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Grainger to Draw $1B from Credit Facility

The funds will support the MRO supply giant's cash position amid market uncertainty caused by the COVID-19 pandemic.

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MRO products distribution giant Grainger announced Tuesday that it is tapping into its revolving credit facility to boost its cash position amid market volatility caused by the COVID-19 pandemic.

Grainger said it will draw down $1 billion of credit "as a proactive measure to increase the company's cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. The funds will supplement the company's strong cash position."

"Our priority remains the health and safety of our team members and customers as we continue to navigate this uncertain period," said DG Macpherson, Grainger Chairman and CEO. "Grainger's financial position is strong. However, in an abundance of caution and as a proactive measure, we are taking prudent actions to increase our liquidity and financial flexibility. We remain committed to providing superior customer service and maintaining high-levels of inventory and to support our customers through this pandemic and beyond."

After the draw down, Grainger expects to have approximately $1.5 billion of cash on hand and approximately $250 million of available capacity remaining in the credit facility.

The due date for the credit facility's principle balance of borrowings is Feb. 14, 2025, and Grainger said it does not have any material debt maturities prior to that date.

"With the actions taken today, the company believes it will have sufficient liquidity to navigate through this period of heightened uncertainty," Grainger said.

Grainger reported its 2019 full-year financials on Jan. 30, showing that total 2019 sales of $11.49 billion increased 2.4 percent over 2018, with daily sales up approximately 3 percent. 2019 operating profit of $1.26 billion increased approximately 9 percent, while net profit of $849 million increased 8 percent. Q4 total sales of $2.85 billion were up 3.0 percent year-over-year, with daily sales up approximately that same amount, driven by a 3.5 percentage point rise in volume. Q4 net profit of $103 million was less than half of a year earlier ($209 million), though Q4 included a $120 million write-down of of the remaining assets of the recently-acquired Cromwell business.

The credit usage announcement comes four weeks after Grainger announced the cancellation of its annual Grainger Show, which was to be held March 15-17 in Orlando. Held each year recently at the Orange County Convention Center, Grainger Show serves as the convention and exhibition for its supplier partners and employees. The 2019 event included 2,400 exhibitors, 550 exhibitor booths, 4,400 Grainger team members and about 6,000 total customers in attendance. The show also includes numerous industry-specific seminars and accredit sessions and provides an overall major networking opportunity for all things Grainger and MRO. Essentially every other industrial supply-centric trade show canceled their events in the two or three weeks after, or re-formated their event to be held online.

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