[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial information, including statements of earnings, balance sheets, cash flows, and management's discussion and analysis [Financial Statements (Unaudited)](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for W.W. Grainger, Inc. for the three months ended March 31, 2023, compared to the same period in 2022, showing significant year-over-year growth [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section presents the unaudited condensed consolidated statements of earnings for Q1 2023 and 2022, highlighting key financial performance metrics Consolidated Statements of Earnings Highlights (Q1 2023 vs Q1 2022) | Metric | Q1 2023 ($M) | Q1 2022 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 4,091 | 3,647 | +12.2% | | Gross Profit | 1,634 | 1,383 | +18.1% | | Operating Earnings | 680 | 534 | +27.4% | | Net Earnings Attributable to W.W. Grainger, Inc. | 488 | 366 | +33.3% | | Diluted EPS | $9.61 | $7.07 | +36.0% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets as of March 31, 2023, and December 31, 2022, detailing assets, liabilities, and equity Balance Sheet Highlights | Metric | March 31, 2023 ($M) | Dec 31, 2022 ($M) | | :--- | :--- | :--- | | Total Current Assets | 5,190 | 4,977 | | Total Assets | 7,825 | 7,588 | | Total Current Liabilities | 1,924 | 2,010 | | Total Liabilities | 4,780 | 4,853 | | Total Shareholders' Equity | 3,045 | 2,735 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2023, and 2022, summarizing cash movements Cash Flow Summary (Three Months Ended March 31) | Activity | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | 454 | 343 | | Net cash used in investing activities | (96) | (57) | | Net cash used in financing activities | (224) | (159) | | **Net change in cash and cash equivalents** | **136** | **123** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides explanatory notes to the condensed consolidated financial statements, covering segment information, legal proceedings, and dividends - The company's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The High-Touch Solutions N.A. segment accounted for **81%** of total company revenue in Q1 2023[35](index=35&type=chunk)[57](index=57&type=chunk) - The company is involved in several product liability-related lawsuits concerning a 2019 chemical refinery explosion. As of the report date, the company has settled with **32** plaintiffs, including all **six** from the first scheduled trial[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - On April 26, 2023, the Board of Directors declared a quarterly dividend of **$1.86** per share, an increase from the **$1.72** per share paid in Q1 2023[25](index=25&type=chunk)[69](index=69&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2023 performance to robust demand, leading to increased net sales, gross profit margin expansion, and diluted EPS growth [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section details the company's financial performance for Q1 2023 compared to Q1 2022, including net sales, gross profit, and earnings per share Q1 2023 vs Q1 2022 Performance Summary | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,091M | $3,647M | +12.2% | | Gross Profit | $1,634M | $1,383M | +18.1% | | Gross Profit Margin | 39.9% | 37.9% | +200 bps | | Operating Earnings | $680M | $534M | +27.4% | | Diluted EPS | $9.61 | $7.07 | +36.0% | - The effective tax rate decreased to **23.3%** in Q1 2023 from **25.5%** in Q1 2022, primarily due to an increased stock compensation tax benefit[83](index=83&type=chunk) [Segment Analysis](index=22&type=section&id=Segment%20Analysis) This section analyzes the performance of the High-Touch Solutions N.A. and Endless Assortment segments, detailing sales and profit contributions High-Touch Solutions N.A. Segment Performance (Q1 2023 vs Q1 2022) | Metric | Q1 2023 ($M) | Q1 2022 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 3,294 | 2,878 | +14.5% | | Gross Profit | 1,397 | 1,164 | +20.0% | | Operating Earnings | 621 | 481 | +29.3% | - High-Touch Solutions N.A. sales growth of **15%** was driven by price/customer mix (**8%**) and volume/product mix (**7%**). Gross profit margin increased by **195 basis points** due to improved product mix and freight efficiencies[86](index=86&type=chunk)[87](index=87&type=chunk) Endless Assortment Segment Performance (Q1 2023 vs Q1 2022) | Metric | Q1 2023 ($M) | Q1 2022 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 724 | 697 | +3.8% | | Gross Profit | 214 | 197 | +9.0% | | Operating Earnings | 58 | 55 | +6.0% | - Endless Assortment sales growth was **14%**, driven by Zoro and MonotaRO, but was partially offset by a **10%** unfavorable foreign exchange impact from the Japanese yen[91](index=91&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, cash flow from operations, and capital allocation activities, including share repurchases - The company had cash and cash equivalents of **$461 million** and total available liquidity of approximately **$1.7 billion** as of March 31, 2023[98](index=98&type=chunk) - Net cash from operating activities increased to **$454 million** in Q1 2023 from **$343 million** in Q1 2022, primarily due to higher net earnings[99](index=99&type=chunk) - Net cash used in financing activities increased to **$224 million** from **$159 million** year-over-year, driven by higher treasury stock repurchases[100](index=100&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its primary market risk exposures, which