gww-20260630

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, 2026

☐ 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 47,100,942 shares of the Company’s Common Stock outstanding as of July 28, 2026.


	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, 2026 and 2025	3
	Condensed Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended June 30, 2026 and 2025	4
	Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025	6
	Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2026 and 2025	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	29
Item 4:	Controls and Procedures	29

	PART II - OTHER INFORMATION

Item 1:	Legal Proceedings	30
Item 1A:	Risk Factors	30
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 5:	Other Information	30
Item 6:	Exhibits	31
Signatures		32

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,
	2026		2025		2026		2025
Net sales	$	5,021	$	4,554	$	9,763	$	8,860
Cost of goods sold	3,037		2,799		5,883		5,395
Gross profit	1,984		1,755		3,880		3,465
Selling, general and administrative expenses	1,177		1,077		2,280		2,115
Operating earnings	807		678		1,600		1,350
Other expense (income):
Interest expense – net	20		20		41		41
Other – net	(11)		(3)		(14)		(9)
Total other expense – net	9		17		27		32
Earnings before income taxes	798		661		1,573		1,318
Income tax provision	198		153		392		310
Net earnings	600		508		1,181		1,008
Less net earnings attributable to noncontrolling interest	30		26		56		47
Net earnings attributable to W.W. Grainger, Inc.	$	570	$	482	$	1,125	$	961
Earnings per share:
Basic	$	12.02	$	9.99	$	23.69	$	19.87
Diluted	$	12.01	$	9.97	$	23.66	$	19.83
Weighted average number of shares outstanding:
Basic	47.2		48.0		47.3		48.1
Diluted	47.2		48.1		47.3		48.2

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,
	2026		2025		2026		2025
Net earnings	$	600	$	508	$	1,181	$	1,008
Other comprehensive earnings (losses):
Foreign currency translation adjustments	(23)		75		(42)		113


Postretirement benefit plan losses – net of tax benefit of $1, $1, $2, and $2, respectively	(3)		(4)		(5)		(6)

Total other comprehensive earnings (losses)	(26)		71		(47)		107
Comprehensive earnings – net of tax	574		579		1,134		1,115
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	30		26		56		47
Foreign currency translation adjustments	(9)		15		(14)		32
Total comprehensive earnings (losses) attributable to noncontrolling interest	21		41		42		79
Comprehensive earnings attributable to W.W. Grainger, Inc.	$	553	$	538	$	1,092	$	1,036

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, 2026		December 31, 2025
Current assets
Cash and cash equivalents	$	589	$	585
Accounts receivable (less allowance for credit losses of $33 and $32, respectively)	2,825		2,329
Inventories – net	2,371		2,394
Prepaid expenses and other current assets	213		176



Total current assets	5,998		5,484
Property, buildings and equipment – net	2,401		2,268

Goodwill	354		360
Intangibles – net	272		265
Operating lease right-of-use	360		345
Other assets	233		240
Total assets	$	9,618	$	8,962

Liabilities and shareholders' equity
Current liabilities

Current maturities	$	2	$	126
Trade accounts payable	1,280		963
Accrued compensation and benefits	347		343

Operating lease liability	72		73
Accrued expenses	389		386
Income taxes payable	48		49

Total current liabilities	2,138		1,940
Long-term debt	2,406		2,362
Long-term operating lease liability	317		301
Deferred income taxes and tax uncertainties	149		121
Other non-current liabilities	95		97
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	1,448		1,446
Retained earnings	15,858		14,958
Accumulated other comprehensive losses	(198)		(165)
Treasury stock, at cost – 62,558,699 and 62,240,438 shares, respectively	(13,032)		(12,558)
Total W.W. Grainger, Inc. shareholders’ equity	4,131		3,736
Noncontrolling interest	382		405
Total shareholders' equity	4,513		4,141
Total liabilities and shareholders' equity	$	9,618	$	8,962

