ThZeal - The Zeal

gww-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission file number 1-5684

W.W. Grainger, Inc.

(Exact name of registrant as specified in its charter)

Illinois

36-1150280

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

100 Grainger Parkway

Lake Forest,

Illinois

60045-5201

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (847) 535-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock	GWW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 47,832,244 shares of the Company’s Common Stock outstanding as of July 25, 2025.


	TABLE OF CONTENTS
		Page
	PART I - FINANCIAL INFORMATION

Item 1:	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Earnings for the Three and Six Months Ended June 30, 2025 and 2024	3
	Condensed Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended June 30, 2025 and 2024	4
	Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024	6
	Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4:	Controls and Procedures	30

	PART II - OTHER INFORMATION

Item 1:	Legal Proceedings	31
Item 1A:	Risk Factors	31
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 5:	Other Information	31
Item 6:	Exhibits	32
Signatures		33

PART I – FINANCIAL INFORMATION

Item 1: Financial Statements

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In millions of dollars and shares, except for per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Net sales	$	4,554	$	4,312	$	8,860	$	8,547
Cost of goods sold	2,799		2,618		5,395		5,185
Gross profit	1,755		1,694		3,465		3,362
Selling, general and administrative expenses	1,077		1,045		2,115		2,044
Operating earnings	678		649		1,350		1,318
Other expense (income):
Interest expense – net	20		20		41		41
Other – net	(3)		(7)		(9)		(14)
Total other expense – net	17		13		32		27
Earnings before income taxes	661		636		1,318		1,291
Income tax provision	153		146		310		304
Net earnings	508		490		1,008		987
Less net earnings attributable to noncontrolling interest	26		20		47		39
Net earnings attributable to W.W. Grainger, Inc.	$	482	$	470	$	961	$	948
Earnings per share:
Basic	$	9.99	$	9.54	$	19.87	$	19.20
Diluted	$	9.97	$	9.51	$	19.83	$	19.13
Weighted average number of shares outstanding:
Basic	48.0		49.0		48.1		49.1
Diluted	48.1		49.2		48.2		49.3

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions of dollars)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Net earnings	$	508	$	490	$	1,008	987
Other comprehensive earnings (losses):
Foreign currency translation adjustments	75		(57)		113		(111)


Postretirement benefit plan losses – net of tax expense of $1, $1, $2, and $2, respectively	(4)		(4)		(6)		(7)

Total other comprehensive earnings (losses)	71		(61)		107		(118)
Comprehensive earnings – net of tax	579		429		1,115		869
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	26		20		47		39
Foreign currency translation adjustments	15		(20)		32		(42)
Total comprehensive earnings (losses) attributable to noncontrolling interest	41		—		79		(3)
Comprehensive earnings attributable to W.W. Grainger, Inc.	$	538	$	429	$	1,036	$	872

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except for share and per share amounts)


	As of
Assets	(Unaudited) June 30, 2025		December 31, 2024
Current assets
Cash and cash equivalents	$	597	$	1,036
Accounts receivable (less allowance for credit losses of $34 and $32, respectively)	2,472		2,232
Inventories – net	2,357		2,306
Prepaid expenses and other current assets	224		163


Total current assets	5,650		5,737
Property, buildings and equipment – net	2,107		1,927

Goodwill	365		355
Intangibles – net	267		243
Operating lease right-of-use	355		371
Other assets	193		196
Total assets	$	8,937	$	8,829

Liabilities and shareholders' equity
Current liabilities

Current maturities	$	2	$	499
Trade accounts payable	1,204		952
Accrued compensation and benefits	260		324

Operating lease liability	81		78
Accrued expenses	414		407
Income taxes payable	41		45
Total current liabilities	2,002		2,305
Long-term debt	2,341		2,279
Long-term operating lease liability	305		327
Deferred income taxes and tax uncertainties	102		101
Other non-current liabilities	104		114
Shareholders' equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding	—		—
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued	55		55
Additional contributed capital	1,414		1,399
Retained earnings	14,429		13,677
Accumulated other comprehensive losses	(199)		(274)
Treasury stock, at cost – 61,749,526 and 61,326,349 shares, respectively	(12,025)		(11,499)
Total W.W. Grainger, Inc. shareholders’ equity	3,674		3,358
Noncontrolling interest	409		345
Total shareholders' equity	4,083		3,703
Total liabilities and shareholders' equity	$	8,937	$	8,829

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)


	Six Months Ended
	June 30,
	2025		2024
Cash flows from operating activities:
Net earnings	$	1,008	$	987
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	13		12
Deferred income taxes and tax uncertainties	1		15
Depreciation and amortization	125		116
Non-cash lease expense	41		41


Stock-based compensation	35		34


Change in operating assets and liabilities:
Accounts receivable	(212)		(205)
Inventories	(19)		71
Prepaid expenses and other assets	(33)		(42)
Trade accounts payable	231		184
Operating lease liabilities	(53)		(47)
Accrued liabilities	(60)		(18)
Income taxes – net	(37)		(62)
Other non-current liabilities	(17)		(14)

Net cash provided by operating activities	1,023		1,072
Cash flows from investing activities:
Capital expenditures	(300)		(195)
Proceeds from sale of assets	4		1
Other – net	13		17


Net cash used in investing activities	(283)		(177)
Cash flows from financing activities:



Proceeds from debt	63		3
Payments of debt	(503)		(17)
Proceeds from stock options exercised	2		10
Payments for employee taxes withheld from stock awards	(30)		(40)
Purchases of treasury stock	(507)		(512)
Cash dividends paid	(225)		(206)
Other – net	(1)		(1)
Net cash used in financing activities	(1,201)		(763)
Exchange rate effect on cash and cash equivalents	22		(23)
Net change in cash and cash equivalents	(439)		109
Cash and cash equivalents at beginning of year	1,036		660
Cash and cash equivalents at end of period	$	597	$	769