include foreign currency exchange and interest rates, from its 2022 Form 10-K - There were no material changes to the Company's market risk from those described in the **2022 Form 10-K**[117](index=117&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that Grainger's disclosure controls and procedures were effective as of the end of the reporting period[118](index=118&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[119](index=119&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Legal Proceedings](index=28&type=section&id=Item%201%3A%20Legal%20Proceedings) This section refers to Note 8 of the financial statements for a detailed description of the company's ongoing legal proceedings - For a description of the Company's legal proceedings, see Note 8 of the Notes to Condensed Consolidated Financial Statements[122](index=122&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A%3A%20Risk%20Factors) The company reports no material changes from the risk factors previously disclosed in its 2022 Form 10-K - There have been no material changes from the risk factors previously disclosed in the Company's **2022 Form 10-K**[123](index=123&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2023, the company repurchased 225,061 shares under its ongoing 5 million share repurchase program Issuer Purchases of Equity Securities – First Quarter 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan. 1 – Jan. 31 | 92,528 | $563.74 | | Feb. 1 – Feb. 28 | 57,903 | $661.23 | | Mar. 1 – Mar. 31 | 74,630 | $675.01 | | **Total** | **225,061** | | - As of March 31, 2023, **2,517,384** shares may yet be purchased under the publicly announced plan[124](index=124&type=chunk) [Exhibits](index=29&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications as required by the Sarbanes-Oxley Act and XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files[126](index=126&type=chunk)

Financial Data and Key Metrics Changes - The company reported a sales growth of 12.2%, or 14.5% on a daily constant currency basis for the first quarter of 2023 [10] - Total company operating margins increased to 16.6%, a rise of 200 basis points year-over-year, driven by improved gross margin performance [11] - Earnings per share (EPS) reached $9.61, reflecting a 36% increase compared to the first quarter of 2022 [39] Business Line Data and Key Metrics Changes - The High-Tech Solutions segment experienced daily sales growth of 14.5%, with gross profit margin finishing at 42.4%, up 195 basis points year-over-year [14][15] - The Endless Assortment segment saw sales increase by 3.8%, or 14% on a daily constant currency basis, with MonotaRO achieving 12% growth in local currency [43] - Zoro's sales were impacted by a slower start than anticipated, particularly in non-core B2C business, which was down in the mid-teens year-over-year [43][78] Market Data and Key Metrics Changes - The US MRO market is estimated to have grown between 7% and 8%, with the company achieving approximately 750 basis points of outgrowth in the quarter [42] - Canadian daily sales increased by 11% in local currency, indicating stable economic conditions in Canada [40] Company Strategy and Development Direction - The company is focused on enhancing customer service and inventory management capabilities, aiming to consistently outgrow the US MRO market by 400 to 500 basis points in any economic cycle [17] - Continued investments in marketing and technology are expected to drive customer acquisition and assortment expansion [19] Management's Comments on Operating Environment and Future Outlook - Management noted that while industrial customers are experiencing solid demand, consumer-facing sectors are entering a softer demand cycle [8] - The company raised its full-year 2023 guidance based on strong Q1 performance and positive trends observed in April [12][22] Other Important Information - The company generated record operating cash flow of $454 million and free cash flow of $356 million, returning $229 million to shareholders through dividends and share repurchases [36] - Grainger was recognized as one of the Fortune 100 Best Companies to Work For for the second consecutive year [24] Q&A Session Summary Question: Can you discuss the price cost dynamic and customer response? - Management indicated that share gains have primarily been on volume rather than price, maintaining competitive pricing [54] Question: What is the outlook for gross margin performance for the full year? - Management expressed confidence in maintaining gross margins above the long-term target of 40%, despite expected price/cost negativity in the coming quarters [57] Question: How is the Canadian business performing? - The Canadian business is on track with growth and profitability improvements, with management feeling positive about its trajectory [63] Question: What are the expectations for Zoro's performance moving forward? - Management expects Zoro to achieve low double-digit growth for the year, despite some challenges in non-core areas [78] Question: How is the company managing logistics and freight costs? - Management noted improvements in supply chain performance and reduced freight expenses due to better product availability and shipping efficiencies [81][92] Question: What is the company's stance on M&A opportunities? - While M&A remains a consideration, management does not see significant opportunities on the horizon at this time [108]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 (I.R.S. Employer Ide ...

