filings.toolsItem 1. Financial Statements
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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 | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net sales | $ | 4,657 | $ | 4,388 | $ | 13,517 | $ | 12,935 | |||||||||||||||
| Cost of goods sold | 2,859 | 2,668 | 8,254 | 7,853 | |||||||||||||||||||
| Gross profit | 1,798 | 1,720 | 5,263 | 5,082 | |||||||||||||||||||
| Selling, general and administrative expenses | 1,287 | 1,034 | 3,402 | 3,078 | |||||||||||||||||||
| Operating earnings | 511 | 686 | 1,861 | 2,004 | |||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense – net | 20 | 19 | 61 | 60 | |||||||||||||||||||
| Other – net | (1) | (4) | (10) | (18) | |||||||||||||||||||
| Total other expense – net | 19 | 15 | 51 | 42 | |||||||||||||||||||
| Earnings before income taxes | 492 | 671 | 1,810 | 1,962 | |||||||||||||||||||
| Income tax provision | 171 | 166 | 481 | 470 | |||||||||||||||||||
| Net earnings | 321 | 505 | 1,329 | 1,492 | |||||||||||||||||||
| Less net earnings attributable to noncontrolling interest | 27 | 19 | 74 | 58 | |||||||||||||||||||
| Net earnings attributable to W.W. Grainger, Inc. | $ | 294 | $ | 486 | $ | 1,255 | $ | 1,434 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 6.13 | $ | 9.90 | $ | 26.02 | $ | 29.10 | |||||||||||||||
| Diluted | $ | 6.12 | $ | 9.87 | $ | 25.97 | $ | 29.00 | |||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | 47.8 | 48.8 | 48.0 | 49.0 | |||||||||||||||||||
| Diluted | 47.9 | 48.9 | 48.1 | 49.2 | |||||||||||||||||||
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 | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net earnings | $ | 321 | $ | 505 | $ | 1,329 | 1,492 | ||||||||||||||||
| Other comprehensive earnings (losses): | |||||||||||||||||||||||
| Foreign currency translation adjustments | (28) | 79 | 85 | (32) | |||||||||||||||||||
| Postretirement benefit plan losses – net of tax expense of $1, $1, $3, and $3, respectively | (3) | (3) | (9) | (10) | |||||||||||||||||||
| Total other comprehensive earnings (losses) | (31) | 76 | 76 | (42) | |||||||||||||||||||
| Comprehensive earnings – net of tax | 290 | 581 | 1,405 | 1,450 | |||||||||||||||||||
| Less comprehensive earnings (losses) attributable to noncontrolling interest | |||||||||||||||||||||||
| Net earnings | 27 | 19 | 74 | 58 | |||||||||||||||||||
| Foreign currency translation adjustments | (11) | 38 | 21 | (4) | |||||||||||||||||||
| Total comprehensive earnings (losses) attributable to noncontrolling interest | 16 | 57 | 95 | 54 | |||||||||||||||||||
| Comprehensive earnings attributable to W.W. Grainger, Inc. | $ | 274 | $ | 524 | $ | 1,310 | $ | 1,396 |
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) September 30, 2025 | December 31, 2024 | |||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 535 | $ | 1,036 | |||||||
| Accounts receivable (less allowance for credit losses of $36 and $32, respectively) | 2,408 | 2,232 | |||||||||
| Inventories – net | 2,275 | 2,306 | |||||||||
| Prepaid expenses and other current assets | 206 | 163 | |||||||||
| Assets held for sale | 50 | — | |||||||||
| Total current assets | 5,474 | 5,737 | |||||||||
| Property, buildings and equipment – net | 2,237 | 1,927 | |||||||||
| Goodwill | 361 | 355 | |||||||||
| Intangibles – net | 264 | 243 | |||||||||
| Operating lease right-of-use | 320 | 371 | |||||||||
| Other assets | 192 | 196 | |||||||||
| Total assets | $ | 8,848 | $ | 8,829 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Current maturities | $ | 2 | $ | 499 | |||||||
| Trade accounts payable | 1,123 | 952 | |||||||||
| Accrued compensation and benefits | 297 | 324 | |||||||||
| Operating lease liability | 76 | 78 | |||||||||
| Accrued expenses | 410 | 407 | |||||||||
| Income taxes payable | 25 | 45 | |||||||||
| Liabilities held for sale | 82 | — | |||||||||
| Total current liabilities | 2,015 | 2,305 | |||||||||
| Long-term debt | 2,367 | 2,279 | |||||||||
| Long-term operating lease liability | 275 | 327 | |||||||||
| Deferred income taxes and tax uncertainties | 135 | 101 | |||||||||
| Other non-current liabilities | 95 | 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 | 1,428 | 1,399 | |||||||||
| Retained earnings | 14,615 | 13,677 | |||||||||
| Accumulated other comprehensive losses | (219) | (274) | |||||||||
| Treasury stock, at cost – 62,034,184 and 61,326,349 shares, respectively | (12,318) | (11,499) | |||||||||
| Total W.W. Grainger, Inc. shareholders’ equity | 3,561 | 3,358 | |||||||||
| Noncontrolling interest | 400 | 345 | |||||||||
| Total shareholders' equity | 3,961 | 3,703 | |||||||||
| Total liabilities and shareholders' equity | $ | 8,848 | $ | 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)
| Nine Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net earnings | $ | 1,329 | $ | 1,492 | ||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
| Provision for credit losses | 20 | 18 | ||||||||||||
| Deferred income taxes and tax uncertainties | 37 | 24 | ||||||||||||
| Depreciation and amortization | 190 | 175 | ||||||||||||
| Non-cash lease expense | 62 | 61 | ||||||||||||
| Impairment loss and net losses from business divestitures | 196 | — | ||||||||||||
| Stock-based compensation | 49 | 48 | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | (252) | (183) | ||||||||||||
| Inventories | (27) | 86 | ||||||||||||
| Prepaid expenses and other assets | (32) | (26) | ||||||||||||
| Trade accounts payable | 185 | 99 | ||||||||||||
| Operating lease liabilities | (79) | (73) | ||||||||||||
| Accrued liabilities | 4 | 36 | ||||||||||||
| Income taxes – net | (42) | (64) | ||||||||||||
| Other non-current liabilities | (20) | (10) | ||||||||||||
| Net cash provided by operating activities | 1,620 | 1,683 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | (558) | (283) | ||||||||||||
| Proceeds from sale of assets | 4 | 2 | ||||||||||||
| Other – net | 11 | 19 | ||||||||||||
| Net cash used in investing activities | (543) | (262) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from debt | 90 | 503 | ||||||||||||
| Payments of debt | (503) | (38) | ||||||||||||
| Proceeds from stock options exercised | 2 | 26 | ||||||||||||
| Payments for employee taxes withheld from stock awards | (31) | (44) | ||||||||||||
| Purchases of treasury stock | (798) | (739) | ||||||||||||
| Cash dividends paid | (358) | (321) | ||||||||||||
| Other – net | (1) | (2) | ||||||||||||
| Net cash used in financing activities | (1,599) | (615) | ||||||||||||
| Exchange rate effect on cash and cash equivalents | 21 | (18) | ||||||||||||
| Net change in cash and cash equivalents | (501) | 788 | ||||||||||||
| Cash and cash equivalents at beginning of year | 1,036 | 660 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 535 | $ | 1,448 |
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 | |||||||||
| Stock-based compensation | — | 18 | — | — | 9 | — | 27 | ||||||||||||||||
| Purchases of treasury stock | — | — | — | — | (223) | — | (223) | ||||||||||||||||
| Net earnings | — | — | 486 | — | — | 19 | 505 | ||||||||||||||||
| Other comprehensive earnings (losses) | — | — | — | 38 | — | 38 | 76 | ||||||||||||||||
| Capital contribution | — | (1) | — | — | — | 1 | — | ||||||||||||||||
| Cash dividends paid ($2.05 per share) | — | — | (101) | — | — | (15) | (116) | ||||||||||||||||
| Balance at September 30, 2024 | $ | 55 | $ | 1,388 | $ | 13,302 | $ | (210) | $ | (11,032) | $ | 353 | $ | 3,856 | |||||||||
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 | |||||||||
| Stock-based compensation | — | 14 | — | — | — | (1) | 13 | ||||||||||||||||
| Purchases of treasury stock | — | — | — | — | (293) | — | (293) | ||||||||||||||||
| Net earnings | — | — | 294 | — | — | 27 | 321 | ||||||||||||||||
| Other comprehensive earnings (losses) | — | — | — | (20) | — | (11) | (31) | ||||||||||||||||
| Capital contribution | — | — | — | — | — | 1 | 1 | ||||||||||||||||
| Cash dividends paid ($2.26 per share) | — | — | (108) | — | — | (25) | (133) | ||||||||||||||||
| Balance at September 30, 2025 | $ | 55 | $ | 1,428 | $ | 14,615 | $ | (219) | $ | (12,318) | $ | 400 | $ | 3,961 |
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 - ASSETS AND LIABILITIES HELD FOR SALE
In September 2025, Grainger committed to a plan to sell its Cromwell business in the United Kingdom (U.K.), part of Other, which is not a reportable segment, and entered into a definitive agreement on October 6, 2025. Completion of the sale is expected in the fourth quarter of 2025, subject to satisfaction of customary closing conditions and regulatory approval. The Company determined the associated assets and liabilities met the held for sale accounting criteria as of September 30, 2025. As a result, the Company recorded an asset impairment loss of $186 million in selling, general and administrative expenses in the third quarter of 2025 to adjust the net book value of this business (including cumulative translation losses related to the Cromwell business in accumulated other comprehensive losses) to its fair value less cost to sell. There was no tax benefit as a result of this impairment loss. The planned divestiture is not considered a strategic shift that will have a material effect on the Company's operations and financial results, and therefore it does not qualify for reporting as discontinued operations.
The assets and liabilities classified as held for sale on the Condensed Consolidated Balance Sheet as of September 30, 2025 were as follows (in millions of dollars):
| As of | |||||
| (Unaudited) September 30, 2025 | |||||
| Accounts receivable | $ | 85 | |||
| Inventories – net | 82 | ||||
| Prepaid expenses and other current assets | 8 | ||||
| Property, buildings and equipment – net | 40 | ||||
| Intangibles – net | 4 | ||||
| Operating lease right-of-use | 17 | ||||
| Impairment of carrying value | (186) | ||||
| Total assets held for sale | $ | 50 | |||
| Trade accounts payable | $ | 33 | |||
| Accrued compensation and benefits | 5 | ||||
| Operating lease liability | 5 | ||||
| Accrued expenses | 22 | ||||
| Long-term operating lease liability | 12 | ||||
| Other non-current liabilities | 5 | ||||
| Total liabilities held for sale | $ | 82 |
NOTE 3 - 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.
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following tables present the Company's percentage of revenue by reportable segment and by customer industry:
| Three Months Ended September 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 | % | 30 | % | 30 | % | 30 | % | |||||||||||||||||||||||
| Government | 20 | % | 3 | % | 16 | % | 20 | % | 3 | % | 17 | % | |||||||||||||||||||||||
| 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 | % | 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) | 10 | % | 16 | % | 11 | % | 10 | % | 16 | % | 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 September 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 accounted for approximately 2% of Total Company revenue for both the three months ended September 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)
| Nine Months Ended September 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 | % | 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 | % | 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 | % | — | % | 2 | % | 3 | % | — | % | 2 | % | |||||||||||||||||||||||
| Other(3) | 10 | % | 16 | % | 11 | % | 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 nine months ended September 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 accounted for approximately 2% of Total Company revenue for both the nine months ended September 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 $113 million and $109 million as of September 30, 2025 and December 31, 2024, respectively.
The Company had no material unsatisfied performance obligations, contract assets or liabilities as of September 30, 2025 and December 31, 2024.
NOTE 4 - PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consisted of the following (in millions of dollars):
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| Land and land improvements | $ | 550 | $ | 415 | |||||||
| Building, structures and improvements | 1,845 | 1,723 | |||||||||
| Furniture, fixtures, machinery and equipment | 2,052 | 1,945 | |||||||||
| Property, buildings and equipment | $ | 4,447 | $ | 4,083 | |||||||
| Less accumulated depreciation | 2,210 | 2,156 | |||||||||
| Property, buildings and equipment – net | $ | 2,237 | $ | 1,927 |
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 5 - 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 nine months ended September 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 | 4 | 2 | 6 | |||||||||||||||||||||||
| Balance at September 30, 2025 | $ | 310 | $ | 51 | $ | 361 |
The Company's cumulative goodwill impairments as of September 30, 2025 were $137 million. No goodwill impairments were recorded for the three and nine months ended September 30, 2025 and 2024.
The balances and changes in intangible assets – net are as follows (in millions of dollars):
| As of | |||||||||||||||||||||||||||||||||||||||||
| September 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 | $ | 164 | $ | 158 | $ | 6 | $ | 164 | $ | 155 | $ | 9 | ||||||||||||||||||||||||||||
| Trademarks, trade names and other | 16.5 years | 20 | 16 | 4 | 31 | 24 | 7 | ||||||||||||||||||||||||||||||||||
| Non-amortized trade names and other | Indefinite | 19 | — | 19 | 18 | — | 18 | ||||||||||||||||||||||||||||||||||
| Capitalized software | 4.5 years | 805 | 570 | 235 | 714 | 505 | 209 | ||||||||||||||||||||||||||||||||||
| Total intangible assets | 5.8 years | $ | 1,008 | $ | 744 | $ | 264 | $ | 927 | $ | 684 | $ | 243 |
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 6 - DEBT
Total debt, including long-term and current maturities, consisted of the following (in millions of dollars):
| As of | |||||||||||||||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| 4.60% senior notes due 2045 | $ | 1,000 | $ | 911 | $ | 1,000 | $ | 894 | |||||||||||||||
| 4.45% senior notes due 2034 | 500 | 494 | 500 | 477 | |||||||||||||||||||
| 3.75% senior notes due 2046 | 400 | 337 | 400 | 332 | |||||||||||||||||||
| 4.20% senior notes due 2047 | 400 | 319 | 400 | 312 | |||||||||||||||||||
| Japanese Yen term loans | 88 | 88 | — | — | |||||||||||||||||||
| Debt issuance costs – net of amortization and other | (21) | (21) | (21) | (21) | |||||||||||||||||||
| Long-term debt | 2,367 | 2,128 | 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 | $ | 2,369 | $ | 2,130 | $ | 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 September 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%.
In September 2025, MonotaRO entered into an additional ¥4 billion term loan agreement to fund the expansion of its DC network. The Japanese Yen term loan matures in 2035, payable in equal monthly principal installments from September 2028 through June 2035, and bears a fixed interest rate of 1.33%.
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.
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 7 - 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.
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 September 30, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| High-Touch Solutions N.A. | Endless Assortment | Total | High-Touch Solutions N.A. | Endless Assortment | Total | ||||||||||||||||||||||||||||||
| Net sales(1) | $ | 3,635 | $ | 935 | $ | 4,570 | $ | 3,515 | $ | 791 | $ | 4,306 | |||||||||||||||||||||||
| Reconciliation of net sales | |||||||||||||||||||||||||||||||||||
| Other net sales | 87 | 82 | |||||||||||||||||||||||||||||||||
| Total company net sales | $ | 4,657 | $ | 4,388 | |||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Cost of goods sold | 2,140 | 654 | 2,053 | 558 | |||||||||||||||||||||||||||||||
| Other segment items(2) | 871 | 199 | 845 | 163 | |||||||||||||||||||||||||||||||
| Segment operating earnings | $ | 624 | $ | 82 | $ | 706 | $ | 617 | $ | 70 | $ | 687 | |||||||||||||||||||||||
| Reconciliation of operating earnings | |||||||||||||||||||||||||||||||||||
| Other operating earnings | (195) | (1) | |||||||||||||||||||||||||||||||||
| Total company operating earnings | $ | 511 | $ | 686 | |||||||||||||||||||||||||||||||
| (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)
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| High-Touch Solutions N.A. | Endless Assortment | Total | High-Touch Solutions N.A. | Endless Assortment | Total | ||||||||||||||||||||||||||||||
| Net sales(1) | $ | 10,576 | $ | 2,692 | $ | 13,268 | $ | 10,378 | $ | 2,318 | $ | 12,696 | |||||||||||||||||||||||
| Reconciliation of net sales | |||||||||||||||||||||||||||||||||||
| Other net sales | 249 | 239 | |||||||||||||||||||||||||||||||||
| Total company net sales | $ | 13,517 | $ | 12,935 | |||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Cost of goods sold | 6,188 | 1,889 | 6,050 | 1,636 | |||||||||||||||||||||||||||||||
| Other segment items(2) | 2,575 | 557 | 2,510 | 492 | |||||||||||||||||||||||||||||||
| Segment operating earnings | $ | 1,813 | $ | 246 | $ | 2,059 | $ | 1,818 | $ | 190 | $ | 2,008 | |||||||||||||||||||||||
| Reconciliation of operating earnings | |||||||||||||||||||||||||||||||||||
| Other operating earnings (losses) | (198) | (4) | |||||||||||||||||||||||||||||||||
| Total company operating earnings | $ | 1,861 | $ | 2,004 | |||||||||||||||||||||||||||||||
| (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. |
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Depreciation, amortization and non-cash lease expense (in millions of dollars): | |||||||||||||||||||||||
| High-Touch Solutions N.A. | $ | 62 | $ | 58 | $ | 181 | $ | 171 | |||||||||||||||
| Endless Assortment | 20 | 18 | 59 | 53 | |||||||||||||||||||
| Other | 2 | 2 | 7 | 6 | |||||||||||||||||||
| Total | $ | 84 | $ | 77 | $ | 247 | $ | 229 | |||||||||||||||
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following is revenue by geographic location (in millions of dollars):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue by geographic location*(1)**:* | |||||||||||||||||||||||
| United States | $ | 3,756 | $ | 3,585 | $ | 10,912 | $ | 10,533 | |||||||||||||||
| Japan | 558 | 471 | 1,600 | 1,391 | |||||||||||||||||||
| Canada | 169 | 161 | 506 | 499 | |||||||||||||||||||
| Other foreign countries | 174 | 171 | 499 | 512 | |||||||||||||||||||
| $ | 4,657 | $ | 4,388 | $ | 13,517 | $ | 12,935 | ||||||||||||||||
| (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 3.
NOTE 8 - 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 has been engaged in litigation involving KMCO, LLC (KMCO) as described in previous quarterly and annual reports. As of September 30, 2025, the Company has settled or resolved all remaining lawsuits pending against the Company. These settlements had no effect on net earnings or cash flows.
NOTE 9 - SUBSEQUENT EVENTS
On October 29, 2025, the Company’s Board of Directors declared a quarterly dividend of $2.26 per share, payable December 1, 2025, to shareholders of record on November 10, 2025.
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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