05%. (4) The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company maintains various agreements with bank counterparties that permit the Company to enter into "over-the-counter" derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates on its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes. Fair value hedges The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swap, along with the gain or loss on the hedged item, is recorded in earnings under the same line item, interest expense, net. The notional amount of the Company’s outstanding fair value hedges as of March 31, 2021 and December 31, 2020 was $500 million. Cash flow hedges The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of Accumulated other comprehensive earnings (losses) (AOCE) and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of March 31, 2021 and December 31, 2020 was approximately $34 million. The effect of the Company's fair value and cash flow hedges on the Company's Condensed Consolidated Statement of Earnings for the three months ended March 31, 2021 and 2020 is as follows (in millions of dollars): Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Interest expense, net Other, net Interest expense, net Other, Net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ 10 $ — $ (18) $ — Interest rate swap designated as hedging instrument $ (10) $ — $ 18 $ — Cash flow hedge: Hedged item $ — $ — $ — $ (2) Cross-currency swap designated as hedging instrument $ — $ — $ — $ 2 The effect of the Company’s fair value and cash flow hedges on AOCE for the three months ended March 31, 2021 and 2020 was not material. The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 were as follows (in millions of dollars): As of March 31, 2021 As of December 31, 2020 Balance Sheet Classification Fair Value and Carrying Amounts Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 $ 2 Interest rate swap Other assets $ 10 $ 21 The carrying amount of the liability hedged by the interest rate swap (long-term debt), including the cumulative amount of fair value hedging adjustments, as of March 31, 2021 and December 31, 2020 amounted to $510 million and $521 million, respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The reconciliations of income tax expense with federal income taxes at the statutory rate are as follows (in millions of dollars): Three Months Ended March 31, 2021 2020 Federal income tax $ 72 $ 35 States income taxes, net of federal income tax benefit 9 4 Foreign rate difference 7 3 Net tax benefit related to foreign subsidiaries — (85) Income tax expense (benefit) $ 88 $ (43) Effective tax rate 25.8 % (30.4) % |
DIVIDEND
DIVIDEND | 3 Months Ended |
Mar. 31, 2021 | |
Dividends [Abstract] | |
DIVIDEND | DIVIDENDOn April 28, 2021, the Company’s Board of Directors declared a quarterly dividend of $1.62 per share, payable June 1, 2021, to shareholders of record on May 10, 2021. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Following is a summary of segment results (in millions of dollars): Three Months Ended March 31, 2021 High-Touch Solutions (N.A.) Endless Assortment Total Reportable Segments Other Total Total net sales $ 2,397 $ 622 $ 3,019 $ 65 $ 3,084 Segment operating earnings $ 306 $ 55 $ 361 $ (3) $ 358 Three Months Ended March 31, 2020 High-Touch Solutions (N.A.) Endless Assortment Total Reportable Segments Other Total Total net sales $ 2,355 $ 496 $ 2,851 $ 150 $ 3,001 Segment operating earnings $ 314 $ 35 $ 349 $ (190) $ 159 The Company is a broad line distributor of MRO products and services. Products are regularly added and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. Intersegment sales transactions, which are sales between Grainger businesses in separate reportable segments, are eliminated within the segment to present only the impact of third-party sales. Service fees for intersegment sales from the High-Touch Solutions (N.A.) segment to the Endless Assortment segment are included in SG&A. |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS From time to time the Company is involved in various legal and administrative proceedings, including claims related to product liability, safety or compliance, privacy and cybersecurity matters, negligence, contract disputes, environmental issues, unclaimed property, wage and hour laws, intellectual property, advertising, consumer protection, pricing (including disaster or emergency declaration pricing statutes), employment practices, regulatory compliance, anti-bribery and corruption or other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties. As previously disclosed, beginning in the fourth quarter of 2019, Grainger, KMCO, LLC (KMCO) and other defendants have been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO chemical refinery located in Crosby, Harris County, Texas on April 2, 2019. The complaints, which to date