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W.W. Grainger Inc., Chicago, IL, industrial supplier of products to maintain, repair and operate facilities, expects revenues from its market-expansion program sites to grow from more than $120 million to more than $245 million in 2006.
Group President James T. Ryan provided an update on the company's multi-year market expansion program at its annual analyst meeting Wednesday in Houston. The company raised its forecast for program-related sales and earnings for 2005 through 2013.
Grainger has been expanding its market since 2004, when it started the first phase of its market-expansion program to Atlanta, Denver and Seattle. The goal was to increase the number of local reps and local branches to better penetrate certain markets. The second phase includes four markets in Southern California, and the third includes Houston, St. Louis and Tampa. Market expansion in Phase I was finished in the first quarter of 2005, while Phase II is 90% complete and Phase III is 70% complete, according to Grainger.
By 2013, we now expect this program to deliver approximately $1.1 billion in sales and $200 million in operating earnings,"" Ryan said. He added that the company plans to make its product line even broader, with new products expected to contribute about 1 percentage point to sales growth next year.
Chairman and CEO Richard L. Keyser announced the company is raising its long-term operating margin target to a range of 10% to 12% from the previously stated range of 9% to 10%.
CFO P. Ogden Loux said sales this year are expected to reach $5.5 billion. The company recently announced that daily sales in October 2005 were up 11% versus October 2004.
For 2006, the company expects revenues to grow 8% to 11%. The company's forecast is based on economic assumptions of GDP and industrial production growth of 3% to 4% for 2006. Cash flow from operations for 2006 is expected to be from $425 million to $475 million, with planned uses including funding capital expenditures of $140 to $175 million and share repurchases of $150 to $200 million.Presentations from the meeting are available on the investor relation's section of Grainger's Web site. Grainger has nearly 600 branches, 18 distribution centers and several Web sites.