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,
	2026		2025
Cash flows from operating activities:
Net earnings	$	1,181	$	1,008
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	13		13
Deferred income taxes and tax uncertainties	31		1
Depreciation and amortization	128		125
Non-cash lease expense	40		41


Stock-based compensation	39		35


Change in operating assets and liabilities:
Accounts receivable	(510)		(212)
Inventories	14		(19)
Prepaid expenses and other assets	(32)		(33)
Trade accounts payable	312		231
Operating lease liabilities	(48)		(53)
Accrued liabilities	21		(60)
Income taxes – net	(4)		(37)
Other non-current liabilities	(2)		(17)

Net cash provided by operating activities	1,183		1,023
Cash flows from investing activities:
Capital expenditures	(281)		(300)
Proceeds from sale of assets	—		4
Other – net	(13)		13


Net cash used in investing activities	(294)		(283)
Cash flows from financing activities:
Short-term borrowings (repayments), original maturities of 90 days or less, net	(125)		—


Proceeds from debt	52		63
Payments of debt	(4)		(503)
Proceeds from stock options exercised	8		2
Payments for employee taxes withheld from stock awards	(30)		(30)
Purchases of treasury stock	(461)		(507)
Purchases of noncontrolling interests	(70)		—

Cash dividends paid	(253)		(225)
Other – net	9		(1)
Net cash used in financing activities	(874)		(1,201)
Exchange rate effect on cash and cash equivalents	(11)		22
Net change in cash and cash equivalents	4		(439)
Cash and cash equivalents at beginning of year	585		1,036
Cash and cash equivalents at end of period	$	589	$	597

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

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, 2026	$	55	$	1,446	$	14,958	$	(165)	$	(12,558)	$	405	$	4,141
Stock-based compensation	—		14		—		—		1		—		15
Purchases of treasury stock	—		—		—		—		(240)		—		(240)
Transactions with noncontrolling interests, net	—		(12)		—		—		—		(13)		(25)
Net earnings	—		—		555		—		—		26		581
Other comprehensive earnings (losses)	—		—		—		(16)		—		(5)		(21)

Cash dividends paid ($2.26 per share)	—		—		(108)		—		—		—		(108)
Balance at March 31, 2026	$	55	$	1,448	$	15,405	$	(181)	$	(12,797)	$	413	$	4,343
Stock-based compensation	—		11		—		—		(9)		—		2
Purchases of treasury stock	—		—		—		—		(226)		—		(226)
Transactions with noncontrolling interests, net	—		(11)		—		—		—		(24)		(35)
Net earnings	—		—		570		—		—		30		600
Other comprehensive earnings (losses)	—		—		—		(17)		—		(9)		(26)

Cash dividends paid ($2.49 per share)	—		—		(117)		—		—		(28)		(145)
Balance at June 30, 2026	$	55	$	1,448	$	15,858	$	(198)	$	(13,032)	$	382	$	4,513

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 distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.) and Japan. In the fourth quarter of 2025, Grainger exited the United Kingdom (U.K.) market by completing the sale of the Cromwell business and closing the Zoro U.K. business. 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, 2025, 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, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 19, 2026 (2025 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 2025 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 customer industry:


	Three Months Ended June 30,
	2026						2025
Customer Industry(1)	High-Touch Solutions N.A.		Endless Assortment		Total Company		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Manufacturing	30	%	30	%	30	%	30	%	30	%	30	%
Government	19	%	3	%	16	%	19	%	3	%	16	%
Wholesale	7	%	17	%	9	%	7	%	18	%	9	%
Commercial Services	7	%	13	%	8	%	7	%	12	%	8	%
Contractors	6	%	12	%	7	%	6	%	12	%	7	%
Healthcare	7	%	2	%	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	2	%	—	%	2	%	3	%	—	%	2	%
Other(3)	11	%	15	%	11	%	10	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	79	%	21	%	100	%	78	%	20	%	100	%