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)


	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2024	$	55	$	1,355	$	12,162	$	(172)	$	(10,285)	$	326	$	3,441
Stock-based compensation	—		8		—		—		2		—		10
Purchases of treasury stock	—		—		—		—		(277)		—		(277)
Net earnings	—		—		478		—		—		19		497
Other comprehensive earnings (losses)	—		—		—		(35)		—		(22)		(57)


Cash dividends paid ($1.86 per share)	—		—		(92)		—		—		(13)		(105)
Balance at March 31, 2024	$	55	$	1,363	$	12,548	$	(207)	$	(10,560)	$	310	$	3,509
Stock-based compensation	—		8		—		—		(15)		1		(6)
Purchases of treasury stock	—		—		—		—		(243)		(1)		(244)
Net earnings	—		—		470		—		—		20		490
Other comprehensive earnings (losses)	—		—		—		(41)		—		(20)		(61)

Cash dividends paid ($2.05 per share)	—		—		(101)		—		—		—		(101)
Balance at June 30, 2024	$	55	$	1,371	$	12,917	$	(248)	$	(10,818)	$	310	$	3,587

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)


	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2025	$	55	$	1,399	$	13,677	$	(274)	$	(11,499)	$	345	$	3,703
Stock-based compensation	—		10		—		—		1		—		11
Purchases of treasury stock	—		—		—		—		(288)		—		(288)
Net earnings	—		—		479		—		—		21		500
Other comprehensive earnings (losses)	—		—		—		19		—		17		36


Cash dividends paid ($2.05 per share)	—		—		(99)		—		—		(16)		(115)
Balance at March 31, 2025	$	55	$	1,409	$	14,057	$	(255)	$	(11,786)	$	367	$	3,847
Stock-based compensation	—		6		—		—		(11)		1		(4)
Purchases of treasury stock	—		—		—		—		(228)		—		(228)
Net earnings	—		—		482		—		—		26		508
Other comprehensive earnings (losses)	—		—		—		56		—		15		71
Capital contribution	—		(1)		—		—		—		—		(1)
Cash dividends paid ($2.26 per share)	—		—		(110)		—		—		—		(110)
Balance at June 30, 2025	$	55	$	1,414	$	14,429	$	(199)	$	(12,025)	$	409	$	4,083

The accompanying notes are an integral part of these financial statements.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.

Basis of Presentation

The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The Condensed Consolidated Balance Sheet at December 31, 2024, has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 20, 2025 (2024 Form 10-K).

There were no material changes to the Company’s significant accounting policies from those disclosed in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2024 Form 10-K.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2 - REVENUE

Grainger serves a large number of customers in diverse industries, which are subject to different economic and market-specific factors. The Company's revenue is primarily comprised of MRO product sales and related activities.

The Company's presentation of revenue by reportable segment and customer industry most reasonably depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic and market-specific factors. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms.

The following tables present the Company's percentage of revenue by reportable segment and by customer industry:


	Three Months Ended June 30,
	2025						2024
Customer Industry(1)	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Manufacturing	30	%	30	%	30	%	31	%	30	%	31	%
Government	19	%	3	%	16	%	19	%	3	%	16	%
Wholesale	7	%	18	%	9	%	7	%	18	%	9	%
Commercial Services	7	%	12	%	8	%	7	%	12	%	8	%
Contractors	6	%	12	%	7	%	5	%	12	%	6	%
Healthcare	7	%	1	%	6	%	7	%	2	%	6	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	4	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	3	%	3	%	2	%	3	%
Warehousing	3	%	—	%	2	%	3	%	—	%	2	%
Other(3)	10	%	16	%	11	%	10	%	15	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	78	%	20	%	100	%	80	%	18	%	100	%


(1)Customer industry results for the three months ended June 30, 2025 and 2024 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.
(2)Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of Total Company revenue for both the three months ended June 30, 2025 and 2024.
(3)Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Six Months Ended June 30,
	2025						2024
Customer Industry(1)	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Manufacturing	30	%	30	%	30	%	31	%	29	%	31	%
Government	19	%	3	%	15	%	19	%	3	%	16	%
Wholesale	7	%	18	%	9	%	7	%	18	%	9	%
Commercial Services	7	%	12	%	8	%	7	%	12	%	8	%
Contractors	5	%	12	%	7	%	5	%	11	%	6	%
Healthcare	8	%	1	%	6	%	7	%	1	%	6	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	4	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	3	%	3	%	2	%	3	%
Warehousing	3	%	1	%	2	%	3	%	1	%	2	%
Other(3)	10	%	15	%	12	%	10	%	17	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	78	%	20	%	100	%	80	%	18	%	100	%


(1)Customer industry results for the six months ended June 30, 2025 and 2024 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.
(2)Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of Total Company revenue for both the six months ended June 30, 2025 and 2024.
(3)Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

Total accrued sales incentives are recorded in Accrued expenses and were approximately $114 million and $109 million as of June 30, 2025 and December 31, 2024, respectively.

The Company had no material unsatisfied performance obligations, contract assets or liabilities as of June 30, 2025 and December 31, 2024.

NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT

Property, buildings and equipment consisted of the following (in millions of dollars):


	As of
	June 30, 2025		December 31, 2024
Land and land improvements	$	435	$	415
Building, structures and improvements	1,866		1,723
Furniture, fixtures, machinery and equipment	2,050		1,945
Property, buildings and equipment	$	4,351	$	4,083
Less accumulated depreciation	2,244		2,156
Property, buildings and equipment – net	$	2,107	$	1,927

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS

The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators during the three and six months ended June 30, 2025. As such, quantitative assessments were not required.