W.W. Grainger, Inc. (NYSE:GWW) Q4 2022 Results Conference Call February 2, 2023 11:00 AM ET Company Participants Kyle Bland - Vice President, Investor Relations D.G. Macpherson - Chairman & Chief Executive Officer Dee Merriwether - Senior Vice President & Chief Financial Officer Conference Call Participants Tommy Moll - Stephens Ryan Merkel - William Blair Deane Dray - RBC Capital Markets Chris Snyder - UBS Jake Levinson - Melius Research Christopher Glynn - Oppenheimer David Manthey - Baird Ken Newman - Ke ...

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 September 30, 2022 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 o ...

NYSE: GWW Q3 2022 Earnings Call October 28, 2022 A Safe Harbor Statement and Non-GAAP Financial Measures | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

W.W. Grainger, Inc. (NYSE:GWW) Q3 2022 Earnings Conference Call October 28, 2022 11:00 AM ET Company Participants Kyle Bland - Vice President, Investor Relations D.G. Macpherson - Chairman & Chief Executive Officer Dee Merriwether - Senior Vice President & Chief Financial Officer Conference Call Participants Tommy Moll - Stephens David Manthey - Baird Josh Pokrzywinski - Morgan Stanley Jake Levinson - Melius Research Deane Dray - RBC Capital Markets Ryan Merkel - William Blair Chris Snyder - UBS Christopher ...

PART I - FINANCIAL INFORMATION [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents W.W. Grainger, Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2022 and 2021, including earnings, balance sheets, cash flows, and notes [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) The company reported significant growth in net sales, net earnings, and diluted EPS for Q2 and H1 2022, reflecting strong operational performance Consolidated Earnings Summary (in millions, except per share data) | Metric | Q2 2022 | Q2 2021 | YoY Change | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $3,837 | $3,207 | +19.6% | $7,484 | $6,291 | +19.0% | | Gross Profit | $1,441 | $1,124 | +28.2% | $2,824 | $2,217 | +27.4% | | Operating Earnings | $534 | $334 | +60.0% | $1,068 | $692 | +54.3% | | Net Earnings Attributable to W.W. Grainger, Inc. | $371 | $225 | +64.9% | $737 | $463 | +59.2% | | Diluted EPS | $7.19 | $4.27 | +68.4% | $14.26 | $8.76 | +62.8% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$7.05 billion** from **$6.59 billion** at year-end 2021, driven by receivables and inventories, with shareholders' equity reaching **$2.47 billion** Balance Sheet Highlights (in millions) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $4,513 | $4,011 | | Total Assets | $7,049 | $6,592 | | **Liabilities & Equity** | | | | Total Current Liabilities | $1,750 | $1,528 | | Long-term Debt | $2,309 | $2,362 | | Total Shareholders' Equity | $2,465 | $2,160 | | Total Liabilities & Shareholders' Equity | $7,049 | $6,592 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$593 million** in H1 2022, while cash was used for investing (**$172 million**) and financing (**$388 million**) activities Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $593 | $563 | | Net cash used in investing activities | ($172) | ($130) | | Net cash used in financing activities | ($388) | ($463) | | Net change in cash and cash equivalents | $21 | ($38) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue recognition, segment data, debt, and legal contingencies, including revenue breakdown and product liability litigation - Revenue is primarily derived from MRO product sales. The **High-Touch Solutions N.A. segment** accounts for **79% of total company revenue**, while the **Endless Assortment segment** accounts for **19%** for the six months ended June 30, 2022[35](index=35&type=chunk)[39](index=39&type=chunk) - The company's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The **High-Touch Solutions N.A. segment** generated operating earnings of **$956 million**, and the **Endless Assortment segment** generated **$117 million** for the first six months of 2022[63](index=63&type=chunk)[65](index=65&type=chunk) - The company is involved in product liability lawsuits related to a 2019 chemical refinery explosion in Texas. The first bellwether trial is scheduled for early 2023. The company believes the ultimate resolution will not have a material adverse effect[68](index=68&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) [Item 2: MD&A of Financial Condition and Results of Operations](index=18&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong financial performance for Q2 and H1 2022, highlighting sales growth, margin expansion, operating earnings, liquidity, and cash flows - The company is monitoring