W.W. Grainger, Inc. (GWW)

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W.W. Grainger, Inc. (GWW)

November 2011 Sales Release Call

December 12, 2011 8:00 a.m. ET

Executives

Bill Chapman - Director of Investor Relations

Presentation

Bill Chapman

Hi, this is Bill Chapman, Director of Investor Relations for Grainger. Thank you for accessing this recorded message with information regarding Grainger’s November 2011 sales results. I’ll begin by reminding you that certain statements and projections of future results made in this webcast constitute forward-looking information. This information is based on current expectations of market conditions and competitive and regulatory environments and involves risk and uncertainty. Please see our 2010 Form 10-K for a discussion of factors as they relate to forward-looking statements.

Let’s now take a look at our sales results for November 2011, which had 21 selling days, the same as November 2010. Total company sales increased 15% versus November 2010. Included in these results was a 5 percentage point contribution from acquisitions, primarily due to the Fabory business acquired August 31. Foreign exchange was not a material factor for the month. Excluding acquisitions, organic sales increased 10%, including 10 percentage points from volume and 2 percentage points from price, partially offset by a 2 percentage point decline from 2010 oil spill related sales. The exhibit at the end of the podcast script provides a summary of the contribution from the oil spill related sales last year.

Now let’s turn our attention to sales results by segment. As a reminder, monthly sales history by reporting segment for the prior 2 years is available on the Investor Relations website, along with a summary of selling days by month and by business. Please note that although some of our businesses have a different number of selling days due to local holidays, we use the number of selling days in the United States as the basis for our calculation of daily sales.

I’ll begin with our largest segment, the United States. Sales for the U.S. segment increased 9%, consisting of 8 percentage points of volume and 3 percentage points from price, partially offset by a 2 percentage point decline from oil spill related sales in 2010. Sales for our customer end markets in the United States were as follows. Heavy Manufacturing was up in the mid-teens, Commercial was up in the low double digits, Retail was up in the high single digits, Light Manufacturing, Contractor and Government were up in the mid single digits, and Reseller was down in the low double digits. As a reminder, sales related to the oil spill in 2010 are included in the Reseller category, a group made up of Reseller and Ag and mining end markets, which includes Grainger’s oil and gas customers.

In our Canadian segment, sales increased 14% in U.S. currency, including a 13 percentage point contribution from volume and a 2 percentage point contribution from acquisitions, offset by 1 percentage point decline from foreign exchange. Strong growth to customers in the construction, agriculture and mining, and heavy manufacturing end markets contributed to this strong sales performance. Sales for the Canadian segment increased 15% in local currency.

Sales for our other businesses increased 97%, primarily due to the incremental sales from Fabory. Excluding acquisitions, sales for our other businesses increased 23%, driven primarily by strong growth in Japan, Mexico and China. Looking forward, December will have 21 selling days, the same as December of last year. Sales growth in early December is trending below the growth seen in November.

As a reminder, we are facing tougher comparisons in December than we had in November, including a 3 percentage point headwind from oil spill related sales as well as a 1 percentage point drag from strong sales of seasonal products in December of 2010. The relative strength of the U.S. dollar, particularly versus the Canadian dollar, is also emerging as a potential headwind in contrast to the tailwind we have enjoyed for the majority of the year.

Finally, please mark your calendar for our fourth quarter earnings release on Wednesday, January 25. If you have any questions, please contact Laura Brown, Senior Vice President, Communications and Investor Relations, at 847-535-0409 or me at 847-535-0881. Thank you.

Question-and-Answer Session

[No Q&A for this event]

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