The balances and changes in the carrying amount of goodwill by segment are as follows (in millions of dollars):


	High-Touch Solutions N.A.		Endless Assortment		Total
Balance at January 1, 2024	$	315	$	55	$	370


Translation	(9)		(6)		(15)
Balance at December 31, 2024	306		49		355


Translation	6		4		10
Balance at June 30, 2025	$	312	$	53	$	365

The Company's cumulative goodwill impairments as of June 30, 2025 were $137 million. No goodwill impairments were recorded for the three and six months ended June 30, 2025 and 2024.

The balances and changes in intangible assets – net are as follows (in millions of dollars):


		As of
		June 30, 2025						December 31, 2024
	Weighted average life	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer lists and relationships	10.7 years	$	166	$	158	$	8	$	164	$	155	$	9
Trademarks, trade names and other	14.9 years	32		26		6		31		24		7
Non-amortized trade names and other	Indefinite	19		—		19		18		—		18
Capitalized software	4.5 years	785		551		234		714		505		209
Total intangible assets	5.9 years	$	1,002	$	735	$	267	$	927	$	684	$	243

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5 - DEBT

Total debt, including long-term and current maturities, consisted of the following (in millions of dollars):


	As of
	June 30, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	884	$	1,000	$	894
4.45% senior notes due 2034	500		489		500		477
3.75% senior notes due 2046	400		329		400		332
4.20% senior notes due 2047	400		311		400		312
Japanese Yen term loans	62		62		—		—
Debt issuance costs – net of amortization and other	(21)		(21)		(21)		(21)
Long-term debt	2,341		2,054		2,279		1,994


1.85% senior notes due 2025(1)	—		—		500		498
Other	2		2		(1)		(1)
Current maturities	2		2		499		497
Total debt	$	2,343	$	2,056	$	2,778	$	2,491

(1)On February 18, 2025, Grainger repaid in full the principal amount of $500 million for the 1.85% Senior Notes that matured in February 2025. The related interest rate swaps with a notional value of $450 million that hedged a portion of the interest rate risk related to this debt expired on February 15, 2025.

Senior Notes

Between 2015 and 2024, Grainger issued $2.8 billion in unsecured debt (Senior Notes) primarily to provide flexibility in funding general working capital needs, share repurchases and long-term cash requirements. The Senior Notes require no principal payments until maturity and interest is paid semi-annually.

The Company incurred debt issuance costs related to its Senior Notes, representing underwriting fees and other expenses. These costs were recorded as a contra-liability in Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net. As of June 30, 2025 and December 31, 2024, the cumulative unamortized costs were $21 million and $22 million, respectively.

Japanese Yen Term Loans

In June 2025, MonotaRO entered into ¥9 billion term loan agreements to fund the expansion of its distribution center (DC) network. The Japanese Yen term loans mature in 2035, payable in equal monthly principal installments from September 2028 through June 2035, and bear a weighted average interest rate of 1.24%.

Fair Value

The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.

NOTE 6 - SEGMENT INFORMATION

Grainger's two reportable segments are High-Touch Solutions N.A. (HTSNA) and Endless Assortment (EA). These reportable segments align with Grainger's go-to-market strategies and bifurcated business models of high-touch solutions and endless assortment that generate sales primarily through the distribution of MRO products. The remaining businesses are classified as Other to reconcile to consolidated results. These businesses individually and in the aggregate do not meet the criteria of a reportable segment.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The operating and reportable segments reflect the way the chief operating decision maker (CODM) evaluates the business. All expenses directly attributable to each reportable segment are included in the operating results for each segment. The CODM is not regularly provided and does not evaluate the segments using total asset or capital expenditure information and it is therefore not disclosed. For further discussion on the CODM, see Note 12 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2024 Form 10-K.

The following is a summary of segment results (in millions of dollars):


	Three Months Ended June 30,
	2025						2024
	High-Touch Solutions N.A.		Endless Assortment		Total		High-Touch Solutions N.A.		Endless Assortment		Total
Net sales(1)	$	3,544	$	929	$	4,473	$	3,458	$	776	$	4,234
Reconciliation of net sales
Other net sales					81						78
Total company net sales					$	4,554					$	4,312
Less:
Cost of goods sold	2,090		652				2,015		547
Other segment items(2)	865		185				852		168
Segment operating earnings	$	589	$	92	$	681	$	591	$	61	$	652
Reconciliation of operating earnings
Other operating earnings					(3)						(3)
Total company operating earnings					$	678					$	649


	Six Months Ended June 30,
	2025						2024
	High-Touch Solutions N.A		Endless Assortment		Total		High-Touch Solutions N.A		Endless Assortment		Total
Net sales(1)	$	6,941	$	1,757	$	8,698	$	6,863	$	1,527	$	8,390
Reconciliation of net sales
Other net sales					162						157
Total company net sales					$	8,860					$	8,547
Less:
Cost of goods sold	4,048		1,235				3,997		1,078
Other segment items(2)	1,704		358				1,665		329
Segment operating earnings	$	1,189	$	164	$	1,353	$	1,201	$	120	$	1,321
Reconciliation of operating earnings
Other operating earnings (losses)					(3)						(3)
Total company operating earnings					$	1,350					$	1,318

(1)Intersegment sales are recorded at values based on market prices, which creates intercompany profit sales that are eliminated within each segment to present only the impact of net sales to external customers.
(2)Other segment items for HTSNA and EA consist of selling, general and administrative expenses primarily comprised of payroll and benefits, marketing expense, depreciation, amortization and non-cash lease expense, corporate overhead expenses allocated to each segment based upon benefits received, occupancy and other miscellaneous expenses. Intersegment expenses including fees and certain incurred costs for shared services are also included within the amounts shown above.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Depreciation, amortization and non-cash lease expense presented below is related to long-lived assets, capitalized software and right-of-use assets. Long-lived assets consist of property, buildings and equipment.