the broader impact of the Russia-Ukraine conflict on the global economy but does not currently expect significant disruption to its overall business[81](index=81&type=chunk) - The company has implemented strategies to mitigate the adverse effects of the inflationary environment on product and service costs while remaining price competitive[82](index=82&type=chunk) [Results of Operations – Q2 2022](index=19&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202022) Q2 2022 net sales increased **19.6%** to **$3.84 billion**, with gross profit margin improving to **37.6%** and operating earnings surging **60.0%** to **$534 million** Q2 2022 Performance vs. Q2 2021 | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,837M | $3,207M | +19.6% | | Gross Profit | $1,441M | $1,124M | +28.3% | | Operating Earnings | $534M | $334M | +60.0% | | Diluted EPS | $7.19 | $4.27 | +68.4% | - Gross profit margin expansion was attributed to lapping prior-year pandemic-related inventory adjustments and an improved product mix[86](index=86&type=chunk)[88](index=88&type=chunk) - **High-Touch Solutions N.A.** sales growth of **22.2%** was driven by volume/mix (**+11.8%**) and price/customer mix (**+10.6%**)[92](index=92&type=chunk) - **Endless Assortment** sales growth of **11.4%** was driven by **21.1%** operational growth, partially offset by a **9.7%** unfavorable foreign exchange impact[96](index=96&type=chunk) [Results of Operations – H1 2022](index=22&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202022) H1 2022 net sales grew **19.0%** to **$7.48 billion**, with gross profit margin at **37.7%**, operating earnings up **54.4%** to **$1.07 billion**, and diluted EPS increasing **62.8%** H1 2022 Performance vs. H1 2021 | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $7,484M | $6,291M | +19.0% | | Gross Profit | $2,824M | $2,217M | +27.4% | | Operating Earnings | $1,068M | $692M | +54.4% | | Diluted EPS | $14.26 | $8.76 | +62.8% | - **High-Touch Solutions N.A.** daily sales increased **20.2%**, driven by volume/mix (**+10.9%**) and price/customer mix (**+9.4%**)[108](index=108&type=chunk) - **Endless Assortment** daily sales increased **10.9%**, reflecting **19.3%** operational growth offset by an **8.4%** unfavorable foreign exchange impact[112](index=112&type=chunk) [Financial Condition](index=25&type=section&id=Financial%20Condition) As of June 30, 2022, the company held **$262 million** in cash and **$1.5 billion** in liquidity, with operating cash flow at **$593 million** and an improved debt-to-capitalization ratio of **52.3%** - Cash and cash equivalents stood at **$262 million** with approximately **$1.5 billion** in available liquidity as of June 30, 2022[121](index=121&type=chunk) - Net cash from operations increased to **$593 million** in H1 2022 from **$563 million** in H1 2021, primarily due to higher net earnings[122](index=122&type=chunk) - The ratio of current assets to current liabilities was **2.6** as of June 30, 2022[125](index=125&type=chunk) - The company maintains investment-grade credit ratings of **A3** from Moody's and **A+** from S&P[127](index=127&type=chunk)[128](index=128&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange and interest rates, with no material changes from the 2021 Form 10-K disclosures - There were no material changes to the Company's market risk from those described in the 2021 Form 10-K[141](index=141&type=chunk) [Item 4: Controls and Procedures](index=29&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[142](index=142&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[143](index=143&type=chunk) PART II - OTHER INFORMATION [Item 1: Legal Proceedings](index=30&type=section&id=Item%201%3A%20Legal%20Proceedings) This section refers to Note 9 of the financial statements for details on ongoing legal matters, including product liability lawsuits - For a description of the Company's legal proceedings, refer to Note 9 of the Notes to Condensed Consolidated Financial Statements[146](index=146&type=chunk) [Item 1A: Risk Factors](index=30&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2021 Form 10-K and Q1 2022 Form 10-Q - There have been no material changes from the risk factors previously disclosed in the Company's 2021 Form 10-K and Q1 2022 Form 10-Q[147](index=147&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased **241,924** shares of common stock under a board-approved program announced in April 2021 Issuer Purchases of Equity Securities – Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | 78,309 | $510.71 | | May 2022 | 103,261 | $474.04 | | June 2022 | 60,354 | $468.97 | | **Total** | **241,924** | | - As of June 30, 2022, **3,493,442** shares may yet be purchased under the existing repurchase program[148](index=148&type=chunk) [Item 6: Exhibits](index=32&type=section&id=Item%206%3A%20Exhibits) This section lists exhibits filed with the Form 10-Q, including incentive plan award agreements and Sarbanes-Oxley Act certifications - Exhibits filed include forms of Restricted Stock Unit and Performance Stock Unit award agreements, and certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[150](index=150&type=chunk)