(1)Customer industry results for the three months ended June 30, 2026 and 2025 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 included the Cromwell business through the date of divestiture in the fourth quarter of 2025. For further details on the sale, see Note 2 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2025 Form 10-K. Other businesses accounted for approximately 2% of Total Company revenue for the three months ended June 30, 2025.
(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,
	2026						2025
Customer Industry(1)	High-Touch Solutions N.A.		Endless Assortment		Total Company		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Manufacturing	30	%	30	%	30	%	30	%	30	%	30	%
Government	19	%	3	%	15	%	19	%	3	%	15	%
Wholesale	7	%	18	%	9	%	7	%	18	%	9	%
Commercial Services	7	%	12	%	8	%	7	%	12	%	8	%
Contractors	6	%	12	%	7	%	5	%	12	%	7	%
Healthcare	8	%	2	%	7	%	8	%	1	%	6	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	4	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	3	%	3	%	2	%	3	%
Warehousing	2	%	1	%	2	%	3	%	1	%	2	%
Other(3)	10	%	14	%	11	%	10	%	15	%	12	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	79	%	21	%	100	%	78	%	20	%	100	%

(1)Customer industry results for the six months ended June 30, 2026 and 2025 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 included the Cromwell business through the date of divestiture in the fourth quarter of 2025. For further details on the sale, see Note 2 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2025 Form 10-K. Other businesses accounted for approximately 2% of Total Company revenue for the six months ended June 30, 2025.
(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 $121 million and $115 million as of June 30, 2026 and December 31, 2025, respectively.

The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of June 30, 2026 and December 31, 2025.

NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT

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


	As of
	June 30, 2026		December 31, 2025
Land and land improvements	$	551	$	551
Building, structures and improvements	1,961		1,883
Furniture, fixtures, machinery and equipment	2,172		2,066
Property, buildings and equipment	4,684		4,500
Less accumulated depreciation	2,283		2,232
Property, buildings and equipment – net	$	2,401	$	2,268

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, 2026. 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, 2025	$	306	$	49	$	355


Translation	5		—		5
Balance at December 31, 2025	311		49		360


Translation	(4)		(2)		(6)
Balance at June 30, 2026	$	307	$	47	$	354

No goodwill impairment was recorded for the three and six months ended June 30, 2026 and 2025.

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


		As of
		June 30, 2026						December 31, 2025
	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	$	162	$	158	$	4	$	163	$	157	$	6
Trademarks, trade names and other	16.5 years	19		16		3		20		17		3
Non-amortized trade names and other	Indefinite	18		—		18		19		—		19
Capitalized software	4.5 years	868		621		247		821		584		237
Total intangible assets	5.7 years	$	1,067	$	795	$	272	$	1,023	$	758	$	265

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, 2026				December 31, 2025
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	894	$	1,000	$	904
4.45% senior notes due 2034	500		486		500		496
3.75% senior notes due 2046	400		314		400		338
4.20% senior notes due 2047	400		333		400		317
Japanese Yen term loans	126		126		83		83
Debt issuance costs – net of amortization and other	(20)		(20)		(21)		(21)
Long-term debt	2,406		2,133		2,362		2,117
Commercial paper and other	2		2		126		126
Current maturities	2		2		126		126
Total debt	$	2,408	$	2,135	$	2,488	$	2,243

Senior Notes

Between 2015 and 2024, Grainger issued $2.3 billion in unsecured debt (Senior Notes), net of the $500 million principal repayment for the 1.85% Senior Notes that matured in February 2025, 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, 2026 and December 31, 2025, the cumulative unamortized costs were $20 million and $21 million, respectively.

Japanese Yen Term Loans

In 2026 and 2025, MonotaRO entered into ¥7.5 billion and ¥13 billion, respectively, 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. The weighted average interest rates on the 2026 and 2025 term loans are 1.74% and 1.27%, respectively.

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 13 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2025 Form 10-K.