encompass 15 lawsuits and approximately 145 plaintiffs, seek recovery of compensatory and other damages and relief in relation to one death and various alleged injuries. On May 8, 2020, KMCO filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas for relief under Chapter 7 of Title 11 of the United States Bankruptcy Court in the case KMCO, LLC, No. 20-60028. As a result of the Chapter 7 proceedings, the claims against KMCO in the Harris County lawsuits were stayed. Effective January 1, 2021, the Bankruptcy Court lifted the stay with respect to KMCO. On December 16, 2020, KMCO, the trustee of its estate and ORG Chemical Holdings, LLC, KMCO’s parent company (“ORG”), filed a product liability-related lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, which seeks unspecified damages (the “KMCO Case”). On April 1, 2021, twenty-four individual plaintiffs filed a petition in intervention seeking to be added as plaintiffs in the KMCO Case and seeking unspecified damages. On March 24, 2021, Indian Harbor Insurance Company together with other insurance companies and underwriters, as subrogees of KMCO and ORG, filed a lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, seeking reimbursement of insurance payments made by the plaintiffs on behalf of the insured parties and other damages. Grainger is investigating each of the various claims relating to the KMCO chemical refinery incident, which are at an early stage, and intends to contest these matters vigorously. Also, as a government contractor selling to federal, state and local governmental entities, the Company may be subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration or to pricing compliance. While the Company is unable to predict the outcome of any of these matters, it is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial condition or results of operations. From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as a defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products manufactured by third parties purportedly distributed by the Company. While several lawsuits have been dismissed in the past based on the lack of product identification, if a specific product distributed by the Company is identified in any pending or future lawsuits, the Company will seek to exercise indemnification remedies against the product manufacturer to the extent available. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope, coverage and the costs of defense, of lawsuits involving claims of exposure to asbestos. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in these lawsuits. While the Company is unable to predict the outcome of these proceedings, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial condition or results of operations. |
NEW ACCOUNTING STANDARDS (Polic
NEW ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Update to Significant Accounting Policies and New Accounting Standards | NEW ACCOUNTING STANDARDS In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the impact of this standard. In October 2020, the FASB issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Financial Statements. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenues | The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Three Months Ended March 31, 2021 2020 High-Touch Solutions (N.A.) Endless Assortment Total Company (2) High-Touch Solutions (N.A.) Endless Assortment Total Company (2) Contractors 9 % 15 % 10 % 10 % 15 % 10 % Commercial 9 % 15 % 10 % 9 % 15 % 10 % Government 19 % 3 % 16 % 17 % 3 % 14 % Healthcare 7 % 2 % 6 % 8 % 1 % 7 % Manufacturing 30 % 29 % 30 % 31 % 31 % 31 % Retail/Wholesale 9 % 10 % 9 % 8 % 11 % 8 % Transportation 5 % 3 % 5 % 5 % 3 % 5 % Others (1) 12 % 23 % 14 % 12 % 21 % 15 % Total 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 78 % 20 % 100 % 78 % 17 % 100 % (1) Others primarily includes revenue from industries and customers that are not material individually including agriculture, mining, natural resources and resellers not aligned to a major industry segment. (2) Total Company includes other businesses, which includes the Cromwell business in the U.K., as well as the Fabory and China businesses in the period prior to their divestitures in the second and third quarter of 2020, respectively. Other businesses account for approximately 2% of revenue for the three months ended March 31, 2021 and 5% of revenue for the three months ended March 31, 2020 , respectively. |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, BUILDINGS AND EQUIPMENT | Property, buildings and equipment consisted of the following (in millions of dollars): As of March 31, 2021 December 31, 2020 Land $ 328 $ 329 Building, structures and improvements 1,329 1,330 Furniture, fixtures, machinery and equipment 1,946 1,878 Property, buildings and equipment $ 3,603 $ 3,537 Less: Accumulated depreciation and amortization 2,162 2,142 Property, buildings and equipment, net $ 1,441 $ 1,395 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars): High-Touch Solutions (N.A) Endless Assortment Other Total Balance at January 1, 2020 $ 318 $ 52 $ 59 $ 429 Acquisition — 15 — 15 Impairment — — (58) (58) Translation 3 3 (1) 5 Balance at December 31, 2020 321 70 — 391 Impairment — — — — Translation 1 (4) — (3) Balance at March 31, 2021 $ 322 $ 66 $ — $ 388 |
