W.W. GRAINGER, INC. (GWW) · Material Event (8-K) SEC Filing

EX-99.1 2 gww8kex991q22026.htm EX-99.1 Document GRAINGER REPORTS RESULTS FOR THE SECOND QUARTER 2026 Continued strong results across the business Company increases full year 2026 outlookSecond Quarter Highlights Delivered sales of $5.0 billion, up 10.3%, or 13.7% on a daily, organic constant currency basis Achieved operating margin of 16.1%, up 120 basis points, inclusive of IEEPA tariff refunds Generated diluted EPS of $12.01, up 20.5% Produced $444 million in operating cash flow and returned $341 million to Grainger shareholders through dividends and share repurchases Increasing full year 2026 guidance, including diluted adjusted EPS range of $45.50 to $47.25CHICAGO, August 4, 2026 - Grainger (NYSE GWW) today reported results for the second quarter of 2026 with sales of $5.0 billion, up 10.3%, or 13.7% on a daily, organic constant currency basis, and diluted EPS of $12.01, up 20.5% compared to the second quarter of 2025. Despite ongoing geopolitical uncertainty, we executed well during the second quarter and delivered exceptional service to customers. Sales remained strong and core operating profitability was in line with expectations, said D.G. Macpherson, Chairman and CEO. Looking ahead, we are increasing our outlook to reflect our strong first half performance and the continued momentum we are seeing across the demand environment. 12026 Second Quarter Financial Summary ($ in millions, except per share amounts) Q2 2026(1) Q2 2025(1) Q2'26 vs. Q2'25Fav. (Unfav.) Net Sales $5,021 $4,554 10.3% Gross Profit $1,984 $1,755 13.0% Operating Earnings $807 $678 19.0% Net Earnings Attributable to W.W. Grainger, Inc. $570 $482 18.3% Diluted Earnings Per Share $12.01 $9.97 20.5% Gross Profit Margin 39.5% 38.5% 100 bps Operating Margin 16.1% 14.9% 120 bps Effective Tax Rate 24.8% 23.2% (160) bps (1) Results are consistent on a reported and adjusted basis. RevenueSales in the quarter increased 10.3% compared to the second quarter of 2025. When normalizing for the Company's exit from the U.K. market and the impact of foreign currency exchange, sales on a daily, organic constant currency basis increased 13.7% compared to the second quarter of 2025. In the High-Touch Solutions - N.A. segment, sales were up 11.9%, or 11.7% on a daily, constant currency basis compared to the second quarter of 2025. Results for the segment were driven by volume growth and price inflation as tariff costs are passed. In the Endless Assortment segment, sales were up 13.5% compared to the second quarter of 2025, or up 20.6% on a daily, organic constant currency basis. Growth for the segment was driven by strong performance at both MonotaRO and Zoro.Gross Profit MarginGross profit margin was 39.5% in the second quarter of 2026, up 100 basis points compared to the second quarter of 2025, driven by strength from both segments and a benefit related to the Company's exit from the U.K. market. Results were inclusive of refunds recognized on IEEPA tariffs for products directly imported by Grainger, which reduced cost of goods sold by $43 million.In the High-Touch Solutions - N.A. segment, gross profit margin was 41.8%, up 80 basis points compared to the prior year quarter as the benefit from the IEEPA tariff refunds and positive mix were partly offset by unfavorable freight and headwinds from certain private label products. In 2the Endless Assortment segment, gross profit margin increased by 90 basis points from the second quarter of 2025 due to improvement across the segment.EarningsFor the second quarter of 2026, total Company operating earnings were $807 million, up 19.0% compared to the second quarter of 2025. Operating margin was 16.1%, a 120 basis point increase compared to the second quarter of 2025. This increase in operating margin was driven by gross margin improvement in both segments, sales leverage improvement in Endless Assortment, and a benefit related to the Company's exit from the U.K. market.Diluted earnings per share for the second quarter of 2026 were $12.01, up 20.5% compared to the second quarter of 2025. The increase was due primarily to strong operating performance and fewer shares outstanding, partly offset by a higher effective tax rate.Tax RateFor the second quarter of 2026, the effective tax rate was 24.8%, compared to 23.2% in the second quarter of 2025. The increase in the effective tax rate was primarily due to decreased tax credit activity in the current year period and the impact of tax legislation effective in 2026.Cash FlowDuring the second quarter of 2026, the Company generated $444 million of cash flow from operating activities as net earnings were partly offset by