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


	Three Months Ended June 30,
	2026						2025
	High-Touch Solutions N.A.		Endless Assortment		Total		High-Touch Solutions N.A.		Endless Assortment		Total
Net sales(1)	$	3,967	$	1,054	$	5,021	$	3,544	$	929	$	4,473
Reconciliation of net sales
Other net sales					—						81
Total company net sales					$	5,021					$	4,554
Less:
Cost of goods sold	2,307		730				2,090		652
Other segment items(2)	974		203				865		185
Segment operating earnings	$	686	$	121	$	807	$	589	$	92	$	681
Reconciliation of operating earnings
Other operating earnings					—						(3)
Total company operating earnings					$	807					$	678


	Six Months Ended June 30,
	2026						2025
	High-Touch Solutions N.A.		Endless Assortment		Total		High-Touch Solutions N.A.		Endless Assortment		Total
Net sales(1)	$	7,719	$	2,044	$	9,763	$	6,941	$	1,757	$	8,698
Reconciliation of net sales
Other net sales					—						162
Total company net sales					$	9,763					$	8,860
Less:
Cost of goods sold	4,460		1,423				4,048		1,235
Other segment items(2)	1,885		395				1,704		358
Segment operating earnings	$	1,374	$	226	$	1,600	$	1,189	$	164	$	1,353
Reconciliation of operating earnings
Other operating earnings (losses)					—						(3)
Total company operating earnings					$	1,600					$	1,350

(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)

The following is depreciation, amortization and non-cash lease expense (in millions of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Depreciation, amortization and non-cash lease expense(1):
High-Touch Solutions N.A.	$	67	$	61	$	132	$	119
Endless Assortment	18		20		33		39
Other	—		3		—		5
Total	$	85	$	84	$	165	$	163

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

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue by geographic location(1):
United States	$	4,110	$	3,652	$	7,992	$	7,156
Japan	630		562		1,219		1,042
Canada	201		175		395		337
Other foreign countries	80		165		157		325
	$	5,021	$	4,554	$	9,763	$	8,860

(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 assortment. 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 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.

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. It is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position or results of operations.

NOTE 8 - SUBSEQUENT EVENTS

On July 29, 2026, the Company’s Board of Directors declared a quarterly dividend of $2.49 per share, payable September 1, 2026, to shareholders of record on August 10, 2026.

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, 2025 included in the Company's 2025 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 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.

Strategic Priorities

For a discussion of the Company’s strategic priorities for 2026, see Part I, Item 1: Business and Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2025 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 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.

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, rising fuel and transportation costs, 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.

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.

For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2025 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, 2026

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, 2026 and 2025 (in millions of dollars except per share amounts):


	Three Months Ended June 30,
					% Change		% of Net Sales
	2026		2025				2026		2025
Net sales(1)	$	5,021	$	4,554	10.3	%	100.0	%	100.0	%
Cost of goods sold	3,037		2,799		8.5		60.5		61.5
Gross profit	1,984		1,755		13.0		39.5		38.5
Selling, general and administrative expenses	1,177		1,077		9.3		23.4		23.6
Operating earnings	807		678		19.0		16.1		14.9
Other expense – net	9		17		(47.1)		0.2		0.3
Income tax provision	198		153		29.4		3.9		3.4
Net earnings	600		508		18.1		12.0		11.2
Noncontrolling interest	30		26		15.4		0.6		0.6
Net earnings attributable to W.W. Grainger, Inc.	$	570	$	482	18.3		11.4	%	10.6	%
Diluted earnings per share	$	12.01	$	9.97	20.5	%

(1)For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, 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 to the prior year period for the three months ended June 30, 2026 and 2025 (in millions of dollars):


	Three Months Ended June 30,
	2026		% Change(1)		2025		% Change(1)
Net sales	$	5,021	10.3	%	$	4,554	5.6	%

