W.W. GRAINGER, INC.

Previous wording

Grainger is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and the U.K. Grainger uses a combination of its high-touch solutions and endless assortment businesses to serve its customers worldwide, which rely on Grainger for products and services that enable them to run safe, sustainable and productive operations.

Current wording

Grainger is a broad line distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America and Japan. In the fourth quarter of 2025, Grainger exited the U.K. market by completing the sale of the Cromwell business and closing the Zoro U.K. business. Grainger uses a combination of its high-touch solutions and endless assortment businesses to serve its customers worldwide, which rely on Grainger for products and services that enable them to run safe, sustainable and productive operations.

Previous 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 fluctuating 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.

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 that can influence demand, cost and execution risk. These dynamics, together with recent changes in U.S. and foreign tariff and trade policies, continue to drive intermittent disruptions in global capital markets and supply chains. These developments may impact the Company’s operations, business, financial condition, and results of operations.

Previous wording

The Company is actively monitoring economic conditions in the U.S. and internationally, including the potential ramifications of evolving trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession. In response to these factors, the Company has implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and supply chain challenges, while continuing to maintain market price competitiveness to the extent possible.

Current wording

The Company is actively monitoring economic conditions in the U.S. and key international markets, including the continued uncertainty regarding evolving tariff and trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession. Although the precise timing and magnitude of these factors remains uncertain, the Company believes its strategy is well positioned to navigate a range of outcomes. The Company continues to evaluate the impact of evolving tariff and trade policies, including potential changes in product sourcing strategies, cost management and customer pricing, and has implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and challenges in our supply chain, while striving to maintain market competitiveness.

Previous wording

Historically, the Company's broad and diverse customer base and the generally nondiscretionary nature of its products have provided a degree of resilience during periods of economic contraction in the industrial MRO market. However, the ultimate impact of ongoing macroeconomic conditions, including recent, unprecedented tariff-related developments and shifting government budget policies and priorities at the municipal, state, and national levels, remains uncertain and cannot be predicted at this time, but may impact the Company’s operations, financial condition, and results of operations.

Current wording

Historically, the Company's broad and diverse customer base and the generally nondiscretionary nature of its products have provided a degree of resilience during periods of economic contraction in the industrial MRO market. The full extent and impact of ongoing macroeconomic conditions, including recent, heightened regional military conflict, unprecedented tariff-related developments and shifting government budget policies and priorities at the municipal, state, and national levels, remain uncertain and cannot be predicted at this time, but may affect the Company’s operations, business, financial condition and results of operations.

Previous wording

In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measure, see "Non-GAAP Measures." For further segment information, see Note 7 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.

Current wording

In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."

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, constant currency net sales from the prior period for the three months ended September 30, 2025 and 2024 (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, organic constant currency net sales compared to the prior year period for the three months ended March 31, 2026 and 2025 (in millions of dollars):

Previous wording

Net sales of $4,657 million for the three months ended September 30, 2025 increased $269 million, or 6%, and on a daily, constant currency basis, net sales increased 5% compared to the same period in 2024. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to sales growth in the third quarter of 2025. For further discussion on the Company's net sales, see the Segment Analysis section below.

Current wording

Net sales of $4,742 million for the three months ended March 31, 2026 increased $436 million, or 10%, and on a daily, organic constant currency basis, net sales increased 12% compared to the same period in 2025. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to sales growth in the first quarter of 2026. For further discussion on the Company's net sales, see the Segment Analysis section below.

Previous wording

Gross profit of $1,798 million for the three months ended September 30, 2025 increased $78 million, or 5%, and gross profit margin of 38.6% decreased 60 basis points compared to the same period in 2024. For further discussion on the Company's gross profit, see the Segment Analysis section below.

Current wording

Gross profit of $1,896 million for the three months ended March 31, 2026 increased $186 million, or 11%, and gross profit margin of 40.0% increased 30 basis points compared to the same period in 2025. 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 $1,287 million for the three months ended September 30, 2025 increased $253 million, or 25%, compared to the same period in 2024. Adjusted SG&A expenses of $1,091 million increased $57 million, or 6%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses in the third quarter of 2025.

Current wording

Selling, general and administrative (SG&A) expenses of $1,103 million for the three months ended March 31, 2026 increased $65 million, or 6%, compared to the same period in 2025. The increase was due to higher payroll and benefit expenses in the first quarter of 2026 partially offset by a benefit related to the exit from the U.K. market in the fourth quarter of 2025.

Previous wording

Income taxes of $481 million for the nine months ended September 30, 2025 increased $11 million, compared to the same period in 2024. Adjusted income taxes increased $7 million, compared to the same period in 2024. Grainger's effective tax rates were 26.6% and 24.0% for the nine months ended September 30, 2025 and 2024, respectively. The adjusted effective tax rate was 24.0% for the nine months ended September 30, 2025 and 2024.