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Depreciation, amortization and non-cash lease expense:
High-Touch Solutions N.A.	$	61	$	59	$	119	$	113
Endless Assortment	20		17		39		35
Other	3		2		5		4
Total	$	84	$	78	$	163	$	152

Following is revenue by geographic location (in millions of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue by geographic location(1):
United States	$	3,652	$	3,502	$	7,156	$	6,948
Japan	562		469		1,042		920
Canada	175		170		337		338
Other foreign countries	165		171		325		341
	$	4,554	$	4,312	$	8,860	$	8,547

(1)Revenue presented above is attributed to the destination country where the customer is located.

The Company is a broad line distributor of MRO products. Products are regularly added and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. For further information regarding the Company's sales by segment and customer industry, see Note 2.

NOTE 7 - CONTINGENCIES AND LEGAL MATTERS

From time to time the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by team members, consumers, competitors, suppliers, customers, governmental entities and other third parties.

The Company remains in litigation involving KMCO, LLC (KMCO) as previously disclosed. The Company continues to contest the remaining KMCO-related lawsuits and cannot reasonably predict the timing, outcome or any estimate of possible loss or range of losses on the remaining KMCO lawsuits.

NOTE 8 - SUBSEQUENT EVENTS

On July 4, 2025, the President of the United States enacted a comprehensive spending and policy bill that includes provisions related to corporate income tax reform. The Company is currently evaluating the financial statement impact of this legislation.

On July 30, 2025, the Company’s Board of Directors declared a quarterly dividend of $2.26 per share, payable September 1, 2025, to shareholders of record on August 11, 2025.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of W.W. Grainger, Inc. (Grainger or Company) as it is viewed by management of the Company. The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024 included in the Company's 2024 Form 10-K and the Condensed Consolidated Financial Statements and accompanying notes included in Part I, Item 1: Financial Statements of this Form 10-Q.

Percentage figures included in this section have not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in the Company's Condensed Consolidated Financial Statements or in the associated text.

Overview

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.

Strategic Priorities

For a discussion of the Company’s strategic priorities for 2025, see Part 1, Item 1: Business and Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2024 Form 10-K.

Recent Events

Macroeconomic Conditions

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.

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.

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, remains uncertain and cannot be predicted at this time, but may impact the Company’s operations, financial condition, and results of operations.

For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2024 Form 10-K.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Results of Operations –Three Months Ended June 30, 2025

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 June 30, 2025 and 2024 (in millions of dollars except per share amounts):


	Three Months Ended June 30,
					% Change		% of Net Sales
	2025		2024				2025		2024
Net sales(1)	$	4,554	$	4,312	5.6	%	100.0	%	100.0	%
Cost of goods sold	2,799		2,618		6.9		61.5		60.7
Gross profit	1,755		1,694		3.6		38.5		39.3
Selling, general and administrative expenses	1,077		1,045		3.1		23.6		24.2
Operating earnings	678		649		4.5		14.9		15.1
Other expense – net	17		13		30.8		0.3		0.3
Income tax provision	153		146		4.8		3.4		3.4
Net earnings	508		490		3.7		11.2		11.4
Noncontrolling interest	26		20		30.0		0.6		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	482	$	470	2.6		10.6	%	10.9	%
Diluted earnings per share	$	9.97	$	9.51	4.8	%

(1)For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q.

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 June 30, 2025 and 2024 (in millions of dollars):


	Three Months Ended June 30,
	2025		% Change(1)		2024		% Change(1)
Net sales	$	4,554	5.6	%	$	4,312	3.1	%

Daily net sales(2)	$	71.2	5.6	%	$	67.4	3.1	%



Daily, constant currency net sales(2)	$	70.8	5.1	%	$	68.4	4.6	%

(1)Calculated on the basis of prior year net sales for the three months ended June 30, 2025 and 2024.
(2)Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. Daily, constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year foreign currency exchange rate fluctuations. There were 64 sales days in the three months ended June 30, 2025 and 2024. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."

Net sales of $4,554 million for the three months ended June 30, 2025 increased $242 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 second quarter of 2025. For further discussion on the Company's net sales, see the Segment Analysis section below.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Gross profit of $1,755 million for the three months ended June 30, 2025 increased $61 million, or 4%, and gross profit margin of 38.5% decreased 80 basis points compared to the same period in 2024. For further discussion on the Company's gross profit, see the Segment Analysis section below.

Selling, general and administrative (SG&A) expenses of $1,077 million for the three months ended June 30, 2025 increased $32 million, or 3%, compared to the same period in 2024. Adjusted SG&A expenses increased $48 million, or 5%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses in the second quarter of 2025.

Operating earnings of $678 million for the three months ended June 30, 2025 increased $29 million, or 5%, compared to the same period in 2024. Adjusted operating earnings increased $13 million, or 2%, compared to the same period in 2024. The increase was due to higher gross profit dollars, partially offset by increased SG&A expenses in the second quarter of 2025.

Income tax expense of $153 million for the three months ended June 30, 2025 increased $7 million compared to the same period in 2024. Adjusted income tax expense increased $3 million compared to the same period in 2024. Grainger's reported and adjusted effective tax rates were 23.2% and 22.9% for the three months ended June 30, 2025 and 2024, respectively. The increase in the effective tax rate was primarily due to lower benefits from stock compensation in the period.