Daily net sales(2)	$	78.5	10.3	%	$	71.2	5.6	%



Daily, organic constant currency net sales(2)	$	80.7	13.7	%	$	70.8	5.1	%

(1)Calculated on the basis of prior year net sales for the three months ended June 30, 2026 and 2025.
(2)Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. There were 64 sales days in the three months ended June 30, 2026 and 2025. Daily, organic constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year changes in foreign currency exchange rates and the net sales results of the divested and closed businesses in the prior year period on a daily basis. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net sales of $5,021 million for the three months ended June 30, 2026 increased $467 million, or 10%, and on a daily, organic constant currency basis, net sales increased 14% compared to the same period in 2025. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to sales growth in the second quarter of 2026. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $1,984 million for the three months ended June 30, 2026 increased $229 million, or 13%, and gross profit margin of 39.5% increased 100 basis points compared to the same period in 2025. For further discussion on the Company's gross profit, see the Segment Analysis section below.

Selling, general and administrative (SG&A) expenses of $1,177 million for the three months ended June 30, 2026 increased $100 million, or 9%, compared to the same period in 2025. The increase was due to higher payroll and benefit expenses in the second quarter of 2026 partially offset by a benefit related to the exit from the U.K. market in the fourth quarter of 2025.

Operating earnings of $807 million for the three months ended June 30, 2026 increased $129 million, or 19%, compared to the same period in 2025.

Income tax expense of $198 million for the three months ended June 30, 2026 increased $45 million compared to the same period in 2025. Grainger's effective tax rates were 24.8% and 23.2% for the three months ended June 30, 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.

Diluted earnings per share was $12.01 for the three months ended June 30, 2026, an increase of 20% compared to $9.97 for the same period in 2025.

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,
	2026		2025		% Change
Net sales	$	3,967	$	3,544	11.9	%

Gross profit	$	1,660	$	1,454	14.2	%
Selling, general and administrative expenses	974		865		12.6	%
Operating earnings	$	686	$	589	16.5	%

Net sales of $3,967 million for the three months ended June 30, 2026 increased $423 million, which represents a 12% increase on a reported and daily, constant currency basis compared to the same period in 2025. The increase was primarily due to volume.

Gross profit of $1,660 million for the three months ended June 30, 2026 increased $206 million, or 14%, and gross profit margin of 41.8% increased 80 basis points compared to the same period in 2025. The increase was primarily due to tariff refund benefits recognized in the quarter, which was partially offset by an increase in freight costs.

SG&A expenses of $974 million for the three months ended June 30, 2026 increased $109 million, or 13%, compared to the same period in 2025. The increase was primarily due to higher payroll and benefit expenses.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings of $686 million for the three months ended June 30, 2026 increased $97 million, or 17%, compared to the same period in 2025.

Endless Assortment

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


	Three Months Ended June 30,
	2026		2025		% Change
Net sales	$	1,054	$	929	13.5	%

Gross profit	$	324	$	277	17.0	%
Selling, general and administrative expenses	203		185		9.7	%
Operating earnings	$	121	$	92	31.5	%

Net sales of $1,054 million for the three months ended June 30, 2026 increased $125 million, or 14%, and on a daily, organic constant currency basis increased 21% compared to the same period in 2025. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 6% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $324 million for the three months ended June 30, 2026 increased $47 million, or 17%, and gross profit margin of 30.7% increased 90 basis points compared to the same period in 2025. The increase was primarily due to favorable discount activity at Zoro and favorable product mix across the segment.

SG&A expenses of $203 million for the three months ended June 30, 2026 increased $18 million, or 10%, compared to the same period in 2025. The increase was primarily due to higher marketing expenses.

Operating earnings of $121 million for the three months ended June 30, 2026 increased $29 million, or 32%, compared to the same period in 2025.