Current wording

Income tax expense of $194 million for the three months ended March 31, 2026 increased $37 million compared to the same period in 2025. Grainger's effective tax rates were 25.1% and 23.9% for the three months ended March 31, 2026 and 2025, respectively. The Company's effective tax rate increase was primarily due to decreased tax credit activity in the current year period and the impact of tax legislation effective in 2026.

Previous wording

Diluted earnings per share was $6.12 for the three months ended September 30, 2025, a decrease of 38% compared to $9.87 for the same period in 2024. Adjusted diluted earnings per share increased 3% for the same period in 2024.

Current wording

Diluted earnings per share was $11.65 for the three months ended March 31, 2026, an increase of 18% compared to $9.86 for the same period in 2025.

Previous wording

Net sales of $935 million for the three months ended September 30, 2025 increased $144 million, or 18%, 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.

Current wording

Net sales of $990 million for the three months ended March 31, 2026 increased $162 million, or 20%, and on a daily, organic constant currency basis increased 22% compared to the same period in 2025. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO.

Previous wording

Gross profit of $803 million for the nine months ended September 30, 2025 increased $121 million, or 18%, and gross profit margin of 29.8% increased 40 basis points compared to the same period in 2024.

Current wording

Gross profit of $297 million for the three months ended March 31, 2026 increased $52 million, or 21%, and gross profit margin of 30.0% increased 40 basis points compared to the same period in 2025.

Previous wording

SG&A expenses of $2,575 million for the nine months ended September 30, 2025 increased $65 million, or 3%, compared to the same period in 2024. Adjusted SG&A expenses increased $80 million, or 3%. The increase was primarily due to higher marketing and payroll and benefit expenses in 2025.

Current wording

SG&A expenses of $192 million for the three months ended March 31, 2026 increased $19 million, or 11%, compared to the same period in 2025. The increase was primarily due to higher marketing and payroll and benefit 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. 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 ofcore operating results and comparability. 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. 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 rates and results of certain divested or closed businesses. This includes the net sales results of the divested Cromwell business and closed Zoro U.K. business, within Other and Endless Assortment, respectively, announced in the third quarter of 2025 and completed in the fourth quarter of 2025. 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 or closures 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 financial 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.

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, constant currency net salesfor the three months ended September 30, 2025 and 2024 (in millions of dollars):

Current wording

The following tables provide reconciliations of reported net sales growth compared to 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 March 31, 2026 and 2025 (in millions of dollars):

Previous wording

Grainger believes its current balances of cash and cash equivalents, marketable securities, and availability under its revolving credit facility will be sufficient to meet its liquidity needs for the next twelve months. The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.

Current wording

Grainger believes its current balances of cash and cash equivalents, marketable securities, and availability under its revolving credit facility, which supports the Company's commercial paper program, will be sufficient to meet its liquidity needs for the next twelve months. The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.

Previous wording

As of September 30, 2025 and December 31, 2024, Grainger had cash and cash equivalents of $535 million and $1,036 million, respectively. The Company had approximately $1.8 billion in available liquidity as of September 30, 2025.

Current wording

As of March 31, 2026 and December 31, 2025, Grainger had cash and cash equivalents of $695 million and $585 million, respectively. The Company had approximately $1.9 billion in available liquidity as of March 31, 2026.

Previous wording

Net cash used in investing activities was $543 million and $262 million for the nine months ended September 30, 2025 and 2024, respectively. The increase was due to capital expenditures driven by continued U.S. and MonotaRO supply chain investments in the first nine months of 2025.

Current wording

Net cash used in investing activities was $178 million and $125 million for the three months ended March 31, 2026 and 2025, respectively. The increase was due to capital expenditures primarily driven by continued MonotaRO supply chain investments in the first three months of 2026.

Previous wording

Net cash used in financing activities was $1,599 million and $615 million for the nine months ended September 30, 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.

Current wording

Net cash used in financing activities was $446 million and $898 million for the three months ended March 31, 2026 and 2025, respectively. The decrease in cash used in financing activities was primarily due to the repayment of the 1.85% Senior Notes in the amount of $500 million in 2025.

Previous wording

Working capital as of September 30, 2025 was $3,347 million, an increase of $65 million compared to $3,282 million as of December 31, 2024. As of September 30, 2025 and December 31, 2024, the ratio of current assets to current liabilities was 2.8 and 2.9, respectively.

Current wording

Working capital as of March 31, 2026 was $3,490 million, a decrease of $25 million compared to $3,515 million as of December 31, 2025. As of March 31, 2026 and December 31, 2025, the ratio of current assets to current liabilities was 2.6 and 3.0, respectively.

Previous wording

Total debt as a percent of total capitalization was 37.4% and 42.9% as of September 30, 2025 and December 31, 2024, respectively.

Current wording

Total debt as a percent of total capitalization was 35.7% and 37.5% as of March 31, 2026 and December 31, 2025, respectively.

Previous 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.

Current 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; 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, including new or revised provisions relating to contract compliance or performance; 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; an incident that adversely impacts Grainger’s reputation or brand; 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 corporate responsibility efforts; 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 uni…

Excerpt shortened here; the source contains the full paragraph.