Schedule of Finite-Lived Intangible Assets By Major Class | The balances in Intangible assets, net are as follows (in millions of dollars ): March 31, 2021 December 31, 2020 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/ impairment Net carrying amount Customer lists and relationships 11.8 years $ 221 $ 171 $ 50 $ 223 $ 171 $ 52 Trademarks, trade names and other 14.1 years 36 23 13 36 22 14 Non-amortized trade names and other Indefinite 26 — 26 28 — 28 Capitalized software 4.2 years 472 337 135 461 327 134 Total intangible assets 7.0 years $ 755 $ 531 $ 224 $ 748 $ 520 $ 228 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | Long-term debt, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of March 31, 2021 As of December 31, 2020 Carrying Value Fair Value (4) Carrying Value Fair Value (4) 4.60% senior notes due 2045 (1) $ 1,000 $ 1,201 $ 1,000 $ 1,343 3.75% senior notes due 2046 (1) 400 422 400 479 4.20% senior notes due 2047 (1) 400 452 400 514 1.85% senior notes due 2025 (2) 500 515 500 526 Japanese Yen term loan (3) 81 81 87 87 Other 23 23 34 34 Subtotal 2,404 2,694 2,421 2,983 Less: Current maturities (7) (7) (8) (8) Debt issuance costs and discounts, net of amortization (24) (24) (24) (24) Long-term debt (less current maturities) $ 2,373 $ 2,663 $ 2,389 $ 2,951 (1) In the years 2015-2017, Grainger issued $1.8 billion in long-term debt (Senior Notes) to partially fund the repurchase of $2.8 billion in shares of the total $3 billion announced in April 2015. The remaining share repurchases were funded from internally generated cash. Debt was issued as follows: • In May 2017, $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually. • In May 2016, $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually. • In June 2015, $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually. The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20-25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $24 million associated with the issuance of the Senior Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Senior Notes. (2) In February 2020, the Company issued $500 million of unsecured 1.85% Senior Notes (1.85% Notes) and used the proceeds to repay the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility, and to fund general working capital needs. The 1.85% Notes mature in February 2025 and they require no principal payments until the maturity date and interest is payable semi-annually on February 15 and August 15, beginning in August 2020. Prior to January 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at a “make-whole” redemption price. This redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the 1.85% Notes plus 10 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the 1.85% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. On or after January 15, 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $5 million associated with the issuance of the 1.85% Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense, net over the term of the 1.85% Notes. In connection with the 1.85% Notes, in February 2020, the Company entered into derivative instrument agreements to manage its risks associated with interest rates on the 1.85% Notes and foreign currency fluctuations related to the financing of international operations. See Note 7 to the Financial Statements for further discussion of these derivative instruments and the Company's hedge accounting policies. (3) In August 2020, MonotaRO Co. LTD., the endless assortment business in Japan, entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024, and bears average interest at 0.05%. (4) The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The effect of the Company's fair value and cash flow hedges on the Company's Condensed Consolidated Statement of Earnings for the three months ended March 31, 2021 and 2020 is as follows (in millions of dollars): Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Interest expense, net Other, net Interest expense, net Other, Net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ 10 $ — $ (18) $ — Interest rate swap designated as hedging instrument $ (10) $ — $ 18 $ — Cash flow hedge: Hedged item $ — $ — $ — $ (2) Cross-currency swap designated as hedging instrument $ — $ — $ — $ 2 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 were as follows (in millions of dollars): As of March 31, 2021 As of December 31, 2020 Balance Sheet