Diluted earnings per share was $9.97 for the three months ended June 30, 2025, an increase of 5% compared to $9.51 for the same period in 2024. Adjusted diluted earnings per share increased 2% compared to $9.76 for the same period in 2024.

Segment Analysis

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 below "Non-GAAP Measures." For further segment information, see Note 6 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.

High-Touch Solutions N.A.

The following table shows reported segment results (in millions of dollars):


	Three Months Ended June 30,
	2025		2024		% Change
Net sales	$	3,544	$	3,458	2.5	%

Gross profit	$	1,454	$	1,443	0.8	%
Selling, general and administrative expenses	865		852		1.5	%
Operating earnings	$	589	$	591	(0.3)	%

Net sales of $3,544 million for the three months ended June 30, 2025 increased $86 million, which represents a 3%, increase on a reported and daily, constant currency basis, compared to the same period in 2024. The increase was primarily due to volume.

Gross profit of $1,454 million for the three months ended June 30, 2025 increased $11 million, or 1%. Gross profit margin of 41.0% decreased 70 basis points compared to the same period in 2024. The decrease was primarily driven by negative price cost spread due to timing and last-in, first-out (LIFO) inventory valuation impacts.

SG&A expenses of $865 million for the three months ended June 30, 2025 increased $13 million, or 2%, compared to the same period in 2024. Adjusted SG&A expenses increased $28 million, or 3%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings of $589 million for the three months ended June 30, 2025 decreased $2 million compared to the same period in 2024. Adjusted operating earnings decreased $17 million, or 3%, compared to the same period in 2024.

Endless Assortment

The following table shows reported segment results (in millions of dollars):


	Three Months Ended June 30,
	2025		2024		% Change
Net sales	$	929	$	776	19.7	%

Gross profit	$	277	$	229	21.0	%
Selling, general and administrative expenses	185		168		10.1	%
Operating earnings	$	92	$	61	50.8	%

Net sales of $929 million for the three months ended June 30, 2025 increased $153 million, or 20%, and on a daily, constant currency basis increased 16% compared to the same period in 2024. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO.

Gross profit of $277 million for the three months ended June 30, 2025 increased $48 million, or 21%, and gross profit margin of 29.8% increased 30 basis points compared to the same period in 2024.

SG&A expenses of $185 million for the three months ended June 30, 2025 increased $17 million, or 10%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses.

Operating earnings of $92 million for the three months ended June 30, 2025 increased $31 million, or 51%, compared to the same period in 2024.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Results of Operations – Six Months Ended June 30, 2025

The following table is included as an aid to understanding the changes in Grainger's Condensed Consolidated Statements of Earnings (in millions of dollars except per share amounts):


	Six Months Ended June 30,
					% Change		% of Net Sales
	2025		2024				2025		2024
Net sales(1)	$	8,860	$	8,547	3.7	%	100.0	%	100.0	%
Cost of goods sold	5,395		5,185		4.1		60.9		60.7
Gross profit	3,465		3,362		3.1		39.1		39.3
Selling, general and administrative expenses	2,115		2,044		3.5		23.9		23.9
Operating earnings	1,350		1,318		2.4		15.2		15.4
Other expense – net	32		27		18.5		0.4		0.2
Income tax provision	310		304		2.0		3.5		3.6
Net earnings	1,008		987		2.1		11.3		11.6
Noncontrolling interest	47		39		20.5		0.5		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	961	$	948	1.4		10.8	%	11.1	%
Diluted earnings per share	$	19.83	$	19.13	3.7	%

(1)For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q.

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 from the prior period for the six months ended June 30, 2025 and 2024 (in millions of dollars):


	Six Months Ended June 30,
	2025		% Change(1)		2024		% Change(1)
Net sales	$	8,860	3.7	%	$	8,547	3.3	%

Daily net sales(2)	$	70.3	4.5	%	$	66.8	3.3	%



Daily, constant currency net sales(2)	$	70.5	4.7	%	$	67.6	4.5	%

(1)Calculated on the basis of prior year net sales for the six months ended June 30, 2025 and 2024.
(2)Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. Daily constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year foreign currency exchange rate fluctuations. There were 127 and 128 sales days in the six months ended June 30, 2025 and 2024, respectively. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measure, see below "Non-GAAP Measures."

Net sales of $8,860 million for the six months ended June 30, 2025 increased $313 million, or 4%, and on a daily, constant currency basis increased 5% compared to the same period in 2024. Both High-Touch Solutions N.A. and the Endless Assortment segments contributed to sales growth in the six months ended June 30, 2025. For further discussion on the Company's net sales, see the Segment Analysis section below.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Gross profit of $3,465 million for the six months ended June 30, 2025 increased $103 million, or 3%, and gross profit margin of 39.1% decreased 20 basis points compared to the same period in 2024. For further discussion on the Company's gross profit, see the Segment Analysis section below.

SG&A expenses of $2,115 million for the six months ended June 30, 2025 increased $71 million, or 4%, and adjusted SG&A expenses increased $87 million, or 4%, driven by higher marketing expenses in 2025.

Operating earnings of $1,350 million for the six months ended June 30, 2025 increased $32 million or 2%, compared to the same period in 2024. Adjusted operating earnings increased $16 million, or 1% compared to the same period in 2024.

Income taxes of $310 million for the six months ended June 30, 2025 increased $6 million, compared to the same period in 2024. Adjusted income taxes increased $2 million, compared to the same period in 2024. Grainger's reported and adjusted effective tax rates were 23.5% for the six months ended June 30, 2025 and 2024.

