WW GRAINGER INC

Previous wording

The global economy continues to experience volatility and uncertainty including to the commodity, labor and transportation markets, arising from a combination of geopolitical conditions and events, and various economic and financial factors. These conditions have affected the Company's operations and may continue to affect the Company's business, financial condition and results of operations.

Current wording

The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors. Recent imposition of new and expanded tariffs have further contributed to disruptions in global capital markets and global supply chains. These developments may impact the Company’s operations, financial condition, and results of operations.

Previous wording

The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for three months ended September 30, 2024 and 2023 (in millions of dollars except per share amounts):

Current wording

The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for the three months ended March 31, 2025 and 2024 (in millions of dollars except per share amounts):

Previous wording

The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily, organic constant currency net sales from the prior period for the three months ended September 30, 2024 and 2023 (in millions of dollars):

Current wording

The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily, constant currency net sales from the prior period for the three months ended March 31, 2025 and 2024 (in millions of dollars):

Previous wording

Net sales of $4,388 million for the three months ended September 30, 2024 increased $180 million, or 4% on a reported and daily, organic constant currency basis, compared to the same period in 2023. Both High-Touch Solutions N.A. and the Endless Assortment segments contributed to sales growth in the third quarter of 2024. For further discussion on the Company's net sales, see the Segment Analysis section below.

Current wording

Net sales of $4,306 million for the three months ended March 31, 2025 increased $71 million, or 2%, and on a daily, constant currency basis, net sales increased 4% compared to the same period in 2024. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to daily, constant currency sales growth in the first quarter of 2025. For further discussion on the Company's net sales, see the Segment Analysis section below.

Previous wording

Gross profit of $1,720 million for the three months ended September 30, 2024 increased $65 million, or 4%, and gross profit margin of 39.2% decreased 10 basis points compared to the same period in 2023. For further discussion on the Company's gross profit, see the Segment Analysis section below.

Current wording

Gross profit of $1,710 million for the three months ended March 31, 2025 increased $42 million, or 3%, and gross profit margin of 39.7% increased 30 basis points compared to the same period in 2024. For further discussion on the Company's gross profit, see the Segment Analysis section below.

Previous wording

Selling, general and administrative (SG&A) expenses of $1,034 million for the three months ended September 30, 2024 increased $46 million, or 5%, compared to the same period in 2023. The increase was primarily due to higher marketing and payroll and benefit expenses in the third quarter of 2024. SG&A leverage decreased 20 basis points compared to the same period in 2023.

Current wording

Selling, general and administrative (SG&A) expenses of $1,038 million for the three months ended March 31, 2025 increased $39 million, or 4%, compared to the same period in 2024. The increase was primarily due to higher marketing expense in the first quarter of 2025.

Previous wording

Diluted earnings per share was $9.87 for the three months ended September 30, 2024, an increase of 5% compared to $9.43 for the same period in 2023.

Current wording

Diluted earnings per share was $9.86 for the three months ended March 31, 2025, an increase of 3% compared to $9.62 for the same period in 2024.

Previous wording

Net sales of $791 million for the three months ended September 30, 2024 increased $59 million, or 8%, and on a daily constant currency basis increased 12% compared to the same period in 2023. The increase was due to sales growth of 13%, driven by customer acquisition for the segment and enterprise growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 5% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Current wording

Net sales of $828 million for the three months ended March 31, 2025 increased $77 million, or 10%, and on a daily, constant currency basis increased 15% compared to the same period in 2024. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 3% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Previous wording

Operating earnings of $190 million for the nine months ended September 30, 2024 increased $12 million, or 7% compared to the same period in 2023.

Current wording

SG&A of $173 million for the three months ended March 31, 2025 increased $12 million, or 8%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses.

Previous wording

Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results. The Company adjusts its reported net sales when there are differences in the number of U.S. selling days relative to the prior year period and also excludes the impact on reported net sales due to changes in foreign currency exchange rate fluctuations and results of certain divested businesses. This includes the net sales results of E&R divested in the fourth quarter of 2023 previously reported in the High-Touch Solutions N.A. segment. Adjusted results including adjusted SG&A, adjusted operating earnings, adjusted net earnings and adjusted diluted EPS exclude certain non-recurring items, including restructuring charges, asset impairments, gains and losses associated with business divestitures and other non-recurring, infrequent or unusual gains and losses from the Company’s most directly comparable reported U.S. generally accepted accounting principles (GAAP) results. The Company believes its non-GAAP measures provide meaningful information to assist investors in understanding financial results and assessing prospects for future performance as they provide a better baseline for analyzing the ongoing performance of its businesses by excluding items that may not be indicative of core operating results. Grainger’s non-GAAP finan cial measures should be considered in addition to, and not as a replacement for or as a superior measure to its most directly comparable GAAP measures and may not be comparable to similarly titled measures reported by other companies.