Classification Fair Value and Carrying Amounts Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 $ 2 Interest rate swap Other assets $ 10 $ 21 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliations of income tax expense with federal income taxes at the statutory rate are as follows (in millions of dollars): Three Months Ended March 31, 2021 2020 Federal income tax $ 72 $ 35 States income taxes, net of federal income tax benefit 9 4 Foreign rate difference 7 3 Net tax benefit related to foreign subsidiaries — (85) Income tax expense (benefit) $ 88 $ (43) Effective tax rate 25.8 % (30.4) % |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): Three Months Ended March 31, 2021 High-Touch Solutions (N.A.) Endless Assortment Total Reportable Segments Other Total Total net sales $ 2,397 $ 622 $ 3,019 $ 65 $ 3,084 Segment operating earnings $ 306 $ 55 $ 361 $ (3) $ 358 Three Months Ended March 31, 2020 High-Touch Solutions (N.A.) Endless Assortment Total Reportable Segments Other Total Total net sales $ 2,355 $ 496 $ 2,851 $ 150 $ 3,001 Segment operating earnings $ 314 $ 35 $ 349 $ (190) $ 159 |
BACKGROUND AND BASIS OF PRESE_2
BACKGROUND AND BASIS OF PRESENTATION (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
REVENUE Narrative (Details)
REVENUE Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Accrued sales returns | $ 37 | $ 31 | |
Accrued sales incentives | $ 48 | $ 58 | |
Service Revenue [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Percent of Total Company Revenue | 1.00% | 1.00% |
REVENUE (Details)
REVENUE (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 100.00% | 100.00% |
Service Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Percent of Total Company Revenue | 1.00% | 1.00% |
Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 16.00% | 14.00% |
Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 7.00% |
Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 30.00% | 31.00% |
Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 8.00% |
Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 5.00% |
Others [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 14.00% | 15.00% |
High-Touch Solutions (N.A.) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 78.00% | 78.00% |
High-Touch Solutions (N.A.) | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 10.00% |
High-Touch Solutions (N.A.) | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 9.00% |
High-Touch Solutions (N.A.) | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 19.00% | 17.00% |
High-Touch Solutions (N.A.) | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 8.00% |
High-Touch Solutions (N.A.) | Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 30.00% | 31.00% |
High-Touch Solutions (N.A.) | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 8.00% |
High-Touch Solutions (N.A.) | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 5.00% |
High-Touch Solutions (N.A.) | Others [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 12.00% | 12.00% |
Endless Assortment | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 20.00% | 17.00% |
Endless Assortment | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 15.00% | 15.00% |
Endless Assortment | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 15.00% | 15.00% |
Endless Assortment | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% | 3.00% |
Endless Assortment | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 2.00% | 1.00% |
Endless Assortment | Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 29.00% | 31.00% |
Endless Assortment | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 11.00% |
Endless Assortment | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% | 3.00% |
Endless Assortment | Others [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 23.00% | 21.00% |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Percent of Total Company Revenue | 2.00% | 5.00% |
PROPERTY, BUILDINGS AND EQUIP_3
PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property, buildings and equipment | $ 3,603 | $ 3,537 |
Less: Accumulated depreciation and amortization | 2,162 | 2,142 |
Property, buildings and equipment - net | 1,441 | 1,395 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, buildings and equipment | 328 | 329 |
Building, Structures and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, buildings and equipment | 1,329 | 1,330 |
Furniture, Fixtures, Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, buildings and equipment | $ 1,946 | $ 1,878 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Goodwill, Impairment Loss, Excluding Divested Businesses | $ 0 | $ 0 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Goodwill and Intangible Asset Impairment | 137 | |
Unallocated expense | ||
Segment Reporting Information [Line Items] | ||
Goodwill and Intangible Asset Impairment | 105 | |