Diluted earnings per share was $19.83 for the six months ended June 30, 2025, an increase of 4% compared to $19.13 for the same period in 2024. Adjusted diluted earnings per share increased 2% compared to $19.37 for the same period in 2024.

Segment Analysis

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.

High-Touch Solutions N.A.

The following table shows reported segment results (in millions of dollars):


	Six Months Ended June 30,
	2025		2024		% Change
Net sales	$	6,941	$	6,863	1.1	%

Gross profit	$	2,893	$	2,866	0.9	%
Selling, general and administrative expenses	1,704		1,665		2.3	%
Operating earnings	$	1,189	$	1,201	(1.0)	%

Net sales of $6,941 million for the six months ended June 30, 2025 increased $78 million, or 1%, and on a daily, constant currency basis increased 2% compared to the same period in 2024. The increase was primarily due to volume.

Gross profit of $2,893 million for the six months ended June 30, 2025 increased $27 million, or 1%, and gross profit margin of 41.7% decreased 10 basis points compared to the same period in 2024.

SG&A expenses of $1,704 million for the six months ended June 30, 2025 increased $39 million, or 2%, compared to the same period in 2024. Adjusted SG&A expenses increased $54 million, or 3%. The increase was primarily due to higher marketing and payroll and benefit expenses in 2025.

Operating earnings of $1,189 million for the six months ended June 30, 2025 decreased $12 million, or 1%, compared to the same period in 2024. Adjusted operating earnings deceased $27 million, or 2%, compared to the same period in 2024.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Endless Assortment

The following table shows reported segment results (in millions of dollars):


	Six Months Ended June 30,
	2025		2024		% Change
Net sales	$	1,757	$	1,527	15.1	%

Gross profit	$	522	$	449	16.3	%
Selling, general and administrative expenses	358		329		8.8	%
Operating earnings	$	164	$	120	36.7	%

Net sales of $1,757 million for the six months ended June 30, 2025 increased $230 million, or 15%, and on a daily constant currency basis increased 16% compared to the same period in 2024. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO.

Gross profit of $522 million for the six months ended June 30, 2025 increased $73 million, or 16%, and gross profit margin of 29.7% increased 30 basis points compared to the same period in 2024.

SG&A expenses of $358 million for the six months ended June 30, 2025 increased $29 million, or 9%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses in 2025.

Operating earnings of $164 million for the six months ended June 30, 2025 increased $44 million, or 37% compared to the same period in 2024.

Non-GAAP Measures

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 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.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 sales for the three months ended June 30, 2025 and 2024 (in millions of dollars):


	Three Months Ended June 30,
	High-Touch Solutions N.A.				Endless Assortment				Total Company(1)
	2025		% Change(2)		2025		% Change(2)		2025		% Change(2)
Reported net sales	$	3,544	2.5	%	$	929	19.7	%	$	4,554	5.6	%

Daily impact(3)	—		—		—		—		—		—
Daily net sales	55.4		2.5		14.5		19.7		71.2		5.6
Foreign currency exchange(4)	0.1		0.3		(0.4)		(3.4)		(0.4)		(0.5)

Daily, constant currency net sales	$	55.5	2.8	%	$	14.1	16.3	%	$	70.8	5.1	%

	2024		% Change(2)		2024		% Change(2)		2024		% Change(2)
Reported net sales	$	3,458	3.1	%	$	776	3.3	%	$	4,312	3.1	%

Daily impact(3)	—		—		—		—		—		—
Daily net sales	54.0		3.1		12.1		3.3		67.4		3.1
Foreign currency exchange(4)	—		—		1.0		8.4		1.0		1.5

Daily, constant currency net sales	$	54.0	3.1	%	$	13.1	11.7	%	$	68.4	4.6	%

(1)Total Company includes Other. Grainger's businesses reported in Other do not meet the criteria of a reportable segment.
(2)Compared to net sales in the prior year period.
(3)Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis. There were 64 sales days in the three months ended June 30, 2025 and 2024.

(4)Excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations on a daily basis.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 sales for the six months ended June 30, 2025 and 2024 (in millions of dollars):


	Six months ended June 30,
	High-Touch Solutions N.A.				Endless Assortment				Total Company(1)
	2025		% Change(2)		2025		% Change(2)		2025		% Change(2)
Reported net sales	$	6,941	1.1	%	$	1,757	15.1	%	$	8,860	3.7	%

Daily impact(3)	0.4		0.8		0.1		0.9		0.5		0.8
Daily net sales	55.1		1.9		13.9		16.0		70.3		4.5
Foreign currency exchange(4)	0.2		0.4		—		(0.1)		0.2		0.2

Daily, constant currency net sales	$	55.3	2.3	%	$	13.9	15.9	%	$	70.5	4.7	%

	2024		% Change(2)		2024		% Change(2)		2024		% Change(2)
Reported net sales	$	6,863	3.2	%	$	1,527	3.5	%	$	8,547	3.3	%

Daily impact(3)	—		—		—		—		—		—
Daily net sales	53.6		3.2		11.9		3.5		66.8		3.3
Foreign currency exchange(4)	—		(0.1)		0.9		7.4		0.8		1.2

Daily, constant currency net sales	$	53.6	3.1	%	$	12.8	10.9	%	$	67.6	4.5	%

(1)Total Company includes Other. Grainger's businesses reported in Other do not meet the criteria of a reportable segment.
(2)Compared to net sales in the prior year period.
(3)Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis. There were 127 and 128 sales days in the six months ended June 30, 2025 and 2024, respectively.

(4)Excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations on a daily basis.