unfavorable working capital. The Company invested $111 million in capital expenditures, resulting in free cash flow of $333 million. During the quarter, the Company returned $341 million to Grainger shareholders through dividends and share repurchases.3GuidanceThe Company is updating the following guidance ranges for 2026 Total Company(1) Previous 2026 Guidance Range(as of May 7, 2026) Updated 2026 Guidance Range(as of August 4, 2026) Net Sales $19.2 - $19.6 billion $19.4 - $19.7 billion Sales growth 6.7% - 9.1% 8.4% - 10.0% Daily, organic constant currency sales growth 9.5% - 12.0% 11.5% - 13.0% Gross Profit Margin 39.2% - 39.5% 39.3% - 39.6% Operating Margin 15.6% - 16.0% 15.8% - 16.2% Diluted Earnings per Share $44.25 - $46.25 $45.50 - $47.25 Operating Cash Flow $2.2 - $2.4 billion $2.25 - $2.4 billion CapEx (cash basis) $0.55 - $0.65 billion $0.575 - $0.65 billion Share Buyback $0.95 - $1.05 billion $0.975 - $1.05 billion Effective Tax Rate 25.0% 25.0% Segment Operating Margin High-Touch Solutions - N.A. 17.0% - 17.4% 17.2% - 17.6% Endless Assortment 10.2% - 10.6% 10.4% - 10.8% (1) Guidance provided is on an adjusted basis. Daily, organic constant currency sales growth is adjusted for the impact of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. For further details see the supplemental information of this release. WebcastThe Company will conduct a live conference call and webcast at 11 00 a.m. ET on Tuesday, August 4, 2026, to discuss the second quarter results. The event will be hosted by D.G. Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO, and can be accessed at invest.grainger.com. To access the conference call via phone, please send a request to InvestorRelations grainger.com. For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com.About GraingerW.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America and Japan. At Grainger, We Keep the World Working by serving more than 4.6 million customers worldwide with maintenance, repair and operating (MRO) products and value-added solutions delivered through innovative technology and deep customer expertise. Known for its commitment to service and purpose-driven culture, the Company reported 2025 revenue of $17.9 billion. For more information, visit www.grainger.com.4Visit invest.grainger.com to view information about the Company, including a supplement regarding 2026 second quarter results and additional Company information.Safe Harbor Statement All statements in this communication, other than those relating to historical facts, are 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. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. 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 that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.5Contacts Media Investors Erin Ptacek Kyle Bland VP, Communications Public Affairs VP, Investor Relations Robb Kristopher Kevin Byrne Director, External Affairs Director, Investor Relations Media_Inquiries grainger.com InvestorRelations grainger.com 6 W.W. Grainger, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS(In millions of dollars, except for share and per share amounts)(Unaudited) Three Months Ended June 30, Six Months Ended 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 (income) expense 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 7 W.W. Grainger, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars)(Unaudited) As of (Unaudited) Assets 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 4,513 4,141 Total liabilities and shareholders equity $ 9,618 $ 8,962 8 W.W. Grainger, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions of dollars)(Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cash flows from operating activities Net earnings $ 600 $ 508 $ 1,181 $ 1,008 Adjustments to reconcile net earnings to net cash provided by operating activities Provision for credit losses 7 6 13 13 Deferred income taxes and tax uncertainties 23 5 31 1 Depreciation and amortization 66 64 128 125 Non-cash lease expense 20 21 40 41 Stock-based compensation 25 23 39 35 Change in operating assets and liabilities Accounts receivable (207) (84) (510) (212) Inventories 9 (25) 14 (19) Prepaid expenses and other assets 18 (14) (32) (33) Trade accounts payable 59 77 312 231 Operating lease liabilities (24) (28) (48) (53) Accrued liabilities 26 (18) 21 (60) Income taxes net (177) (143) (4) (37) Other non-current liabilities (1) (15) (2) (17) Net cash provided by operating activities 444 377 1,183 1,023 Cash flows from investing activities Capital expenditures (111) (175) (281) (300) Proceeds from sale of assets 4 4 Other net (5) 13 (13) 13 Net cash used in investing activities (116) (158) (294) (283) Cash