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Acklands-Grainger Closes WFS Deal

Sept. 5, 2014
Grainger reported in its press release that its Acklands business continues to face the adverse effects of a sluggish macroeconomic environment and unfavorable currency exchange, and that revenues from the business dipped 8.5% (down 3% in local currency) to $264 million in the second quarter.

W.W. Grainger Inc.’s Canadian business, Acklands-Grainger, closed the acquisition of Windsor, Ontario-based WFS Enterprises Inc., a distributor of tools and supplies for industrial markets in southern Ontario and select U.S. locations. 

 Acklands-Grainger had previously announced its intention to acquire WFS in July to provide an enhanced source of supply to customers, particularly those in eastern Canada and the manufacturing sector. Founded in 1955, WFS currently has a portfolio of more than 100,000 maintenance, repair and operating (MRO) products and generated sales of approximately $87 million in 2013. Its products are mainly focused on safety, metalworking, plumbing, and hand and power tools.  The company has 12 locations including 10 branches in southwest Ontario, and two locations in the U.S., in Michigan and South Carolina, with a total workforce of 275 people. Grainger said its Acklands business unit is Canada’s largest distributor of industrial, safety and fastener products and that it offers more than 350,000 products from its 171 branches and six distribution centers. 

According to the press release announcing the completion of the deal, the Grainger parent company continues to grow through acquisitions. The company funded $154 million worth of acquisitions in 2013. In a move to grow stronger in the manufacturing arena and boast metalworking experts, Grainger acquired E&R Industrial Sales, Inc., Sterling Heights, Mich., in Aug. 2013.

Grainger reported in its press release that its Acklands business continues to face the adverse effects of a sluggish macroeconomic environment and unfavorable currency exchange, and that revenues from the business dipped 8.5% (down 3% in local currency) to $264 million in the second quarter. Among the end-markets where the company saw growth were the commercial, forestry, utilities, transportation, heavy manufacturing and retail segments. This was offset by weakness in the construction, mining, oil and gas, government, light manufacturing and reseller customer end markets. Operating income plunged 48% (down 45% in local currency) to $19.2 million, hurt by lower sales and gross margins and negative expense leverage.

 The press release said weak performance in this business will be offset by ongoing positive momentum in the United States segment as well as benefits from Grainger’s focus on expanding its product offerings, sales force as well as the share of its private label products. Moreover, Grainger continues to invest in e-commerce and expects to increase the number of customers utilizing this channel and its percentage of overall sales.

Grainger has 709 branches, 23,700 employees and $9.4 billion in 2013 annual sales. With at least 16% of the company’s total annual sales in electrical products, the company does at least $1.4 billion in electrical sales annually.  Growth in the company’s stock price year-to-date and over the past year has been flat. After a dip to the $230-per-share range last month, the shares are back around $250, where they had been about a year ago and where they were in early January.

In other news at Grainger, the company says  its new data center in Lake Forest is the first to be certified by the U.S, Green Building Council’s new LEED green building standards for data centers. According to a Grainger press release, this data center features an advanced cooling system where the energy used for cooling the facility is controlled by strictly managing the air flow, using outside air to cool the facility. As a result, Grainger expects the new data center to consume up to 50% less energy for cooling than similar data centers.

Data centers usually run nonstop, which means these facilities can consume up to 200 times more electricity than typical office spaces. Most of this energy is used to cool the building as temperatures from IT equipment housed in a data center can reach more than 100 degrees Fahrenheit. The Grainger data center’s air cooling design is anticipated to have a best-in-class PUE rating of 1.2 at full capacity; the industry average is 2.0. Throughout planning and construction, Grainger’s project team partnered with the U.S. Green Building Council to provide feedback about the new v4 BD+C standards, which were finalized more than seven months after the project broke ground. The team worked quickly to incorporate the new standards into the certification process.