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, 2026

The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for the six months ended June 30, 2026 and 2025 (in millions of dollars except per share amounts):


	Six Months Ended June 30,
					% Change		% of Net Sales
	2026		2025				2026		2025
Net sales(1)	$	9,763	$	8,860	10.2	%	100.0	%	100.0	%
Cost of goods sold	5,883		5,395		9.0		60.3		60.9
Gross profit	3,880		3,465		12.0		39.7		39.1
Selling, general and administrative expenses	2,280		2,115		7.8		23.3		23.9
Operating earnings	1,600		1,350		18.5		16.4		15.2
Other expense – net	27		32		(15.6)		0.3		0.4
Income tax provision	392		310		26.5		4.0		3.5
Net earnings	1,181		1,008		17.2		12.1		11.3
Noncontrolling interest	56		47		19.1		0.6		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	1,125	$	961	17.1		11.5	%	10.8	%
Diluted earnings per share	$	23.66	$	19.83	19.3	%

(1)For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, 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 to the prior year period for the six months ended June 30, 2026 and 2025 (in millions of dollars):


	Six Months Ended June 30,
	2026		% Change(1)		2025		% Change(1)
Net sales	$	9,763	10.2	%	$	8,860	3.7	%

Daily net sales(2)	$	76.9	10.2	%	$	70.3	4.5	%



Daily, organic constant currency net sales(2)	$	78.6	12.9	%	$	70.5	4.7	%

(1)Calculated on the basis of prior year net sales for the six months ended June 30, 2026 and 2025.
(2)Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. There were 127 sales days in the six months ended June 30, 2026 and 2025. Daily, organic constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year changes in foreign currency exchange rates and the net sales results of the divested and closed businesses in the prior year period on a daily basis. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net sales of $9,763 million for the six months ended June 30, 2026 increased $903 million, or 10%, and on a daily, constant currency basis increased 13% compared to the same period in 2025. Both High-Touch Solutions N.A. and the Endless Assortment segments contributed to sales growth in the six months ended June 30, 2026. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $3,880 million for the six months ended June 30, 2026 increased $415 million, or 12%, and gross profit margin of 39.7% increased 60 basis points compared to the same period in 2025. For further discussion on the Company's gross profit, see the Segment Analysis section below.

SG&A expenses of $2,280 million for the six months ended June 30, 2026 increased $165 million, or 8%, compared to the same period in 2025. The increase was due to higher payroll and benefit expenses in 2026 partially offset by a benefit related to the exit from the U.K. market in the fourth quarter of 2025.

Operating earnings of $1,600 million for the six months ended June 30, 2026 increased $250 million, or 19%, compared to the same period in 2025.

Income taxes of $392 million for the six months ended June 30, 2026 increased $82 million, compared to the same period in 2025. Grainger's effective tax rates were 24.9% and 23.5% for the six months ended June 30, 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.

Diluted earnings per share was $23.66 for the six months ended June 30, 2026, an increase of 19% compared to $19.83 for the same period in 2025.

Segment Analysis

High-Touch Solutions N.A.

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


	Six Months Ended June 30,
	2026		2025		% Change
Net sales	$	7,719	$	6,941	11.2	%

Gross profit	$	3,259	$	2,893	12.7	%
Selling, general and administrative expenses	1,885		1,704		10.6	%
Operating earnings	$	1,374	$	1,189	15.6	%

Net sales of $7,719 million for the six months ended June 30, 2026 increased $778 million, which represents an 11% increase on a reported and daily, constant currency basis compared to the same period in 2025. The increase was primarily due to volume.

Gross profit of $3,259 million for the six months ended June 30, 2026 increased $366 million, or 13%, and gross profit margin of 42.2% increased 50 basis points compared to the same period in 2025. The increase was primarily due to tariff refund benefits recognized in 2026, which was partially offset by an increase in freight costs.

SG&A expenses of $1,885 million for the six months ended June 30, 2026 increased $181 million, or 11%, compared to the same period in 2025. The increase was primarily due to higher payroll and benefit expenses in 2026.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Operating earnings of $1,374 million for the six months ended June 30, 2026 increased $185 million, or 16%, compared to the same period in 2025.