Current wording

Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results.

Previous wording

The following tables provide reconciliations of reported net sales growth from the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, organic constant currency net salesfor the three months ended September 30, 2024 and 2023 (in millions of dollars):

Current wording

The following tables provide reconciliations of reported net sales growth from the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, constant currency net salesfor the three months ended March 31, 2025 and 2024 (in millions of dollars):

Previous wording

As of September 30, 2024 and December 31, 2023, Grainger had cash and cash equivalents of $1,448 million and $660 million, respectively. The Company had approximately $2.7 billion in available liquidity as of September 30, 2024.

Current wording

As of March 31, 2025 and December 31, 2024, Grainger had cash and cash equivalents of $666 million and $1,036 million, respectively. The Company had approximately $1.9 billion in available liquidity as of March 31, 2025.

Previous wording

Net cash provided by operating activities was $1,683 million and $1,427 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was driven by favorable changes in working capital primarily due to decreased accounts receivable driven by value added services compared to the prior year period.

Current wording

Net cash provided by operating activities was $646 million and $661 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was driven by unfavorable changes in working capital primarily due to inventory management and timing of cash payments compared to the prior year period.

Previous wording

Net cash used in investing activities was $262 million and $307 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was due to timing of capital expenditures driven by U.S. supply chain investments in the third quarter of 2024.

Current wording

Net cash used in investing activities was $125 million and $118 million for the three months ended March 31, 2025 and 2024, respectively. The increase was due to capital expenditures driven by continued U.S. supply chain investments in the first quarter of 2025.

Previous wording

Net cash used in financing activities was $615 million and $839 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in cash used in financing activities was primarily due to the issuance of long-term debt, which includes $500 million in unsecured senior notes partially offset by higher treasury stock repurchases in the third quarter of 2024.

Current wording

Net cash used in financing activities was $898 million and $391 million for the three months ended March 31, 2025 and 2024, respectively. The increase in cash used in financing activities was primarily due to the repayment of the 1.85% Senior Notes in the amount of $500 million.

Previous wording

Working capital as of September 30, 2024 was $3,112 million, an increase of $34 million compared to $3,078 million as of December 31, 2023. As of September 30, 2024 and December 31, 2023, the ratio of current assets to current liabilities was 2.7 and 2.8, respectively.

Current wording

Working capital as of March 31, 2025 was $3,198 million, a decrease of $84 million compared to $3,282 million as of December 31, 2024. As of March 31, 2025 and December 31, 2024, the ratio of current assets to current liabilities was 2.7 and 2.9, respectively.

Previous wording

Total debt as a percent of total capitalization was 41.9% and 40.1% as of September 30, 2024 and December 31, 2023, respectively.

Current wording

Total debt as a percent of total capitalization was 37.2% and 42.9% as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

From time to time in this Quarterly Report on Form 10-Q as well as in other written reports, communications and verbal statements, Grainger makes forward-looking statements that are not historical in nature but concern forecasts of future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “estimate,” “believe,” “expect,” “could,” “may,” "continue," “plan,” “predict,” “will,” or “would,” and similar terms and phrases, including references to assumptions.

Current wording

From time to time in this Quarterly Report on Form 10-Q as well as in other written reports, communications and verbal statements, Grainger makes forward-looking statements that are not historical in nature but concern forecasts of future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will,” or “would,” and similar terms and phrases, including references to assumptions.

Previous wording

Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; the impact of macroeconomic pressures and geopolitical trends, changes and events; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to Grainger’s eCommerce platforms; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger’s responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the Internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger’s common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; outbreaks of pandemic disease or viral contagions; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key team members; loss of key members of management or key team members; loss of operational flexibility and potential for work stoppages or slowdowns if team members unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger’s incurrence of indebtedn…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Grainger cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond Grainger's control, which could cause Grainger's results to differ materially from those that are presented. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third-party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including existing, new, or increased tariffs, trade issues and changes in trade policies, inflation, and interest rates; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; effects of outbreaks of pandemic disease or viral contagions, global conflicts, natural or human induced disasters, extreme weather, and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executi…

Excerpt shortened here; the source contains the full paragraph.