W.W. Grainger 10-Q 2025-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2025

OR

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

For the transition period from ______ to _______

Commission file number 1-5684

W.W. Grainger, Inc.

(Exact name of registrant as specified in its charter)

Illinois																		36-1150280
(State or other jurisdiction of incorporation or organization)																		(I.R.S. Employer Identification No.)
100 Grainger Parkway
			Lake Forest,			Illinois												60045-5201
(Address of principal executive offices)																		(Zip Code)

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

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

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

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

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

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

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

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

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

Yes ☐ No ☒

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

			TABLE OF CONTENTS
						Page
			PART I - FINANCIAL INFORMATION
Item 1:			Financial Statements (Unaudited)
			Condensed Consolidated Statements of Earnings for the Three and Six Months Ended June 30, 2025 and 2024			3
			Condensed Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended June 30, 2025 and 2024			4
			Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024			5
			Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024			6
			Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024			7
			Notes to Condensed Consolidated Financial Statements			9
Item 2:			Management's Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3:			Quantitative and Qualitative Disclosures About Market Risk			30
Item 4:			Controls and Procedures			30
			PART II - OTHER INFORMATION
Item 1:			Legal Proceedings			31
Item 1A:			Risk Factors			31
Item 2:			Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 5:			Other Information			31
Item 6:			Exhibits			32
Signatures						33

PART I – FINANCIAL INFORMATION

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

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

(Unaudited)

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

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions of dollars)

(Unaudited)

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2025						2024						2025						2024
Net earnings			$	508					$	490					$	1,008					987
Other comprehensive earnings (losses):
Foreign currency translation adjustments			75						(57)						113						(111)
Postretirement benefit plan losses – net of tax expense of $1, $1, $2, and $2, respectively			(4)						(4)						(6)						(7)
Total other comprehensive earnings (losses)			71						(61)						107						(118)
Comprehensive earnings – net of tax			579						429						1,115						869
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings			26						20						47						39
Foreign currency translation adjustments			15						(20)						32						(42)
Total comprehensive earnings (losses) attributable to noncontrolling interest			41						—						79						(3)
Comprehensive earnings attributable to W.W. Grainger, Inc.			$	538					$	429					$	1,036					$	872

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

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

			As of
Assets			(Unaudited) June 30, 2025						December 31, 2024
Current assets
Cash and cash equivalents			$	597					$	1,036
Accounts receivable (less allowance for credit losses of $34 and $32, respectively)			2,472						2,232
Inventories – net			2,357						2,306
Prepaid expenses and other current assets			224						163
Total current assets			5,650						5,737
Property, buildings and equipment – net			2,107						1,927
Goodwill			365						355
Intangibles – net			267						243
Operating lease right-of-use			355						371
Other assets			193						196
Total assets			$	8,937					$	8,829
Liabilities and shareholders' equity
Current liabilities
Current maturities			$	2					$	499
Trade accounts payable			1,204						952
Accrued compensation and benefits			260						324
Operating lease liability			81						78
Accrued expenses			414						407
Income taxes payable			41						45
Total current liabilities			2,002						2,305
Long-term debt			2,341						2,279
Long-term operating lease liability			305						327
Deferred income taxes and tax uncertainties			102						101
Other non-current liabilities			104						114
Shareholders' equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding			—						—
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued			55						55
Additional contributed capital			1,414						1,399
Retained earnings			14,429						13,677
Accumulated other comprehensive losses			(199)						(274)
Treasury stock, at cost – 61,749,526 and 61,326,349 shares, respectively			(12,025)						(11,499)
Total W.W. Grainger, Inc. shareholders’ equity			3,674						3,358
Noncontrolling interest			409						345
Total shareholders' equity			4,083						3,703
Total liabilities and shareholders' equity			$	8,937					$	8,829

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)

						Six Months Ended
						June 30,
						2025						2024
Cash flows from operating activities:
Net earnings						$	1,008					$	987
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses						13						12
Deferred income taxes and tax uncertainties						1						15
Depreciation and amortization						125						116
Non-cash lease expense						41						41
Stock-based compensation						35						34
Change in operating assets and liabilities:
Accounts receivable						(212)						(205)
Inventories						(19)						71
Prepaid expenses and other assets						(33)						(42)
Trade accounts payable						231						184
Operating lease liabilities						(53)						(47)
Accrued liabilities						(60)						(18)
Income taxes – net						(37)						(62)
Other non-current liabilities						(17)						(14)
Net cash provided by operating activities						1,023						1,072
Cash flows from investing activities:
Capital expenditures						(300)						(195)
Proceeds from sale of assets						4						1
Other – net						13						17
Net cash used in investing activities						(283)						(177)
Cash flows from financing activities:
Proceeds from debt						63						3
Payments of debt						(503)						(17)
Proceeds from stock options exercised						2						10
Payments for employee taxes withheld from stock awards						(30)						(40)
Purchases of treasury stock						(507)						(512)
Cash dividends paid						(225)						(206)
Other – net						(1)						(1)
Net cash used in financing activities						(1,201)						(763)
Exchange rate effect on cash and cash equivalents						22						(23)
Net change in cash and cash equivalents						(439)						109
Cash and cash equivalents at beginning of year						1,036						660
Cash and cash equivalents at end of period						$	597					$	769