Endless Assortment

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


	Six Months Ended June 30,
	2026		2025		% Change
Net sales	$	2,044	$	1,757	16.3	%

Gross profit	$	621	$	522	19.0	%
Selling, general and administrative expenses	395		358		10.3	%
Operating earnings	$	226	$	164	37.8	%

Net sales of $2,044 million for the six months ended June 30, 2026 increased $287 million, or 16%, and on a daily, constant currency basis increased 21% compared to the same period in 2025. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 4% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $621 million for the six months ended June 30, 2026 increased $99 million, or 19%, and gross profit margin of 30.4% increased 70 basis points compared to the same period in 2025. The increase was primarily due to favorable discount activity at Zoro and favorable product mix across the segment.

SG&A expenses of $395 million for the six months ended June 30, 2026 increased $37 million, or 10%, compared to the same period in 2025. The increase was primarily due to higher marketing expenses in 2026.

Operating earnings of $226 million for the six months ended June 30, 2026 increased $62 million, or 38%, compared to the same period in 2025.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 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.

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 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 sales for the three months ended June 30, 2026 and 2025 (in millions of dollars):


	Three Months Ended June 30,
	High-Touch Solutions N.A.				Endless Assortment				Total Company(1)
	2026		% Change(2)		2026		% Change(2)		2026		% Change(2)
Reported net sales	$	3,967	11.9	%	$	1,054	13.5	%	$	5,021	10.3	%

Daily impact(3)	—		—		—		—		—		—
Daily net sales	62.0		11.9		16.5		13.5		78.5		10.3
Foreign currency exchange(4)	(0.1)		(0.2)		0.9		5.9		0.8		1.1
Business divestiture(5)	—		—		0.2		1.2		1.4		2.3
Daily, organic constant currency net sales	$	61.9	11.7	%	$	17.6	20.6	%	$	80.7	13.7	%

	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)
Business divestiture(5)	—		—		—		—		—		—
Daily, organic constant currency net sales	$	55.5	2.8	%	$	14.1	16.3	%	$	70.8	5.1	%

(1)Total Company includes other businesses, which included the Cromwell business through the date of divestiture in the fourth quarter of 2025. 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, 2026 and 2025.

(4)Excludes the impact on net sales due to year-over-year changes in foreign currency exchange rates on a daily basis.
(5)Excludes the net sales results of the divested Cromwell business and closed Zoro U.K. business, announced in the third quarter of 2025 and completed in the fourth quarter of 2025, in the prior year period on a daily basis. There was no business divestiture impact for the three months ended June 30, 2025 compared to the prior year period 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 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 sales for the six months ended June 30, 2026 and 2025 (in millions of dollars):


	Six Months Ended June 30,
	High-Touch Solutions N.A.				Endless Assortment				Total Company(1)
	2026		% Change(2)		2026		% Change(2)		2026		% Change(2)
Reported net sales	$	7,719	11.2	%	$	2,044	16.3	%	$	9,763	10.2	%

Daily impact(3)	—		—		—		—		—		—
Daily net sales	60.8		11.2		16.1		16.3		76.9		10.2
Foreign currency exchange(4)	(0.2)		(0.3)		0.5		3.5		0.3		0.4
Business divestiture(5)	—		—		0.1		1.3		1.4		2.3
Daily, organic constant currency net sales	$	60.6	10.9	%	$	16.7	21.1	%	$	78.6	12.9	%

	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
Business divestiture(5)	—		—		—		—		—		—
Daily, organic constant currency net sales	$	55.3	2.3	%	$	13.9	15.9	%	$	70.5	4.7	%

(1)Total Company includes other businesses, which included the Cromwell business through the date of divestiture in the fourth quarter of 2025. 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 sales days in the six months ended June 30, 2026 and 2025.