The following tables provide reconciliations of reported SG&A expenses, operating earnings, net earnings attributable to W.W. Grainger, Inc. and diluted earnings per share determined in accordance with GAAP to the Company's non-GAAP measures adjusted SG&A expenses, adjusted operating earnings, adjusted net earnings attributable to W.W. Grainger, Inc. and adjusted diluted earnings per share for the three and six months ended June 30, 2025 and 2024 (in millions of dollars):

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS


Three months ended June 30, 2025	Reported		Adjustment(1)		Adjusted		% Change Reported(2)	% Change Adjusted(2)
Selling, general and administrative expenses
High-Touch Solutions N.A.	$	865	$	—	$	865
Endless Assortment	185		—		185
Other(3)	27		—		27
Selling, general and administrative expenses	$	1,077	$	—	$	1,077	3.1%	4.7%

Earnings
High-Touch Solutions N.A.	$	589	$	—	$	589
Endless Assortment	92		—		92
Other(3)	(3)		—		(3)
Operating earnings	$	678	$	—	$	678	4.5%	2.0%
Total other expense – net	(17)		—		(17)
Income tax provision	(153)		—		(153)
Net earnings	$	508	$	—	$	508
Noncontrolling interest	(26)		—		(26)
Net earnings attributable to W.W. Grainger, Inc.	$	482	$	—	$	482	2.6%	—
Diluted earnings per share	$	9.97	$	—	$	9.97	4.8%	2.2%

Three months ended June 30, 2024	Reported		Adjustment(1)		Adjusted		% Change Reported(2)	% Change Adjusted(2)
Selling, general and administrative expenses
High-Touch Solutions N.A.	$	852	$	(15)	$	837
Endless Assortment	168		—		168
Other(3)	25		(1)		24
Selling, general and administrative expenses	$	1,045	$	(16)	$	1,029	6.3%	4.7%

Earnings
High-Touch Solutions N.A.	$	591	$	15	$	606
Endless Assortment	61		—		61
Other(3)	(3)		1		(2)
Operating earnings	$	649	$	16	$	665	(1.8)%	0.6%
Total other expense – net	(13)		—		(13)
Income tax provision(4)	(146)		(4)		(150)
Net earnings	$	490	$	12	$	502
Noncontrolling interest	(20)		—		(20)
Net earnings attributable to W.W. Grainger, Inc.	$	470	$	12	$	482	—	2.6%
Diluted earnings per share	$	9.51	$	0.25	$	9.76	2.5%	5.2%

(1)Reflects restructuring costs incurred in the second quarter of 2024. There were no non-GAAP adjustments for the three months ended June 30, 2025.
(2)Compared to the reported and adjusted results of the prior year period.
(3)Grainger's businesses reported in Other do not meet the criteria of a reportable segment.
(4)Reflects a tax benefit related to the restructuring costs incurred in the second quarter of 2024. Grainger's reported and adjusted effective tax rates were 23.2% for the three months ended June 30, 2025.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS


Six Months Ended June 30, 2025	Reported		Adjustment(1)		Adjusted		% Change Reported(2)	% Change Adjusted(2)
Selling, general and administrative expenses
High-Touch Solutions N.A.	$	1,704	$	—	$	1,704
Endless Assortment	358		—		358
Other(3)	53		—		53
Selling, general and administrative expenses	$	2,115	$	—	$	2,115	3.5%	4.3%

Earnings
High-Touch Solutions N.A.	$	1,189	$	—	$	1,189
Endless Assortment	164		—		164
Other(3)	(3)		—		(3)
Operating earnings	$	1,350	$	—	$	1,350	2.4%	1.2%
Total other expense – net	(32)		—		(32)
Income tax provision	(310)		—		(310)
Net earnings	$	1,008	$	—	$	1,008
Noncontrolling interest	(47)		—		(47)
Net earnings attributable to W.W. Grainger, Inc.	$	961	$	—	$	961	1.4%	0.1%
Diluted earnings per share	$	19.83	$	—	$	19.83	3.7%	2.4%

Six Months Ended June 30, 2024	Reported		Adjustment(1)		Adjusted		% Change Reported(2)	% Change Adjusted(2)
Selling, general and administrative expenses
High-Touch Solutions N.A.	$	1,665	$	(15)	$	1,650
Endless Assortment	329		—		329
Other(3)	50		(1)		49
Selling, general and administrative expenses	$	2,044	$	(16)	$	2,028	5.5%	4.7%

Earnings
High-Touch Solutions N.A.	$	1,201	$	15	$	1,216
Endless Assortment	120		—		120
Other(3)	(3)		1		(2)
Operating earnings	$	1,318	$	16	$	1,334	(1.7)%	(0.5)%
Total other expense – net	(27)		—		(27)
Income tax provision(4)	(304)		(4)		(308)
Net earnings	$	987	$	12	$	999
Noncontrolling interest	(39)		—		(39)
Net earnings attributable to W.W. Grainger, Inc.	$	948	$	12	$	960	(1.0)%	0.2%
Diluted earnings per share	$	19.13	$	0.24	$	19.37	1.3%	2.5%

(1)Reflects restructuring costs incurred in the second quarter of 2024. There were no non-GAAP adjustments for the six months ended June 30, 2025.
(2)Compared to the reported and adjusted results of the prior year period.
(3)Grainger's businesses reported in Other do not meet the criteria of a reportable segment.
(4)Reflects a tax benefit related to the restructuring costs incurred in the second quarter of 2024. Grainger's reported and adjusted effective tax rates were 23.5% for the six months ended June 30, 2025.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

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.