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

(Unaudited)

			Common Stock			Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Earnings (Losses)			Treasury Stock			Noncontrolling Interest			Total
Balance at January 1, 2024			$	55		$	1,355		$	12,162		$	(172)		$	(10,285)		$	326		$	3,441
Stock-based compensation			—			8			—			—			2			—			10
Purchases of treasury stock			—			—			—			—			(277)			—			(277)
Net earnings			—			—			478			—			—			19			497
Other comprehensive earnings (losses)			—			—			—			(35)			—			(22)			(57)
Cash dividends paid ($1.86 per share)			—			—			(92)			—			—			(13)			(105)
Balance at March 31, 2024			$	55		$	1,363		$	12,548		$	(207)		$	(10,560)		$	310		$	3,509
Stock-based compensation			—			8			—			—			(15)			1			(6)
Purchases of treasury stock			—			—			—			—			(243)			(1)			(244)
Net earnings			—			—			470			—			—			20			490
Other comprehensive earnings (losses)			—			—			—			(41)			—			(20)			(61)
Cash dividends paid ($2.05 per share)			—			—			(101)			—			—			—			(101)
Balance at June 30, 2024			$	55		$	1,371		$	12,917		$	(248)		$	(10,818)		$	310		$	3,587

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

(Unaudited)

			Common Stock			Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Earnings (Losses)			Treasury Stock			Noncontrolling Interest			Total
Balance at January 1, 2025			$	55		$	1,399		$	13,677		$	(274)		$	(11,499)		$	345		$	3,703
Stock-based compensation			—			10			—			—			1			—			11
Purchases of treasury stock			—			—			—			—			(288)			—			(288)
Net earnings			—			—			479			—			—			21			500
Other comprehensive earnings (losses)			—			—			—			19			—			17			36
Cash dividends paid ($2.05 per share)			—			—			(99)			—			—			(16)			(115)
Balance at March 31, 2025			$	55		$	1,409		$	14,057		$	(255)		$	(11,786)		$	367		$	3,847
Stock-based compensation			—			6			—			—			(11)			1			(4)
Purchases of treasury stock			—			—			—			—			(228)			—			(228)
Net earnings			—			—			482			—			—			26			508
Other comprehensive earnings (losses)			—			—			—			56			—			15			71
Capital contribution			—			(1)			—			—			—			—			(1)
Cash dividends paid ($2.26 per share)			—			—			(110)			—			—			—			(110)
Balance at June 30, 2025			$	55		$	1,414		$	14,429		$	(199)		$	(12,025)		$	409		$	4,083

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation

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

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

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

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2 - REVENUE

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

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

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

			Three Months Ended June 30,
			2025																		2024
Customer Industry(1)			High-Touch Solutions N.A.						Endless Assortment						Total Company(2)						High-Touch Solutions N.A.						Endless Assortment						Total Company(2)
Manufacturing			30		%				30		%				30		%				31		%				30		%				31		%
Government			19		%				3		%				16		%				19		%				3		%				16		%
Wholesale			7		%				18		%				9		%				7		%				18		%				9		%
Commercial Services			7		%				12		%				8		%				7		%				12		%				8		%
Contractors			6		%				12		%				7		%				5		%				12		%				6		%
Healthcare			7		%				1		%				6		%				7		%				2		%				6		%
Retail			4		%				4		%				4		%				4		%				4		%				4		%
Transportation			4		%				2		%				4		%				4		%				2		%				4		%
Utilities			3		%				2		%				3		%				3		%				2		%				3		%
Warehousing			3		%				—		%				2		%				3		%				—		%				2		%
Other(3)			10		%				16		%				11		%				10		%				15		%				11		%
Total net sales			100		%				100		%				100		%				100		%				100		%				100		%
Percent of total company revenue			78		%				20		%				100		%				80		%				18		%				100		%
(1)Customer industry results for the three months ended June 30, 2025 and 2024 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.
(2)Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of Total Company revenue for both the three months ended June 30, 2025 and 2024.
(3)Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

