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DG Macpherson p
Senior Vice President and President, Global Supply Chain and Strategy
June 2012
Forward-Looking Statements
This presentation contains statements that are forwardlooking; i.e., not historical facts. The forward-looking g; , g statements are based on the companys current expectations, and some of them are subject to risks and uncertainties the outcome of which could result in actual future performance being materially different from the performance indicated. They should be considered in conjunction with the companys most recent annual report company s report, as well as the companys Form 10-K and other reports filed with the Securities and Exchange Commission containing a discussion of the companys business and of company s various factors that may affect it.
June 2012
Agenda
Grainger Overview Americas S A i Supply Ch i l Chain Leveraging Global Scale g g The California Market and Patterson DC Tour
June 2012
About Grainger
Founded in Chicago, 1927 2011 revenues of $8.1 billion Distributor of maintenance, repair and operations (MRO) products; industry leader Growing international presence ~ 25% in 2012E
June 2012
Global Market
Worldwide MRO Market est. ~$575 Billion USD
North America
Asia Pacific
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Multi-Channel Advantage
Multiple
Large 74%
Channels Medium 21%
*Based on 2011 U.S. segment sales g
Small 5%
Single <1%
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Share of Wallet
25%
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Corporate Priorities
Product Breadth and Availability Customer coverage Inventory management eCommerce Supply chain / IT scale
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June 2012
2005
2011
2014 2016 E
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Greenville DC Improvements
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Canada
Mexico
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2007
2011
2007
2011
2007
2011
2007
2011
defect rate
minutes i t
$ per li line
40
Gross Profit % t
30
20
10
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total Company
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Information Technology
Leveraging technology across borders - Inventory and product information systems - Migrating to common warehouse systems Americas SAP to drive leverage and scalability
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June 2012
Leveraging Scale
Total Company Operating Margin*
16.0%
Margin Drivers Purchasing leverage P h i l Private label North American supply chain Back office consolidation y Quality/LEAN Americas SAP
*Excluding unusual items
15%
13.3% 11.5%
10%
9.4%
5%
June 2012
Hector Vega g
Director, Distribution
June 2012
June 2012
New York
Maryland
SFDC
Kentucky
Virginia
North Carolina Arizona New Mexico Texas Oklahoma Arkansas South Carolina Tennessee
Alaska
Florida
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June 2012
SFDC Objectives
Customer Service Enhancements
Puts more products closer to West Coast customers to improve availability a d tu a ou d times p o e a a ab ty and turnaround t es University of California Facebook Stanford
Cost Savings C tS i
Positions inventory closer to customers to lower transportation costs Enables SFDC to serve as Grainger Global Sourcing (GGS) import DC, reducing transportation and double-handling costs
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Productivity Improvements
Designed for optimal productivity Incorporates learnings from ongoing Continuous Improvement efforts across the network, as well as the best design and material handling systems Inbound Outbound
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FACILITY TOUR
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APPENDIX
June 2012
1% 2% 12% 10%
0% 1% - 2% 9% - 14% 8% 12%
2012E
5% 8% 9% 4% 3
6% 16% 18% 9% 69
9% 15% 17% 9% 30
TSR shown includes EPS growth and dividend yield; it does not include changes in P/E multiple. 2012 NWQ 11% without Fabory. 2012 guidance of 12 14% sales growth and EPS of $10.40 - $10.80 as of 4/17/12 is reflected as midpoint of range.
Capital Allocation
More cash to return to shareholders and invest in the business
$ BIllions B
2002 - 2006
2007 - 2011
100 84 80 70 60 40
17% reduction
$2.50
$1.11 $1.00
20 0
$0.50 $0.00
2006
2011
2006
2011
40% reduction in shares outstanding since 1984 41 consecutive years of increased dividends
40%
30%
20%
10%
w/o Fabory
Low
June 2012
IR Contacts
Laura D. Brown Senior Vice President, Communications & Investor Relations Laura.Brown@grainger.com Laura Brown@grainger com 847.535.0409 William D. Chapman Senior Director, Investor Relations William.Chapman@grainger.com 847.535.0881
June 2012