High-Touch Solutions (N.A.) | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Goodwill and Intangible Asset Impairment | $ 32 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 391 | $ 429 |
Acquisition | 15 | |
Impairment | 0 | (58) |
Translation | (3) | 5 |
Goodwill, ending balance | 388 | 391 |
Unallocated expense | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 0 | 59 |
Acquisition | 0 | |
Impairment | 0 | (58) |
Translation | 0 | (1) |
Goodwill, ending balance | 0 | 0 |
High-Touch Solutions (N.A.) | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 321 | 318 |
Acquisition | 0 | |
Impairment | 0 | 0 |
Translation | 1 | 3 |
Goodwill, ending balance | 322 | 321 |
Endless Assortment | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 70 | 52 |
Acquisition | 15 | |
Impairment | 0 | 0 |
Translation | (4) | 3 |
Goodwill, ending balance | $ 66 | $ 70 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets included in Other assets and intangibles (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Total intangible assets, gross | $ 755 | $ 748 |
Total intangible assets, net | 224 | 228 |
Finite-lived intangible assets, accumulated amortization | 531 | 520 |
Customer lists and relationships [Member] | ||
Finite-lived intangible assets, gross | 221 | 223 |
Finite-lived intangible assets, accumulated amortization | 171 | 171 |
Finite-lived intangible assets, net | 50 | 52 |
Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, gross | 36 | 36 |
Finite-lived intangible assets, accumulated amortization | 23 | 22 |
Finite-lived intangible assets, net | 13 | 14 |
Non-amortized trade names and other [Member] | ||
Finite-lived intangible assets, gross | 26 | 28 |
Finite-lived intangible assets, accumulated amortization | 0 | 0 |
Indefinite-lived intangible assets, carrying amount | 26 | 28 |
Capitalized software [Member] | ||
Finite-lived intangible assets, gross | 472 | 461 |
Finite-lived intangible assets, accumulated amortization | 337 | 327 |
Finite-lived intangible assets, net | $ 135 | $ 134 |
Weighted average [Member] | ||
Finite-lived intangible assets, useful life | 7 years | |
Weighted average [Member] | Customer lists and relationships [Member] | ||
Finite-lived intangible assets, useful life | 11 years 9 months 18 days | |
Weighted average [Member] | Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, useful life | 14 years 1 month 6 days | |
Weighted average [Member] | Capitalized software [Member] | ||
Finite-lived intangible assets, useful life | 4 years 2 months 12 days |
DEBT - Narrative (Details)
DEBT - Narrative (Details) $ in Millions | 1 Months Ended | 24 Months Ended | |||||||||
Aug. 31, 2020JPY (¥)numberOfPayments | Feb. 29, 2020USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jun. 30, 2015 | May 31, 2017USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2015USD ($) | |
Debt Instrument [Line Items] | |||||||||||
Debt issuance costs and discounts, net of amortization | $ (24) | $ (24) | |||||||||
Debt Instrument, Repurchase Amount | $ 2,800 | ||||||||||
Debt Instrument, Repurchased Face Amount | $ 3,000 | ||||||||||
Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | $ 1,800 | ||||||||||
Debt Issuance Costs, Gross | $ 24 | $ 24 | |||||||||
Senior Notes [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis points | 20.00% | ||||||||||
Senior Notes [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis points | 25.00% | ||||||||||
Senior Notes [Member] | Debt Instrument, Redemption, Period Two | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Redemption price | 100.00% | ||||||||||
Senior Notes [Member] | Debt Instrument, Redemption, Period One | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Redemption price | 101.00% | ||||||||||
Line of Credit [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Outstanding lines of credit | $ 0 | ||||||||||
Senior Notes, 4.20% due 2047 [Member] | Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | $ 400 | $ 400 | |||||||||
Interest rate | 4.20% | 4.20% | 4.20% | ||||||||
Debt Instrument, Term | 30 years | ||||||||||
Senior Notes, 3.75% due 2046 [Member] | Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | $ 400 | ||||||||||
Interest rate | 3.75% | 3.75% | |||||||||
Debt Instrument, Term | 30 years | ||||||||||
Senior Notes, 4.60% due 2045 [Member] | Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | $ 1,000 | ||||||||||
Interest rate | 4.60% | 4.60% | |||||||||
Debt Instrument, Term | 30 years | ||||||||||
Unsecured Senior Notes, 1.85% | Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | $ 500 | ||||||||||
Interest rate | 1.85% | 1.85% | |||||||||
Basis points | 0.10% | ||||||||||
Redemption price, percentage upon change of control | 101.00% | ||||||||||
Redemption price | 100.00% | ||||||||||
Debt issuance costs and discounts, net of amortization | $ 5 | ||||||||||
