Grainger 3Q profit falls 15 pct, misses Street

CHICAGO -- W.W. Grainger Inc., which sells power tools and other industrial equipment, said Tuesday that its third-quarter net income fell 15 percent, in part because it set aside money for an anticipated settlement related to some government contracts.

The Chicago-based company's quarterly results missed Wall Street's expectations and it cut its full-year revenue forecast, citing the sluggish global economy.

The stock declined $10.91, or 5.1 percent, to $204.95 in premarket trading.

For the three months ended Sept. 30, Grainger earned $155.4 million, or $2.15 per share. That's down from $182.1 million, or $2.51 per share, in the prior-year period.

Taking out a $70 million, or 66 cents per share, reserve for an expected settlement with the Justice Department related to pricing issues for some government contracts with the U.S. Postal Service and General Services Administration, earnings were $2.81 per share.

Analysts, on average, expected earnings of $2.89 per share, according to FactSet.

Revenue rose 8 percent to $2.28 billion, from $2.11 billion last year, helped by acquisitions.

Wall Street predicted revenue of $2.32 billion, on average.

Sales in the U.S. climbed 4 percent, driven by price increases and market share gains in the heavy manufacturing, light manufacturing, commercial, government and retail end markets.

Sales in its Acklands-Grainger Canadian unit rose 10 percent, reflecting higher prices and volume growth. The segment saw gains selling to customers in the commercial services, oil and gas, forestry, contractor and utilities markets.

Sales for other businesses, including operations in Asia, Europe and Latin America, jumped 54 percent, helped by contributions from businesses acquired in Europe and Brazil.

Grainger still expects full-year earnings of $10.50 to $10.80 per share. It now anticipates a revenue increase of 11 percent to 12 percent, implying $8.97 billion to $9.05 billion. The company previously predicted that revenue would rise 12 percent to 14 percent, which implied $9.05 billion to $9.21 billion.

Analysts, on average, forecast earnings of $10.61 per share, with estimates ranging from $10.50 to $10.70.

Wall Street expects revenue of $9.02 billion, on average, with estimates ranging from $8.93 billion to $9.08 billon.