flows from financing activities Short-term borrowings (repayments), original maturities of 90 days or less, net (125) Proceeds from debt 2 62 52 63 Payments of debt (3) (1) (4) (503) Proceeds from stock options exercised 2 8 2 Payments for employee taxes withheld from stock awards (25) (27) (30) (30) Purchases of treasury stock (224) (226) (461) (507) Purchases of noncontrolling interests (45) (70) Cash dividends paid (145) (110) (253) (225) Other net 10 (1) 9 (1) Net cash used in financing activities (428) (303) (874) (1,201) Exchange rate effect on cash and cash equivalents (6) 15 (11) 22 Net change in cash and cash equivalents (106) (69) 4 (439) Cash and cash equivalents at beginning of period 695 666 585 1,036 Cash and cash equivalents at end of period $ 589 $ 597 $ 589 $ 597 9SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)The Company supplements the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with the non-GAAP financial measures as defined below. The Company believes these non-GAAP financial measures provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.Basis of presentationThe Company has a controlling ownership interest in MonotaRO, which is part of the Endless Assortment segment. MonotaRO s results are fully consolidated, reflected in U.S. GAAP, and reported one-month in arrears. Results will differ from MonotaRO s externally reported financials which follow Japanese GAAP.Adjusted gross profit, adjusted SG A, adjusted operating earnings, adjusted operating margin, adjusted net earnings, adjusted diluted EPSExclude certain non-recurring items, like restructuring charges, asset impairments, gains and losses associated with business divestitures or closures and other non-recurring, infrequent or unusual gains and losses (together referred to as non-GAAP adjustments ), from the Company s most directly comparable reported U.S. GAAP figures (reported gross profit, SG A, operating earnings, net earnings and EPS). The Company believes these non-GAAP adjustments provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.Free cash flow (FCF) Calculated using total cash provided by operating activities less capital expenditures. The Company believes the presentation of FCF allows investors to evaluate the capacity of the Company's operations to generate free cash flow.Daily sales Refers to sales for the period divided by the number of U.S. selling days for the period.Daily, constant currency salesRefers to daily sales adjusted for changes in foreign currency exchange rates.Daily, organic constant currency salesRefers to daily sales excluding the sales of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange rates.Foreign currency exchangeCalculated by dividing current period local currency daily sales by current period average exchange rate and subtracting the current period local currency daily sales divided by the prior period average exchange rate.U.S. selling days 2025 Q1-63, Q2-64, Q3-64, Q4-64, FY-2552026 Q1-63, Q2-64, Q3-64, Q4-64, FY-2552027 Q1-63, Q2-64, Q3-64, Q4-63, FY-254As non-GAAP financial measures are not standardized, it may not be possible to compare these measures with other companies' non-GAAP measures having the same or similar names. These non-GAAP measures should not be considered in isolation or as a substitute for reported results. These non-GAAP measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. This press release also includes certain non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of future restructurings, asset impairments, and other charges. Neither of these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measures is not provided.The reconciliations provided below reconcile GAAP financial measures to non-GAAP financial measures used in this release daily sales daily, organic constant currency sales and free cash flow.10Sales growth for the three months ended June 30, 2026(percent change compared to prior year period) (unaudited) Q2 2026 Total Company High-Touch Solutions - N.A. Endless Assortment Reported sales 10.3% 11.9% 13.5% Daily impact % % % Daily sales(1) 10.3% 11.9% 13.5% Foreign currency exchange(2) 1.1% (0.2)% 5.9% Business divestiture(3) 2.3% % 1.2% Daily, organic constant currency sales 13.7% 11.7% 20.6% (1) Based on U.S. selling days, there were 64 selling days in Q2 2026 and Q2 2025. (2) Excludes the impact of year-over-year foreign currency exchange rate fluctuations. (3) 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. Free cash flow (FCF) for the three months ended June 30, 2026(in millions of dollars) (unaudited) Q2 2026 Net cash flows provided by operating activities $ 444 Capital expenditures (111) Free cash flow $ 333 11