Cash and Cash Equivalents

As of June 30, 2025 and December 31, 2024, Grainger had cash and cash equivalents of $597 million and $1,036 million, respectively. The Company had approximately $1.8 billion in available liquidity as of June 30, 2025.

Cash Flows

The following table shows the Company's cash flow activity for the periods presented (in millions of dollars):


	Six Months Ended June 30,
	2025		2024
Total cash provided by (used in):
Operating activities	$	1,023	$	1,072
Investing activities	(283)		(177)
Financing activities	(1,201)		(763)
Effect of exchange rate changes on cash and cash equivalents	22		(23)
Increase (decrease) in cash and cash equivalents	$	(439)	$	109

Net cash provided by operating activities was $1,023 million and $1,072 million for the six months ended June 30, 2025 and 2024, respectively. The decrease was driven by unfavorable changes in working capital primarily due to inventory inflation partially offset by timing of cash payments compared to the prior year period.

Net cash used in investing activities was $283 million and $177 million for the six months ended June 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 half of 2025.

Net cash used in financing activities was $1,201 million and $763 million for the six months ended June 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.

Working Capital

Working capital as of June 30, 2025 was $3,455 million, an increase of $173 million compared to $3,282 million as of December 31, 2024. As of June 30, 2025 and December 31, 2024, the ratio of current assets to current liabilities was 2.8 and 2.9, respectively.

Debt

Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. Grainger has various sources of financing available.

Total debt as a percent of total capitalization was 36.5% and 42.9% as of June 30, 2025 and December 31, 2024, respectively.

Grainger receives ratings from two independent credit rating agencies: Moody's Investor Service (Moody's) and Standard & Poor's (S&P). Both credit rating agencies currently rate the Company's corporate credit at investment grade.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following table summarizes the Company's credit ratings as of June 30, 2025:

Corporate

Senior Unsecured

Short-term

Moody's

S&P

A+

Commitments and Other Contractual Obligations

There were no material changes to the Company’s commitments and other contractual obligations from those disclosed in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2024 Form 10-K.

Critical Accounting Estimates

The preparation of Grainger’s Condensed Consolidated Financial Statements and accompanying notes are in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make assumptions and estimates that affect the reported amounts. The Company considers an accounting policy to be a critical estimate if: (1) it involves assumptions that are uncertain when judgment was applied, and (2) changes in the estimate assumptions, or selection of a different estimate methodology, could have a significant impact on Grainger’s consolidated financial position and results. While the Company believes the assumptions and estimates used are reasonable, the Company’s management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances.

Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements of the Company's 2024 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements.

There were no material changes to the Company's critical accounting estimates from those disclosed in Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2024 Form 10-K.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

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.

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 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 indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors identified under Part I, Item 1A: Risk Factors and elsewhere in Grainger's latest Form 10-K, as updated from time to time in Grainger's Quarterly Form 10-Q.

The preceding list is not intended to be an exhaustive list of all of the factors that could impact Grainger's forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on Grainger's forward looking-statements and Grainger undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

W.W. Grainger, Inc. and Subsidiaries

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Grainger’s primary market risk exposures include changes in foreign currency exchange and interest rates.

There were no material changes to the Company’s market risk from those described in Part II, Item 7A: Quantitative and Qualitative Disclosures About Market Risk in the Company's 2024 Form 10-K.

Item 4: Controls and Procedures

Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Grainger's disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Grainger’s disclosure controls and procedures were effective as of the end of the period covered by this report in (i) ensuring that information required to be disclosed by Grainger in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in Grainger's internal control over financial reporting for the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, Grainger’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1: Legal Proceedings

For an update to the description of the Company’s legal proceedings, see Note 7 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1: Financial Information of this Form 10-Q.

Item 1A: Risk Factors

There have been no material changes from the risk factors previously disclosed in Part 1, Item 1A: Risk Factors in the Company's 2024 Form 10-K.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities – Second Quarter 2025


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(2)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3)	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Apr. 1 – Apr. 30	95,367	$976.31	95,367	3,808,931
May 1 – May 31	76,555	$1,072.07	76,555	3,732,376
Jun. 1 – Jun. 30	48,872	$1,053.04	48,872	3,683,504
Total	220,794		220,794

(1)There were no shares withheld to satisfy tax withholding obligations.

(2)Average price paid per share excludes excise tax and commissions of $0.02 per share paid.
(3)Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced April 24, 2024 (2024 Program). The 2024 Program authorized the Company to repurchase an aggregate amount of up to five million shares in the open market, through privately negotiated transactions and block transactions, pursuant to a trading plan or otherwise with no expiration date.

Item 5: Other Information

None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's quarter ended June 30, 2025.

W.W. Grainger, Inc. and Subsidiaries

Item 6: Exhibits


EXHIBIT NO.						DESCRIPTION
3.1						Restated Articles of Incorporation of W.W. Grainger, Inc., as Amended, incorporated by reference to Exhibit 3.1 to W.W. Grainger, Inc.'s Current Report on Form 8-K dated May 15, 2025.
3.2						By-laws of W.W. Grainger, Inc.**


31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
32						Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.**
101.SCH						XBRL Taxonomy Extension Schema Document.**
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.**
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).**


(*) Management contract or compensatory plan or arrangement.
(**) Filed herewith.
(***) Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			W.W. GRAINGER, INC.
Date:	August 1, 2025	By:	/s/ Deidra C. Merriwether
			Deidra C. Merriwether
			Senior Vice President
			and Chief Financial Officer
			(Principal Financial Officer)
Date:	August 1, 2025	By:	/s/ Laurie R. Thomson
			Laurie R. Thomson
			Vice President and Controller
			(Principal Accounting Officer)