			Six Months Ended June 30,
			2025																		2024
Customer Industry(1)			High-Touch Solutions N.A.						Endless Assortment						Total Company(2)						High-Touch Solutions N.A.						Endless Assortment						Total Company(2)
Manufacturing			30		%				30		%				30		%				31		%				29		%				31		%
Government			19		%				3		%				15		%				19		%				3		%				16		%
Wholesale			7		%				18		%				9		%				7		%				18		%				9		%
Commercial Services			7		%				12		%				8		%				7		%				12		%				8		%
Contractors			5		%				12		%				7		%				5		%				11		%				6		%
Healthcare			8		%				1		%				6		%				7		%				1		%				6		%
Retail			4		%				4		%				4		%				4		%				4		%				4		%
Transportation			4		%				2		%				4		%				4		%				2		%				4		%
Utilities			3		%				2		%				3		%				3		%				2		%				3		%
Warehousing			3		%				1		%				2		%				3		%				1		%				2		%
Other(3)			10		%				15		%				12		%				10		%				17		%				11		%
Total net sales			100		%				100		%				100		%				100		%				100		%				100		%
Percent of total company revenue			78		%				20		%				100		%				80		%				18		%				100		%
(1)Customer industry results for the six months ended June 30, 2025 and 2024 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.
(2)Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of Total Company revenue for both the six months ended June 30, 2025 and 2024.
(3)Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

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

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

NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT

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

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS

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

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

						High-Touch Solutions N.A.						Endless Assortment												Total
Balance at January 1, 2024						$	315					$	55											$	370
Translation						(9)						(6)												(15)
Balance at December 31, 2024						306						49												355
Translation						6						4												10
Balance at June 30, 2025						$	312					$	53											$	365

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

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

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5 - DEBT

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

			As of
			June 30, 2025												December 31, 2024
			Carrying Value						Fair Value						Carrying Value						Fair Value
4.60% senior notes due 2045			$	1,000					$	884					$	1,000					$	894
4.45% senior notes due 2034			500						489						500						477
3.75% senior notes due 2046			400						329						400						332
4.20% senior notes due 2047			400						311						400						312
Japanese Yen term loans			62						62						—						—
Debt issuance costs – net of amortization and other			(21)						(21)						(21)						(21)
Long-term debt			2,341						2,054						2,279						1,994
1.85% senior notes due 2025(1)			—						—						500						498
Other			2						2						(1)						(1)
Current maturities			2						2						499						497
Total debt			$	2,343					$	2,056					$	2,778					$	2,491
(1)On February 18, 2025, Grainger repaid in full the principal amount of $500 million for the 1.85% Senior Notes that matured in February 2025. The related interest rate swaps with a notional value of $450 million that hedged a portion of the interest rate risk related to this debt expired on February 15, 2025.

Senior Notes

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

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

Japanese Yen Term Loans

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

Fair Value

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

NOTE 6 - SEGMENT INFORMATION

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

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

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

			Six Months Ended June 30,
			2025																		2024
			High-Touch Solutions N.A						Endless Assortment						Total						High-Touch Solutions N.A						Endless Assortment						Total
Net sales(1)			$	6,941					$	1,757					$	8,698					$	6,863					$	1,527					$	8,390
Reconciliation of net sales
Other net sales															162																		157
Total company net sales															$	8,860																	$	8,547
Less:
Cost of goods sold			4,048						1,235												3,997						1,078
Other segment items(2)			1,704						358												1,665						329
Segment operating earnings			$	1,189					$	164					$	1,353					$	1,201					$	120					$	1,321
Reconciliation of operating earnings
Other operating earnings (losses)															(3)																		(3)
Total company operating earnings															$	1,350																	$	1,318
(1)Intersegment sales are recorded at values based on market prices, which creates intercompany profit sales that are eliminated within each segment to present only the impact of net sales to external customers.
(2)Other segment items for HTSNA and EA consist of selling, general and administrative expenses primarily comprised of payroll and benefits, marketing expense, depreciation, amortization and non-cash lease expense, corporate overhead expenses allocated to each segment based upon benefits received, occupancy and other miscellaneous expenses. Intersegment expenses including fees and certain incurred costs for shared services are also included within the amounts shown above.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

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

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Revenue by geographic location*(1)**:*
United States			$	3,652					$	3,502					$	7,156					$	6,948
Japan			562						469						1,042						920
Canada			175						170						337						338
Other foreign countries			165						171						325						341
			$	4,554					$	4,312					$	8,860					$	8,547
(1)Revenue presented above is attributed to the destination country where the customer is located.

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

NOTE 7 - CONTINGENCIES AND LEGAL MATTERS

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

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

NOTE 8 - SUBSEQUENT EVENTS

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

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

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS