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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 March 31, 2026
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 47,213,119 shares of the Company’s Common Stock outstanding as of April 30, 2026.
1

| TABLE OF CONTENTS |
|  | Page
| PART I - FINANCIAL INFORMATION |
Item 1: | Financial Statements (Unaudited) |
| Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2026 and 2025 | 3
| Condensed Consolidated Statements of Comprehensive Earnings for the Three Months Ended March 31, 2026 and 2025 | 4
| Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 | 5
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 | 6
| Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended March 31, 2026 and 2025 | 7
| Notes to Condensed Consolidated Financial Statements | 9
Item 2: | Management's Discussion and Analysis of Financial Condition and Results of Operations | 15
Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 24
Item 4: | Controls and Procedures | 24
| PART II - OTHER INFORMATION |
Item 1: | Legal Proceedings | 25
Item 1A: | Risk Factors | 25
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 25
Item 5: | Other Information | 25
Item 6: | Exhibits | 26
Signatures |  | 27

2

PART I – FINANCIAL INFORMATION
Item 1: Financial Statements
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of dollars and shares, except for per share amounts)
(Unaudited)

| Three Months Ended |  |
| March 31, |  |
| 2026 |  | 2025 |  |  |  |
Net sales | $ | 4,742 |  |  | $ | 4,306 |  |  |  |  |
Cost of goods sold | 2,846 |  |  | 2,596 |  |  |  |  |
Gross profit | 1,896 |  |  | 1,710 |  |  |  |  |
Selling, general and administrative expenses | 1,103 |  |  | 1,038 |  |  |  |  |
Operating earnings | 793 |  |  | 672 |  |  |  |  |
Other expense (income): |  |  |  |  |  |  |
Interest expense – net | 21 |  |  | 21 |  |  |  |  |
Other – net | (3) |  |  | (6) |  |  |  |  |
Total other expense – net | 18 |  |  | 15 |  |  |  |  |
Earnings before income taxes | 775 |  |  | 657 |  |  |  |  |
Income tax provision | 194 |  |  | 157 |  |  |  |  |
Net earnings | 581 |  |  | 500 |  |  |  |  |
Less net earnings attributable to noncontrolling interest | 26 |  |  | 21 |  |  |  |  |
Net earnings attributable to W.W. Grainger, Inc. | $ | 555 |  |  | $ | 479 |  |  |  |  |
Earnings per share: |  |  |  |  |  |  |
Basic | $ | 11.67 |  |  | $ | 9.88 |  |  |  |  |
Diluted | $ | 11.65 |  |  | $ | 9.86 |  |  |  |  |
Weighted average number of shares outstanding: |  |  |  |  |  |  |
Basic | 47.3 |  |  | 48.2 |  |  |  |  |
Diluted | 47.4 |  |  | 48.3 |  |  |  |  |

The accompanying notes are an integral part of these financial statements.
3

W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In millions of dollars)
(Unaudited)

| Three Months Ended |  |
| March 31, |  |
| 2026 |  | 2025 |  |  |  |
Net earnings | $ | 581 |  |  | $ | 500 |  |  |  |  |
Other comprehensive earnings (losses): |  |  |  |  |  |  |
Foreign currency translation adjustments | (19) |  |  | 38 |  |  |  |  |
Postretirement benefit plan losses – net of tax benefit of $1 and $1 | (2) |  |  | (2) |  |  |  |  |
Total other comprehensive earnings (losses) | (21) |  |  | 36 |  |  |  |  |
Comprehensive earnings – net of tax | 560 |  |  | 536 |  |  |  |  |
Less comprehensive earnings (losses) attributable to noncontrolling interest |  |  |  |  |  |  |
Net earnings | 26 |  |  | 21 |  |  |  |  |
Foreign currency translation adjustments | (5) |  |  | 17 |  |  |  |  |
Total comprehensive earnings (losses) attributable to noncontrolling interest | 21 |  |  | 38 |  |  |  |  |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ | 539 |  |  | $ | 498 |  |  |  |  |

The accompanying notes are an integral part of these financial statements.
4

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) March 31, 2026 |  | December 31, 2025
Current assets |  |  |
Cash and cash equivalents | $ | 695 |  |  | $ | 585 |
Accounts receivable (less allowance for credit losses of $32 and $32) | 2,627 |  |  | 2,329 |
Inventories – net | 2,385 |  |  | 2,394 |
Prepaid expenses and other current assets | 200 |  |  | 176 |
Total current assets | 5,907 |  |  | 5,484 |
Property, buildings and equipment – net | 2,359 |  |  | 2,268 |
Goodwill | 358 |  |  | 360 |
Intangibles – net | 268 |  |  | 265 |
Operating lease right-of-use | 342 |  |  | 345 |
Other assets | 239 |  |  | 240 |
Total assets | $ | 9,473 |  |  | $ | 8,962 |
Liabilities and shareholders' equity |  |  |
Current liabilities |  |  |
Current maturities | $ | 2 |  |  | $ | 126 |
Trade accounts payable | 1,220 |  |  | 963 |
Accrued compensation and benefits | 285 |  |  | 343 |
Operating lease liability | 71 |  |  | 73 |
Accrued expenses | 423 |  |  | 386 |
Income taxes payable | 198 |  |  | 49 |
Total current liabilities | 2,199 |  |  | 1,940 |
Long-term debt | 2,409 |  |  | 2,362 |
Long-term operating lease liability | 299 |  |  | 301 |
Deferred income taxes and tax uncertainties | 128 |  |  | 121 |
Other non-current liabilities | 95 |  |  | 97 |
Shareholders' equity |  |  |
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding | — |  |  | — |
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued | 55 |  |  | 55 |
Additional contributed capital | 1,448 |  |  | 1,446 |
Retained earnings | 15,405 |  |  | 14,958 |
Accumulated other comprehensive losses | (181) |  |  | (165) |
Treasury stock, at cost – 62,432,376 and 62,240,438 shares, respectively | (12,797) |  |  | (12,558) |
Total W.W. Grainger, Inc. shareholders’ equity | 3,930 |  |  | 3,736 |
Noncontrolling interest | 413 |  |  | 405 |
Total shareholders' equity | 4,343 |  |  | 4,141 |
Total liabilities and shareholders' equity | $ | 9,473 |  |  | $ | 8,962 |

The accompanying notes are an integral part of these financial statements.
5

W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)

| Three Months Ended
| March 31,
| 2026 |  | 2025
Cash flows from operating activities: |  |  |
Net earnings | $ | 581 |  |  | $ | 500 |
Adjustments to reconcile net earnings to net cash provided by operating activities: |  |  |
Provision for credit losses | 6 |  |  | 7 |
Deferred income taxes and tax uncertainties | 8 |  |  | (4) |
Depreciation and amortization | 62 |  |  | 61 |
Non-cash lease expense | 20 |  |  | 20 |
Stock-based compensation | 14 |  |  | 12 |
Change in operating assets and liabilities: |  |  |
Accounts receivable | (303) |  |  | (128) |
Inventories | 5 |  |  | 6 |
Prepaid expenses and other assets | (50) |  |  | (19) |
Trade accounts payable | 253 |  |  | 154 |
Operating lease liabilities | (24) |  |  | (25) |
Accrued liabilities | (5) |  |  | (42) |
Income taxes – net | 173 |  |  | 106 |
Other non-current liabilities | (1) |  |  | (2) |
Net cash provided by operating activities | 739 |  |  | 646 |
Cash flows from investing activities: |  |  |
Capital expenditures | (170) |  |  | (125) |
Other – net | (8) |  |  | — |
Net cash used in investing activities | (178) |  |  | (125) |
Cash flows from financing activities: |  |  |
Short-term borrowings (repayments), original maturities of 90 days or less, net | (125) |  |  | — |
Proceeds from debt | 50 |  |  | 1 |
Payments of debt | (1) |  |  | (502) |
Proceeds from stock options exercised | 6 |  |  | 2 |
Payments for employee taxes withheld from stock awards | (5) |  |  | (3) |
Purchases of treasury stock | (237) |  |  | (281) |
Purchases of noncontrolling interests | (25) |  |  | — |
Cash dividends paid | (108) |  |  | (115) |
Other – net | (1) |  |  | — |
Net cash used in financing activities | (446) |  |  | (898) |
Exchange rate effect on cash and cash equivalents | (5) |  |  | 7 |
Net change in cash and cash equivalents | 110 |  |  | (370) |
Cash and cash equivalents at beginning of year | 585 |  |  | 1,036 |
Cash and cash equivalents at end of period | $ | 695 |  |  | $ | 666 |

The accompanying notes are an integral part of these financial statements.
6

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 |

The accompanying notes are an integral part of these financial statements.
7

W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions of dollars, except for per share amounts)
(Unaudited)

| Common Stock | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock | Noncontrolling Interest | Total
Balance at January 1, 2026 | $ | 55 |  | $ | 1,446 |  | $ | 14,958 |  | $ | (165) |  | $ | (12,558) |  | $ | 405 |  | $ | 4,141 |
Stock-based compensation | — |  | 14 |  | — |  | — |  | 1 |  | — |  | 15 |
Purchases of treasury stock | — |  | — |  | — |  | — |  | (240) |  | — |  | (240) |
Transactions with noncontrolling interests, net | — |  | (12) |  | — |  | — |  | — |  | (13) |  | (25) |
Net earnings | — |  | — |  | 555 |  | — |  | — |  | 26 |  | 581 |
Other comprehensive earnings (losses) | — |  | — |  | — |  | (16) |  | — |  | (5) |  | (21) |
Cash dividends paid ($2.26 per share) | — |  | — |  | (108) |  | — |  | — |  | — |  | (108) |
Balance at March 31, 2026 | $ | 55 |  | $ | 1,448 |  | $ | 15,405 |  | $ | (181) |  | $ | (12,797) |  | $ | 413 |  | $ | 4,343 |

The accompanying notes are an integral part of these financial statements.
8

W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
W.W. Grainger, Inc. is a broad line distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.) and Japan. In the fourth quarter of 2025, Grainger exited the United Kingdom (U.K.) market by completing the sale of the Cromwell business and closing the Zoro U.K. business. In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.
Basis of Presentation
The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
The Condensed Consolidated Balance Sheet at December 31, 2025, has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 19, 2026 (2025 Form 10-K).
There were no material changes to the Company’s significant accounting policies from those disclosed in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2025 Form 10-K.
9

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 table presents the Company's percentage of revenue by reportable segment and customer industry:

|  | Three Months Ended March 31,
|  | 2026 |  | 2025
Customer Industry(1) |  | High-Touch Solutions N.A. |  | Endless Assortment |  | Total Company |  | High-Touch Solutions N.A. |  | Endless Assortment |  | Total Company(2)
Manufacturing |  | 31 | % |  | 29 | % |  | 30 | % |  | 31 | % |  | 30 | % |  | 31 | %
Government |  | 18 | % |  | 3 | % |  | 15 | % |  | 18 | % |  | 3 | % |  | 15 | %
Wholesale |  | 7 | % |  | 18 | % |  | 10 | % |  | 7 | % |  | 19 | % |  | 10 | %
Commercial Services |  | 7 | % |  | 12 | % |  | 8 | % |  | 7 | % |  | 12 | % |  | 8 | %
Contractors |  | 6 | % |  | 12 | % |  | 7 | % |  | 5 | % |  | 12 | % |  | 6 | %
Healthcare |  | 8 | % |  | 2 | % |  | 6 | % |  | 8 | % |  | 1 | % |  | 6 | %
Retail |  | 4 | % |  | 4 | % |  | 4 | % |  | 4 | % |  | 4 | % |  | 4 | %
Transportation |  | 4 | % |  | 2 | % |  | 4 | % |  | 4 | % |  | 2 | % |  | 4 | %
Utilities |  | 3 | % |  | 2 | % |  | 3 | % |  | 3 | % |  | 2 | % |  | 3 | %
Warehousing |  | 2 | % |  | 1 | % |  | 2 | % |  | 3 | % |  | — | % |  | 2 | %
Other(3) |  | 10 | % |  | 15 | % |  | 11 | % |  | 10 | % |  | 15 | % |  | 11 | %
Total net sales |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
Percent of total company revenue |  | 79 | % |  | 21 | % |  | 100 | % |  | 79 | % |  | 19 | % |  | 100 | %
(1)Customer industry results for the three months ended March 31, 2026 and 2025 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.
(2)Total Company includes other businesses, which included the Cromwell business through the date of divestiture in the fourth quarter of 2025. For further details on the sale, see Note 2 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2025 Form 10-K. Other businesses accounted for approximately 2% of total Company revenue for the three months ended March 31, 2025.
(3)Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

Total accrued sales incentives are recorded in Accrued expenses and were approximately $116 million and $115 million as of March 31, 2026 and December 31, 2025, respectively.
The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of March 31, 2026 and December 31, 2025.
10

W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consisted of the following (in millions of dollars):

| As of
| March 31, 2026 |  | December 31, 2025
Land and land improvements | $ | 551 |  |  | $ | 551 |
Building, structures and improvements | 1,943 |  |  | 1,883 |
Furniture, fixtures, machinery and equipment | 2,132 |  |  | 2,066 |
Property, buildings and equipment | 4,626 |  |  | 4,500 |
Less accumulated depreciation | 2,267 |  |  | 2,232 |
Property, buildings and equipment – net | $ | 2,359 |  |  | $ | 2,268 |

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 months ended March 31, 2026. As such, quantitative assessments were not required.
The balances and changes in the carrying amount of goodwill by segment are as follows (in millions of dollars):

|  | High-Touch Solutions N.A. |  | Endless Assortment |  |  |  | Total
Balance at January 1, 2025 |  | $ | 306 |  |  | $ | 49 |  |  |  |  | $ | 355 |
Translation |  | 5 |  |  | — |  |  |  |  | 5 |
Balance at December 31, 2025 |  | 311 |  |  | 49 |  |  |  |  | 360 |
Translation |  | (1) |  |  | (1) |  |  |  |  | (2) |
Balance at March 31, 2026 |  | $ | 310 |  |  | $ | 48 |  |  |  |  | $ | 358 |

No goodwill impairment was recorded for the three months ended March 31, 2026 and 2025.
The balances and changes in intangible assets – net are as follows (in millions of dollars):

|  |  | As of
|  |  | March 31, 2026 |  | December 31, 2025
| Weighted average life |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount
Customer lists and relationships | 10.7 years |  | $ | 163 |  |  | $ | 158 |  |  | $ | 5 |  |  | $ | 163 |  |  | $ | 157 |  |  | $ | 6 |
Trademarks, trade names and other | 16.5 years |  | 20 |  |  | 17 |  |  | 3 |  |  | 20 |  |  | 17 |  |  | 3 |
Non-amortized trade names and other | Indefinite |  | 18 |  |  | — |  |  | 18 |  |  | 19 |  |  | — |  |  | 19 |
Capitalized software | 4.5 years |  | 844 |  |  | 602 |  |  | 242 |  |  | 821 |  |  | 584 |  |  | 237 |
Total intangible assets | 5.7 years |  | $ | 1,045 |  |  | $ | 777 |  |  | $ | 268 |  |  | $ | 1,023 |  |  | $ | 758 |  |  | $ | 265 |

11

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
| March 31, 2026 |  | December 31, 2025
| Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
4.60% senior notes due 2045 | $ | 1,000 |  |  | $ | 890 |  |  | $ | 1,000 |  |  | $ | 904 |
4.45% senior notes due 2034 | 500 |  |  | 493 |  |  | 500 |  |  | 496 |
3.75% senior notes due 2046 | 400 |  |  | 331 |  |  | 400 |  |  | 338 |
4.20% senior notes due 2047 | 400 |  |  | 311 |  |  | 400 |  |  | 317 |
Japanese Yen term loans | 129 |  |  | 129 |  |  | 83 |  |  | 83 |
Debt issuance costs – net of amortization and other | (20) |  |  | (20) |  |  | (21) |  |  | (21) |
Long-term debt | 2,409 |  |  | 2,134 |  |  | 2,362 |  |  | 2,117 |
Commercial paper and other | 2 |  |  | 2 |  |  | 126 |  |  | 126 |
Current maturities | 2 |  |  | 2 |  |  | 126 |  |  | 126 |
Total debt | $ | 2,411 |  |  | $ | 2,136 |  |  | $ | 2,488 |  |  | $ | 2,243 |

Senior Notes
Between 2015 and 2024, Grainger issued $2.3 billion in unsecured debt (Senior Notes), net of the $500 million principal repayment for the 1.85% Senior Notes that matured in February 2025, primarily to provide flexibility in funding general working capital needs, share repurchases and long-term cash requirements. The Senior Notes require no principal payments until maturity and interest is paid semi-annually.
The Company incurred debt issuance costs related to its Senior Notes, representing underwriting fees and other expenses. These costs were recorded as a contra-liability in Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net. As of March 31, 2026 and December 31, 2025, the cumulative unamortized costs were $20 million and $21 million, respectively.
Japanese Yen Term Loans
In 2026 and 2025, MonotaRO entered into ¥7.5 billion and ¥13 billion, respectively, term loan agreements to fund the expansion of its distribution center (DC) network. The Japanese Yen term loans mature in 2035, payable in equal monthly principal installments from September 2028 through June 2035. The weighted average interest rates on the 2026 and 2025 term loans are 1.74% and 1.27%, respectively.
Fair Value
The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair v alue hierarchy.
12

W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
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.
The operating and reportable segments reflect the way the chief operating decision maker (CODM) evaluates the business. All expenses directly attributable to each reportable segment are included in the operating results for each segment. The CODM is not regularly provided and does not evaluate the segments using total asset or capital expenditure information and it is therefore not disclosed. For further discussion on the CODM, see Note 13 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2025 Form 10-K.
The following is a summary of segment results (in millions of dollars):

| Three Months Ended March 31,
| 2026 |  | 2025
| High-Touch Solutions N.A. |  | Endless Assortment |  | Total |  | High-Touch Solutions N.A. |  | Endless Assortment |  | Total
Net sales(1) | $ | 3,752 |  |  | $ | 990 |  |  | $ | 4,742 |  |  | $ | 3,397 |  |  | $ | 828 |  |  | $ | 4,225 |
Reconciliation of net sales |  |  |  |  |  |  |  |  |  |  |
Other net sales |  |  |  |  | — |  |  |  |  |  |  | 81 |
Total company net sales |  |  |  |  | $ | 4,742 |  |  |  |  |  |  | $ | 4,306 |
Less: |  |  |  |  |  |  |  |  |  |  |
Cost of goods sold | 2,153 |  |  | 693 |  |  |  |  | 1,958 |  |  | 583 |  |  |
Other segment items(2) | 911 |  |  | 192 |  |  |  |  | 839 |  |  | 173 |  |  |
Segment operating earnings | $ | 688 |  |  | $ | 105 |  |  | $ | 793 |  |  | $ | 600 |  |  | $ | 72 |  |  | $ | 672 |
Reconciliation of operating earnings |  |  |  |  |  |  |  |  |  |  |
Other operating earnings |  |  |  |  | — |  |  |  |  |  |  | — |
Total company operating earnings |  |  |  |  | $ | 793 |  |  |  |  |  |  | $ | 672 |
(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.

13

W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following is depreciation, amortization and non-cash lease expense (in millions of dollars):

| Three Months Ended March 31,
| 2026 |  | 2025
Depreciation, amortization and non-cash lease expense(1): |  |  |
High-Touch Solutions N.A. | $ | 65 |  |  | $ | 58 |
Endless Assortment | 15 |  |  | 19 |
Other | — |  |  | 2 |
Total | $ | 80 |  |  | $ | 79 |
(1)Depreciation, amortization and non-cash lease expense presented above is related to long-lived assets, capitalized software and right-of-use assets. Long-lived assets consist of property, buildings and equipment.

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

| Three Months Ended March 31,
| 2026 |  | 2025
Revenue by geographic location(1): |  |  |
United States | $ | 3,882 |  |  | $ | 3,504 |
Japan | 589 |  |  | 480 |
Canada | 194 |  |  | 162 |
Other foreign countries | 77 |  |  | 160 |
| $ | 4,742 |  |  | $ | 4,306 |
(1)Revenue presented above is attributed to the destination country where the customer is located.

The Company is a broad line distributor of MRO products. Products are regularly added and removed from the Company's inventory assortment. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. For further information regarding the Company's sales by segment and customer industry, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.
NOTE 7 - CONTINGENCIES AND LEGAL MATTERS
From time to time, the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by team members, consumers, competitors, suppliers, customers, governmental entities and other third parties. It is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position or results of operations.
NOTE 8 - SUBSEQUENT EVENTS
On April 29, 2026, the Company’s Board of Directors declared a quarterly dividend of $2.49 per share, payable June 1, 2026, to shareholders of record on May 11, 2026.
14

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of W.W. Grainger, Inc. (Grainger or Company) as it is viewed by management of the Company. The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2025 included in the Company's 2025 Form 10-K and the Condensed Consolidated Financial Statements and accompanying notes included in Part I, Item 1: Financial Statements of this Form 10-Q.
Percentage figures included in this section have not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in the Company's Condensed Consolidated Financial Statements or in the associated text.
Overview
Grainger is a broad line distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America and Japan. In the fourth quarter of 2025, Grainger exited the U.K. market by completing the sale of the Cromwell business and closing the Zoro U.K. business. Grainger uses a combination of its high-touch solutions and endless assortment businesses to serve its customers worldwide, which rely on Grainger for products and services that enable them to run safe, sustainable and productive operations.
Strategic Priorities
For a discussion of the Company’s strategic priorities for 2026, see Part 1, Item 1: Business and Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2025 Form 10-K.
Recent Events
Macroeconomic Conditions
The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors that can influence demand, cost and execution risk. These dynamics, together with recent changes in U.S. and foreign tariff and trade policies, continue to drive intermittent disruptions in global capital markets and supply chains. These developments may impact the Company’s operations, business, financial condition, and results of operations.
The Company is actively monitoring economic conditions in the U.S. and key international markets, including the continued uncertainty regarding evolving tariff and trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession. Although the precise timing and magnitude of these factors remains uncertain, the Company believes its strategy is well positioned to navigate a range of outcomes. The Company continues to evaluate the impact of evolving tariff and trade policies, including potential changes in product sourcing strategies, cost management and customer pricing, and has implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and challenges in our supply chain, while striving to maintain market competitiveness.
Historically, the Company's broad and diverse customer base and the generally nondiscretionary nature of its products have provided a degree of resilience during periods of economic contraction in the industrial MRO market. The full extent and impact of ongoing macroeconomic conditions, including recent, heightened regional military conflict, unprecedented tariff-related developments and shifting government budget policies and priorities at the municipal, state, and national levels, remain uncertain and cannot be predicted at this time, but may affect the Company’s operations, business, financial condition and results of operations.
For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2025 Form 10-K.
15

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations –Three Months Ended March 31, 2026
In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."
The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for the three months ended March 31, 2026 and 2025 (in millions of dollars except per share amounts):

| Three Months Ended March 31,
|  |  |  |  | % Change |  | % of Net Sales
| 2026 |  | 2025 |  |  | 2026 |  | 2025
Net sales(1) | $ | 4,742 |  |  | $ | 4,306 |  |  | 10.1 | % |  | 100.0 | % |  | 100.0 | %
Cost of goods sold | 2,846 |  |  | 2,596 |  |  | 9.6 |  |  | 60.0 |  |  | 60.3 |
Gross profit | 1,896 |  |  | 1,710 |  |  | 10.9 |  |  | 40.0 |  |  | 39.7 |
Selling, general and administrative expenses | 1,103 |  |  | 1,038 |  |  | 6.3 |  |  | 23.3 |  |  | 24.1 |
Operating earnings | 793 |  |  | 672 |  |  | 18.0 |  |  | 16.7 |  |  | 15.6 |
Other expense – net | 18 |  |  | 15 |  |  | 20.0 |  |  | 0.4 |  |  | 0.4 |
Income tax provision | 194 |  |  | 157 |  |  | 23.6 |  |  | 4.1 |  |  | 3.6 |
Net earnings | 581 |  |  | 500 |  |  | 16.2 |  |  | 12.2 |  |  | 11.6 |
Noncontrolling interest | 26 |  |  | 21 |  |  | 23.8 |  |  | 0.5 |  |  | 0.5 |
Net earnings attributable to W.W. Grainger, Inc. | $ | 555 |  |  | $ | 479 |  |  | 15.9 |  |  | 11.7 | % |  | 11.1 | %
Diluted earnings per share | $ | 11.65 |  |  | $ | 9.86 |  |  | 18.2 | % |  |  |  |
(1)For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q.

The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily, organic constant currency net sales compared to the prior year period for the three months ended March 31, 2026 and 2025 (in millions of dollars):

| Three Months Ended March 31, |  |  |  |  |  |  |
| 2026 |  | % Change(1) |  | 2025 |  | % Change(1) |  |  |  |  |  |  |  |  |
Net sales | $ | 4,742 |  |  | 10.1 | % |  | $ | 4,306 |  |  | 1.7 | % |  |  |  |  |  |  |  |  |
Daily net sales(2) | $ | 75.3 |  |  | 10.1 | % |  | $ | 69.4 |  |  | 3.3 | % |  |  |  |  |  |  |  |  |
Daily, organic constant currency net sales(2) | $ | 76.6 |  |  | 12.2 | % |  | $ | 70.1 |  |  | 4.4 | % |  |  |  |  |  |  |  |  |
(1)Calculated on the basis of prior year net sales for the three months ended March 31, 2026 and 2025.
(2)Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. There were 63 sales days in the three months ended March 31, 2026 and 2025. Daily, organic constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year changes in foreign currency exchange rates and the net sales results of the divested and closed businesses in the prior year period on a daily basis. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."

16

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales of $4,742 million for the three months ended March 31, 2026 increased $436 million, or 10%, and on a daily, organic constant currency basis, net sales increased 12% compared to the same period in 2025. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to sales growth in the first quarter of 2026. For further discussion on the Company's net sales, see the Segment Analysis section below.
Gross profit of $1,896 million for the three months ended March 31, 2026 increased $186 million, or 11%, and gross profit margin of 40.0% increased 30 basis points compared to the same period in 2025. For further discussion on the Company's gross profit, see the Segment Analysis section below.
Selling, general and administrative (SG&A) expenses of $1,103 million for the three months ended March 31, 2026 increased $65 million, or 6%, compared to the same period in 2025. The increase was due to higher payroll and benefit expenses in the first quarter of 2026 partially offset by a benefit related to the exit from the U.K. market in the fourth quarter of 2025.
Operating earnings of $793 million for the three months ended March 31, 2026 increased $121 million, or 18%, compared to the same period in 2025.
Income tax expense of $194 million for the three months ended March 31, 2026 increased $37 million compared to the same period in 2025. Grainger's effective tax rates were 25.1% and 23.9% for the three months ended March 31, 2026 and 2025, respectively. The Company's effective tax rate increase was primarily due to decreased tax credit activity in the current year period and the impact of tax legislation effective in 2026.
Diluted earnings per share was $11.65 for the three months ended March 31, 2026, an increase of 18% compared to $9.86 for the same period in 2025.
Segment Analysis
In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measure, see below "Non-GAAP Measures." For further segment information, see Note 6 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.
High-Touch Solutions N.A.
The following table shows reported segment results (in millions of dollars):

| Three Months Ended March 31,
| 2026 |  | 2025 |  | % Change
Net sales | $ | 3,752 |  |  | $ | 3,397 |  |  | 10.5 | %
Gross profit | $ | 1,599 |  |  | $ | 1,439 |  |  | 11.1 | %
Selling, general and administrative expenses | 911 |  |  | 839 |  |  | 8.6 | %
Operating earnings | $ | 688 |  |  | $ | 600 |  |  | 14.7 | %

Net sales of $3,752 million for the three months ended March 31, 2026 increased $355 million, or 11%, and on a daily, constant currency basis increased 10% compared to the same period in 2025. The increase was due to equal contribution of 5% for both volume and price.
Gross profit of $1,599 million for the three months ended March 31, 2026 increased $160 million, or 11%, and gross profit margin of 42.6% increased 20 basis points compared to the same period in 2025.
SG&A expenses of $911 million for the three months ended March 31, 2026 increased $72 million, or 9%, compared to the same period in 2025. The increase was primarily due to higher payroll and benefit expenses.
17

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating earnings of $688 million for the three months ended March 31, 2026 increased $88 million, or 15%, compared to the same period in 2025.
Endless Assortment
The following table shows reported segment results (in millions of dollars):

| Three Months Ended March 31,
| 2026 |  | 2025 |  | % Change
Net sales | $ | 990 |  |  | $ | 828 |  |  | 19.6 | %
Gross profit | $ | 297 |  |  | $ | 245 |  |  | 21.2 | %
Selling, general and administrative expenses | 192 |  |  | 173 |  |  | 11.0 | %
Operating earnings | $ | 105 |  |  | $ | 72 |  |  | 45.8 | %

Net sales of $990 million for the three months ended March 31, 2026 increased $162 million, or 20%, and on a daily, organic constant currency basis increased 22% compared to the same period in 2025. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO.
Gross profit of $297 million for the three months ended March 31, 2026 increased $52 million, or 21%, and gross profit margin of 30.0% increased 40 basis points compared to the same period in 2025.
SG&A expenses of $192 million for the three months ended March 31, 2026 increased $19 million, or 11%, compared to the same period in 2025. The increase was primarily due to higher marketing and payroll and benefit expenses.
Operating earnings of $105 million for the three months ended March 31, 2026 increased $33 million, or 46%, compared to the same period in 2025.
18

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Measures
Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results. The Company adjusts its reported net sales when there are differences in the number of U.S. selling days relative to the prior year period and also excludes the impact on reported net sales due to changes in foreign currency exchange rates and results of certain divested or closed businesses. This includes the net sales results of the divested Cromwell business and closed Zoro U.K. business, within Other and Endless Assortment, respectively, announced in the third quarter of 2025 and completed in the fourth quarter of 2025. Adjusted results, including adjusted SG&A, adjusted operating earnings, adjusted net earnings and adjusted diluted EPS exclude certain non-recurring items, including restructuring charges, asset impairments, gains and losses associated with business divestitures or closures and other non-recurring, infrequent or unusual gains and losses from the Company’s most directly comparable reported U.S. generally accepted accounting principles (GAAP) results. The Company believes its non-GAAP measures provide meaningful information to assist investors in understanding financial results and assessing prospects for future performance as they provide a better baseline for analyzing the ongoing performance of its businesses by excluding items that may not be indicative of core operating results. Grainger’s non-GAAP financial measures should be considered in addition to, and not as a replacement for or as a superior measure to, its most directly comparable GAAP measures and may not be comparable to similarly titled measures reported by other companies.
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W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following tables provide reconciliations of reported net sales growth compared to the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, organic constant currency net sales for the three months ended March 31, 2026 and 2025 (in millions of dollars):

|  | Three Months Ended March 31,
|  | High-Touch Solutions N.A. |  | Endless Assortment |  | Total Company(1) |  |
|  | 2026 |  | % Change(2) |  | 2026 |  | % Change(2) |  | 2026 |  | % Change(2) |  |
Reported net sales |  | $ | 3,752 |  |  | 10.5 | % |  | $ | 990 |  |  | 19.6 | % |  | $ | 4,742 |  |  | 10.1 | % |  |
Daily impact(3) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Daily net sales |  | 59.6 |  |  | 10.5 |  |  | 15.7 |  |  | 19.6 |  |  | 75.3 |  |  | 10.1 |  |  |
Foreign currency exchange(4) |  | (0.3) |  |  | (0.5) |  |  | 0.1 |  |  | 0.9 |  |  | (0.1) |  |  | (0.2) |  |  |
Business divestiture(5) |  | — |  |  | — |  |  | 0.1 |  |  | 1.4 |  |  | 1.4 |  |  | 2.3 |  |  |
Daily, organic constant currency net sales |  | $ | 59.3 |  |  | 10.0 | % |  | $ | 15.9 |  |  | 21.9 | % |  | $ | 76.6 |  |  | 12.2 | % |  |
|  | 2025 |  | % Change(2) |  | 2025 |  | % Change(2) |  | 2025 |  | % Change(2) |  |
Reported net sales |  | $ | 3,397 |  |  | (0.2) | % |  | $ | 828 |  |  | 10.3 | % |  | $ | 4,306 |  |  | 1.7 | % |  |
Daily impact(3) |  | 0.9 |  |  | 1.5 |  |  | 0.2 |  |  | 1.7 |  |  | 1.1 |  |  | 1.6 |  |  |
Daily net sales |  | 54.8 |  |  | 1.3 |  |  | 13.4 |  |  | 12.0 |  |  | 69.4 |  |  | 3.3 |  |  |
Foreign currency exchange(4) |  | 0.3 |  |  | 0.6 |  |  | 0.3 |  |  | 3.3 |  |  | 0.7 |  |  | 1.1 |  |  |
Business divestiture(5) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Daily, organic constant currency net sales |  | $ | 55.1 |  |  | 1.9 | % |  | $ | 13.7 |  |  | 15.3 | % |  | $ | 70.1 |  |  | 4.4 | % |  |
(1)Total Company includes other businesses, which included the Cromwell business through the date of divestiture in the fourth quarter of 2025. Grainger's businesses reported in Other do not meet the criteria of a reportable segment. |  |
(2)Compared to net sales in the prior year period.
(3)Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis. There were 63 sales days in the three months ended March 31, 2026 and 2025.
(4)Excludes the impact on net sales due to year-over-year changes in foreign currency exchange rates on a daily basis.
(5)Excludes the net sales results of the divested Cromwell business and closed Zoro U.K. business, announced in the third quarter of 2025 and completed in the fourth quarter of 2025, in the prior year period on a daily basis. There was no business divestiture impact for the three months ended March 31, 2025 compared to the prior year period on a daily basis.

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W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Grainger believes its current balances of cash and cash equivalents, marketable securities, and availability under its revolving credit facility, which supports the Company's commercial paper program, will be sufficient to meet its liquidity needs for the next twelve months. The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.
Cash and Cash Equivalents
As of March 31, 2026 and December 31, 2025, Grainger had cash and cash equivalents of $695 million and $585 million, respectively. The Company had approximately $1.9 billion in available liquidity as of March 31, 2026.
Cash Flows
The following table shows the Company's cash flow activity for the periods presented (in millions of dollars):

| Three Months Ended March 31,
| 2026 |  | 2025
Total cash provided by (used in): |  |  |
Operating activities | $ | 739 |  |  | $ | 646 |
Investing activities | (178) |  | (125)
Financing activities | (446) |  | (898)
Effect of exchange rate changes on cash and cash equivalents | (5) |  | 7
Increase (decrease) in cash and cash equivalents | $ | 110 |  |  | $ | (370) |

Net cash provided by operating activities was $739 million and $646 million for the three months ended March 31, 2026 and 2025, respectively. The increase was primarily due to higher net earnings.
Net cash used in investing activities was $178 million and $125 million for the three months ended March 31, 2026 and 2025, respectively. The increase was due to capital expenditures primarily driven by continued MonotaRO supply chain investments in the first three months of 2026.
Net cash used in financing activities was $446 million and $898 million for the three months ended March 31, 2026 and 2025, respectively. The decrease in cash used in financing activities was primarily due to the repayment of the 1.85% Senior Notes in the amount of $500 million in 2025.
Working Capital
Working capital as of March 31, 2026 was $3,490 million, a decrease of $25 million compared to $3,515 million as of December 31, 2025. As of March 31, 2026 and December 31, 2025, the ratio of current assets to current liabilities was 2.6 and 3.0, respectively.
Debt
Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. Grainger has various sources of financing available.
Total debt as a percent of total capitalization was 35.7% and 37.5% as of March 31, 2026 and December 31, 2025, respectively.
Grainger receives ratings from two independent credit rating agencies: Moody's Investor Service (Moody's) and Standard & Poor's (S&P). Both credit rating agencies currently rate the Company's corporate credit at investment grade.
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W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the Company's credit ratings as of March 31, 2026:

| Corporate |  | Senior Unsecured |  | Short-term
Moody's | A1 |  | A1 |  | P1
S&P | A+ |  | A+ |  | A1

Commitments and Other Contractual Obligations
There were no material changes to the Company’s commitments and other contractual obligations from those disclosed in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2025 Form 10-K.
Critical Accounting Estimates
The preparation of Grainger’s Condensed Consolidated Financial Statements and accompanying notes are in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make assumptions and estimates that affect the reported amounts. The Company considers an accounting policy to be a critical estimate if: (1) it involves assumptions that are uncertain when judgment was applied, and (2) changes in the estimate assumptions, or selection of a different estimate methodology, could have a significant impact on Grainger’s consolidated financial position and results. While the Company believes the assumptions and estimates used are reasonable, the Company’s management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances.
Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements of the Company's 2025 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements.
There were no material changes to the Company's critical accounting estimates from those disclosed in Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2025 Form 10-K.
22

W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
From time to time in this Quarterly Report on Form 10-Q as well as in other written reports, communications and verbal statements, Grainger makes forward-looking statements that are not historical in nature but concern forecasts of future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will,” or “would,” and similar terms and phrases, including references to assumptions.
Grainger cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond Grainger's control, which could cause Grainger's results to differ materially from those that are presented.
Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third-party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters, including new or revised provisions relating to contract compliance or performance; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including existing, new, or increased tariffs, trade issues and changes in trade policies, inflation, and interest rates; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; an incident that adversely impacts Grainger’s reputation or brand; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; effects of outbreaks of pandemic disease or viral contagions, global conflicts, natural or human induced disasters, extreme weather, and other catastrophes or conditions; effects of climate change; failure to execute on our corporate responsibility efforts; competition for, or failure to attract, retain, train, motivate and develop executives and key team members; loss of key members of management or key team members; loss of operational flexibility and potential for work stoppages or slowdowns if team members unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors identified under Part I, Item 1A: Risk Factors and elsewhere in Grainger's 2025 Form 10-K, as updated from time to time in Grainger's Quarterly Form 10-Q.
The preceding list is not intended to be an exhaustive list of all of the factors that could impact Grainger's forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on Grainger's forward looking-statements and Grainger undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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W.W. Grainger, Inc. and Subsidiaries
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Grainger’s primary market risk exposures include changes in foreign currency exchange rates and commodity price risks.
There were no material changes to the Company’s market risk from those described in Part II, Item 7A: Quantitative and Qualitative Disclosures About Market Risk in the Company's 2025 Form 10-K.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Grainger's disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Grainger’s disclosure controls and procedures were effective as of the end of the period covered by this report in (i) ensuring that information required to be disclosed by Grainger in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in Grainger's internal control over financial reporting for the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, Grainger’s internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1: Legal Proceedings
For a description of the Company’s legal proceedings, see Note 7 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1: Financial Information of this Form 10-Q.
Item 1A: Risk Factors
There have been no material changes from the risk factors previously disclosed in Part 1, Item 1A: Risk Factors in the Company's 2025 Form 10-K.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities – First Quarter 2026

Period |  | Total Number of Shares Purchased(1)(2) |  | Average Price Paid per Share(3) |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(4)(2) |  | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Jan. 1 – Jan. 31 |  | 48,810 |  | $1,044.66 |  | 48,810 |  | 3,093,782
Feb. 1 – Feb. 28 |  | 62,065 |  | $1,135.77 |  | 62,065 |  | 3,031,717
Mar. 1 – Mar. 31 |  | 106,880 |  | $1,086.59 |  | 106,751 |  | 2,924,966
Total |  | 217,755 |  |  |  | 217,626 |  |
(1)There were no shares withheld to satisfy tax withholding obligations.
(2)The difference of 129 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc. Retirement Savings Plan for the benefit of the employees who participate in the plan.
(3)Average price paid per share excludes excise tax and commissions of $0.02 per share paid.
(4)Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced April 24, 2024 (2024 Program). The 2024 Program authorized the Company to repurchase an aggregate amount of up to five million shares in the open market, through privately negotiated transactions and block transactions, pursuant to a trading plan or otherwise with no expiration date.

Item 5: Other Information
None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's quarter ended March 31, 2026.
On May 1, 2026, the Company established a commercial paper program, pursuant to which the Company may issue, from time to time, on a private placement basis, unsecured commercial paper notes (the “Notes”) up to a maximum aggregate amount outstanding at any time of $1.25 billion. The maturities of the Notes may not exceed 397 days from the date of issue. The Notes will be sold under customary terms in the commercial paper market and will be issued at a discount from par, or, alternatively, will be sold at par and bear varying interest rates on a fixed or floating basis terms and conditions.
25

W.W. Grainger, Inc. and Subsidiaries
Item 6: Exhibits

EXHIBIT NO. |  | DESCRIPTION
3.1 |  | Restated Articles of Incorporation of W.W. Grainger, Inc.**
10.1 |  | 2026 Form of W.W. Grainger, Inc. 2022 Incentive Plan Restricted Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers.*
10.2 |  | 2026 Form of W.W. Grainger, Inc. 2022 Incentive Plan Performance Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers.*
10.3 |  | 2026 Form of Confidentiality, Invention Assignment, Non-Competition and Non-Solicitation Agreement between W.W. Grainger, Inc. and certain of its executive officers.*
10.4 |  | Summary Description of the Company Management Incentive Program.*
31.1 |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
31.2 |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
32 |  | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.**
101.SCH |  | XBRL Taxonomy Extension Schema Document.**
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document.**
104 |  | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).**
(*) Management contract or compensatory plan or arrangement.
(**) Filed herewith.
(***) Furnished herewith.

26

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

|  |  | W.W. GRAINGER, INC.
Date: | May 7, 2026 | By: | /s/ Deidra C. Merriwether
|  |  | Deidra C. Merriwether
|  |  | Senior Vice President
|  |  | and Chief Financial Officer
|  |  | (Principal Financial Officer)
Date: | May 7, 2026 | By: | /s/ Laurie R. Thomson
|  |  | Laurie R. Thomson
|  |  | Vice President and Controller
|  |  | (Principal Accounting Officer)

27