Financial Data and Key Metrics Changes - The company reported a sales growth of 19.6%, or 22% on a daily constant currency basis, driven by strong performance in both segments [14][16] - Total company gross profit finished at 37.6%, expanding 255 basis points year-over-year, with a significant contribution from lapping the prior year's pandemic-related inventory adjustment [15][16] - Operating margin increased to 13.9%, up 350 basis points from the prior year, primarily due to improved gross margin performance and SG&A leverage [16][18] - Adjusted ROIC reached 40.5%, significantly up from 29.2% in the same quarter last year [16] - EPS for the quarter was $7.19, reflecting a 68% increase compared to Q2 2021 [18] Business Line Data and Key Metrics Changes - High-Touch Solutions segment saw daily sales up 22.2% compared to Q2 2021, with broad-based double-digit growth across all geographies [19] - In the US, daily sales growth was 23.1%, driven by strong volume growth and price realization of around 11% [20] - Endless Assortment segment reported daily sales growth of 11.4%, or 21.1% on a daily constant currency basis, with MonotaRO achieving 21.9% growth in local currency [26][27] Market Data and Key Metrics Changes - The US MRO market, including both volume and price inflation, grew between 12.5% and 13.5%, indicating the company achieved approximately 1,000 basis points of market outgrowth [24] - Canadian daily sales were up 11.1%, marking the fifth consecutive quarter of profitability for the Canadian team [20] Company Strategy and Development Direction - The company continues to focus on its Grainger Edge framework, which emphasizes customer solutions, speed, and value delivery [7][8] - Strategic investments in remerchandising and data-driven marketing programs are expected to yield strong returns and support ongoing market outgrowth [25] - The company is committed to maintaining price competitiveness while achieving price/cost neutrality during inflationary periods [22][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the team's ability to execute and drive market outgrowth despite uncertain market conditions [35][36] - The company has not observed a slowdown in demand and continues to receive positive sentiment from customers [31] - Full-year 2022 guidance was raised, with expected daily sales growth between 14.5% and 16.5% and EPS between $27.25 and $28.75, reflecting a 41% increase year-over-year at the midpoint [32] Other Important Information - The company reported a total SG&A as a percentage of sales at 23.7%, a 95 basis point improvement year-over-year [17] - The company returned $219 million to shareholders through share repurchases and dividends [16] Q&A Session Summary Question: Share gains drivers - Management indicated that initiatives have contributed more than the expected 300 to 400 basis points of share gains, alongside advantages from inventory position [41][42] Question: Demand slowdown - Management noted that while some markets have slowed, overall growth continues across all segments, with strong performance in healthcare and government [52][53] Question: Technology investments - Management highlighted positive results from investments in product information systems and customer databases, which have improved marketing outreach and seller coverage [56][57] Question: Price cost neutrality - Management clarified that price/cost neutrality refers to product costs and efforts to cover incremental freight costs during inflationary periods [59] Question: Endless Assortment profitability - Management explained that ongoing investments in MonotaRO and Zoro are impacting operating margins, but expect normalization in 2023 [66] Question: Customer inventory levels - Management observed that industrial manufacturers have higher inventory levels primarily due to work-in-process inventory, not MRO products [104][106] Question: Pricing momentum - Management expects pricing to end the year around 9% to 10%, with continued efforts to pass on inflation [128][129]

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, 2022 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 ...