(4)Excludes the impact on net sales due to year-over-year changes in foreign currency exchange rates on a daily basis.
(5)Excludes the net sales results of the divested Cromwell business and closed Zoro U.K. business, announced in the third quarter of 2025 and completed in the fourth quarter of 2025, in the prior year period on a daily basis. There was no business divestiture impact for the six months ended June 30, 2025 compared to the prior year period on a daily basis.

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, 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.

Cash and Cash Equivalents

As of June 30, 2026 and December 31, 2025, Grainger had cash and cash equivalents of $589 million and $585 million, respectively. The Company had approximately $1.8 billion in available liquidity as of June 30, 2026.

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,
	2026		2025
Total cash provided by (used in):
Operating activities	$	1,183	$	1,023
Investing activities	(294)		(283)
Financing activities	(874)		(1,201)
Effect of exchange rate changes on cash and cash equivalents	(11)		22
Increase (decrease) in cash and cash equivalents	$	4	$	(439)

Net cash provided by operating activities was $1,183 million and $1,023 million for the six months ended June 30, 2026 and 2025, respectively. The increase was primarily due to higher net earnings.

Net cash used in investing activities was $294 million and $283 million for the six months ended June 30, 2026 and 2025, respectively. The 2026 investing activities were in line with prior year and driven by continued investment in supply chain across the Company.

Net cash used in financing activities was $874 million and $1,201 million for the six months ended June 30, 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.

Working Capital

Working capital as of June 30, 2026 was $3,615 million, an increase of $100 million compared to $3,515 million as of December 31, 2025. As of June 30, 2026 and December 31, 2025, the ratio of current assets to current liabilities was 2.8 and 3.0, 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 34.8% and 37.5% as of June 30, 2026 and December 31, 2025, 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, 2026:

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 2025 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 2025 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 2025 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, acquisitions or business strategies, including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect our 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 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 2025 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 rates and commodity price risks.

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 2025 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, 2026, 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 a 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 I, Item 1A: Risk Factors in the Company's 2025 Form 10-K.

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

Issuer Purchases of Equity Securities – Second Quarter 2026


Period	Total Number of Shares Purchased(1)(2)	Average Price Paid per Share(3)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(4)(2)	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Apr. 1 – Apr. 30	58,833	$1,149.24	58,833	2,866,133
May 1 – May 31	66,790	$1,228.03	66,790	2,799,343
Jun. 1 – Jun. 30	56,786	$1,311.82	56,602	2,742,741
Total	182,409		182,225

(1)There were no shares withheld to satisfy tax withholding obligations.
(2)The difference of 184 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc. Retirement Savings Plan for the benefit of the employees who participate in the plan.
(3)Average price paid per share excludes excise tax and commissions of $0.02 per share paid.
(4)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

On June 9, 2026, the Novich Family Trust, a family trust under which Neil Novich, a member of the Company’s Board of Directors, serves as co-trustee and beneficiary, adopted a written trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The trading arrangement provides for the sale of shares issuable upon the settlement of 33,644 deferred stock units previously granted to Mr. Novich and held by the Novich Family Trust, plus any additional deferred stock units credited to Mr. Novich’s account prior to the date of settlement. The aggregate number of shares to be sold under the arrangement will be determined at the time of settlement and will exclude shares withheld to satisfy transaction costs and applicable income tax withholding obligations, if any. The trading arrangement is a multi-trade trading plan and will expire on November 5, 2027, or earlier if all shares subject to the arrangement have been sold.

None of the Company's other 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, 2026.

W.W. Grainger, Inc. and Subsidiaries

Item 6: Exhibits


EXHIBIT NO.						DESCRIPTION
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 4, 2026	By:	/s/ Deidra C. Merriwether
			Deidra C. Merriwether
			Senior Vice President
			and Chief Financial Officer
			(Principal Financial Officer)
Date:	August 4, 2026	By:	/s/ Laurie R. Thomson
			Laurie R. Thomson
			Vice President and Controller
			(Principal Accounting Officer)