Term Loan Agreement, 0.05% [Member] | Yen Denominated Bank Term Loan | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal amount | ¥ | ¥ 9,000,000,000 | ||||||||||
Number of semi-annual principal payments | numberOfPayments | 4 | ||||||||||
Average interest rate | 0.05% |
DEBT - Schedule of Long-Term De
DEBT - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Feb. 29, 2020 | May 31, 2017 | May 31, 2016 | Sep. 30, 2015 |
Debt Instrument [Line Items] | ||||||
Other | $ 23 | $ 34 | ||||
Other, fair value | 23 | 34 | ||||
Long-term debt, gross | 2,404 | 2,421 | ||||
Long-term debt, gross, fair value | 2,694 | 2,983 | ||||
Less: Current maturities | (7) | (8) | ||||
Less current maturities, fair value | (7) | (8) | ||||
Debt issuance costs and discounts, net of amortization | (24) | (24) | ||||
Debt issuance costs and discounts, fair value | (24) | (24) | ||||
LONG-TERM DEBT (less current maturities) | 2,373 | 2,389 | ||||
Long-term debt, excluding current maturities, , fair value | 2,663 | 2,951 | ||||
Yen Denominated Bank Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | 81 | 87 | ||||
Long-term debt, gross | 81 | 87 | ||||
Senior Notes, 4.60% due 2045 [Member] | Senior notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | 1,201 | 1,343 | ||||
Long-term debt, gross | $ 1,000 | 1,000 | ||||
Interest rate | 4.60% | 4.60% | ||||
Senior Notes, 3.75% due 2046 [Member] | Senior notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | $ 422 | 479 | ||||
Long-term debt, gross | $ 400 | 400 | ||||
Interest rate | 3.75% | 3.75% | ||||
Senior Notes, 4.20% due 2047 [Member] | Senior notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | $ 452 | 514 | ||||
Long-term debt, gross | $ 400 | 400 | ||||
Interest rate | 4.20% | 4.20% | ||||
Unsecured Senior Notes, 1.85% | Senior notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | $ 515 | 526 | ||||
Long-term debt, gross | $ 500 | $ 500 | ||||
Debt issuance costs and discounts, net of amortization | $ 5 | |||||
Interest rate | 1.85% | 1.85% |
DERIVATIVE INSTRUMENTS - Narrat
DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Feb. 29, 2020 |
Derivative [Line Items] | |||
Derivative instruments and hedges, liabilities | $ 510 | $ 521 | |
Unsecured Senior Notes, 1.85% | Senior notes [Member] | |||
Derivative [Line Items] | |||
Interest rate | 1.85% | 1.85% | |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 500 | 500 | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 34 | $ 34 |
DERIVATIVE INSTRUMENTS - Schedu
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Derivative [Line Items] | |||
Interest expense, net | $ (21) | $ (21) | |
Other, net | 6 | 4 | |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Other Contract [Member] | |||
Derivative [Line Items] | |||
Interest expense, net | 10 | (18) | |
Other, net | 0 | 0 | |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Fair Value and Carrying Amounts | 10 | $ 21 | |
Interest expense, net | (10) | 18 | |
Other, net | 0 | 0 | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Other Contract [Member] | |||
Derivative [Line Items] | |||
Interest expense, net | 0 | 0 | |
Other, net | 0 | (2) | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | |||
Derivative [Line Items] | |||
Fair Value and Carrying Amounts | 2 | $ 2 | |
Interest expense, net | 0 | 0 | |
Other, net | $ 0 | $ 2 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 25.80% | (30.40%) |
INCOME TAXES INCOME TAXES - Rec
INCOME TAXES INCOME TAXES - Reconciliation of Income Tax Expense with Federal Income Taxes at the Statutory Rate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax | $ 72 | $ 35 |
State income taxes, net of federal income tax benefit | 9 | 4 |
Foreign rate difference | 7 | 3 |
Net tax benefit related to foreign subsidiaries | 0 | (85) |
Income tax expense | $ 88 | $ (43) |
Effective tax rate | 25.80% | (30.40%) |
DIVIDEND - Narrative (Details)
DIVIDEND - Narrative (Details) | Apr. 28, 2021$ / shares |
Subsequent event | |
Subsequent Event [Line Items] | |
Dividend declared (in dollars per share) | $ 1.62 |
SEGMENT INFORMATION - Summary o
SEGMENT INFORMATION - Summary of Segment Results (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Total net sales | $ 3,084 | $ 3,001 |
Segment operating earnings | 358 | 159 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total net sales | 3,019 | 2,851 |
Segment operating earnings | 361 | 349 |
Unallocated expense | ||
Segment Reporting Information [Line Items] | ||
Total net sales | 65 | 150 |
Segment operating earnings | (3) | (190) |
High-Touch Solutions (N.A.) | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total net sales | 2,397 | 2,355 |
Segment operating earnings | 306 | 314 |
Endless Assortment | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total net sales | 622 | 496 |
Segment operating earnings | $ 55 | $ 35 |