W.W. Grainger Inc., a Lake Forest-based supplier of facilities maintenance products, boosted its net earnings by 28 percent on record sales, exceeding analysts’ expectations. The stock bucked the broad market pullback to rise 3.6 percent Tuesday.

The company earned $140 million, or $1.79 per diluted share, in the third quarter ended Sept. 30, compared with a profit of $109.2 million, or $1.29 per diluted share, in the year-earlier period. Analysts expected $1.53 per diluted share, Bloomberg reported.

James T. Ryan, president and CEO of Grainger, raised its earnings guidance for the full year to $6.00 to $6.20 per diluted share from $5.80 to $6.10 per diluted share. Analysts expect $5.90, according to Bloomberg.

Revenues rose 11 percent to $1.84 billion from $1.66 billion. Sales growth was largely driven by the inflation of sales prices, which contributed about four percentage points, and by the company’s two main growth programs for market and product line expansion, said Laura Brown, vice president of investor relations, in a podcast released with the earnings report. She said sales prices were raised in anticipation of higher prices from suppliers later in the year.

“Despite what is happening in the economy, these customers still have to maintain and repair their buildings and Grainger is well positioned to help them,” Director of Investor Relations William Chapman said in the podcast. He said the company’s addition of 150,000 products since 2006 and one million square feet of space makes Grainger attractive to businesses looking for a “one stop shop” to buy maintenance and repair supplies.

The higher earnings per share is largely due to share buyback activity, in addition to the increase in net earnings, according to Brown. The company repurchased 350,000 shares for $29 million in the third quarter and 4.3 million shares over the past year, said Brown. Approximately 8.8 million more shares may be repurchased under the current authorization.

Chapman said the company expects lower earnings per share in the fourth quarter because of lower sales, higher prices from suppliers, a disadvantageous foreign exchange rate and one fewer selling day. The company will also no longer have the benefit of a declining share count.

The company’s interest expense was $4.4 million in the third quarter, six times the $721,000 in the year-earlier period, due to a $500 million four-year term loan announced in May.

For the nine months ended Sept. 30, Grainger had net earnings of $367.4 million, or $4.65 per diluted share, compared with $315.7 million, or $3.67 per diluted share, in the year-earlier period. Revenues were $5.3 billion compared with $4.8 billion.

Analyst Brent Rakers at Morgan Keegan & Co. Inc. raised his 2008 earnings per share estimate to $6.23 from $6.02 because of the surprise earnings. He said the largest component of the unexpected earnings came from the company's lower than expected operating expenses due to a decrease in advertising, lower bad debt expense and lower than expected unallocated expense, according to the research note. He raised his 2009 forecast to $6.75 from $6.60.

Grainger operates 460 branches across the U.S., Mexico, China and Panama. The company opened its one branch in Mexico and one in Panama last quarter, and closed six will-call expresses, or non-inventory carrying branches, in China. Grainger has approximately 18,000 employees worldwide.

The company’s stock closed at $83.40, up $2.95.