Financial Data and Key Metrics Changes - The company finished the year with over $16.5 billion in sales, up 8.6% on a daily basis, or 9.5% in daily organic constant currency [25] - Adjusted EPS was up over 23% to $36.67 per share, with operating cash flow exceeding $2 billion [27] - Total company gross margin for the fourth quarter was 39.1%, declining by 50 basis points year-over-year, while operating margin increased by 80 basis points to 15.7% [29][30] Business Line Data and Key Metrics Changes - The High-Touch Solutions segment saw sales up 4.7% on both a reported and daily organic constant currency basis, with strong volume growth across all geographies [37] - The Endless Assortment segment's sales increased 6% or 8.2% on a daily constant currency basis, with Zoro U.S. up 2.6% and MonotaRO achieving 9.9% growth in local currency [40] - Operating margins for the Endless Assortment segment expanded by 50 basis points to 7.8% [41] Market Data and Key Metrics Changes - The U.S. MRO market grew between 2.5% and 3% in the quarter, largely driven by price, with industrial production remaining flat year-over-year [31] - B2B customer growth remained steady in the high single digits, while noncore B2C and B2C light customer performance declined over 20% year-over-year [33] Company Strategy and Development Direction - The company is focused on enhancing customer experience through investments in technology, supply chain, and high-touch growth engines [6][8] - Strategic investments are being made in capacity, automation, and sustainability initiatives to strengthen service advantages [19][24] - The company aims to achieve 400 to 500 basis points of U.S. market outgrowth in 2024, with expectations for daily constant currency sales growth between 4% and 7% [34][42] Management's Comments on Operating Environment and Future Outlook - Management expects a more muted market in 2024 but remains confident in the company's ability to deliver strong results [57] - The company anticipates continued improvements in supply chain efficiencies and a return to normal service levels [66] - The outlook for 2024 includes revenue expectations between $17.2 billion and $17.7 billion, with stable gross margins and operating margins remaining healthy [42][44] Other Important Information - The company updated its 2030 sustainability target to reduce absolute Scope 1 and 2 emissions by 50% from a 2018 baseline [23][24] - Grainger ranked third in the American Opportunity Index for commitment to developing internal talent and was named Glassdoor's 2024 Best Places to Work [21][22] Q&A Session Summary Question: What are the drivers of gross margin improvement since 2019? - Management noted improvements in product gross margins, pricing strategy execution, and supply chain efficiencies as key drivers [60] Question: What offsets are expected for the flat gross margin guidance in 2024? - Management indicated that a faster pricing environment and normalization of supply chain disruptions would help offset the expected decline [61] Question: Can you elaborate on the investments being made? - Investments are categorized into demand generation (SG&A) and capacity additions (capital expenditures), with a focus on improving service and cost efficiency [80] Question: What is the expected pace of share buybacks in 2024? - The company plans to maintain a stable pace for share buybacks throughout the year [90] Question: How does the company view opportunistic M&A? - Management emphasized a focus on organic growth but remains open to technology investments that align with strategic goals [78]

Financial Performance - Net sales for Q3 2023 reached $4,208 million, a 6.7% increase from $3,942 million in Q3 2022[11] - Gross profit for the nine months ended September 30, 2023, was $4,933 million, up 13.6% from $4,343 million in the same period of 2022[11] - Operating earnings for Q3 2023 were $667 million, representing a 10.6% increase compared to $603 million in Q3 2022[11] - Net earnings attributable to W.W. Grainger, Inc. for the nine months ended September 30, 2023, were $1,434 million, a 23.3% increase from $1,163 million in the same period of 2022[11] - Earnings per share (diluted) for Q3 2023 was $9.43, compared to $8.27 in Q3 2022, reflecting a 14.0% increase[11] - Comprehensive earnings attributable to W.W. Grainger, Inc. for the nine months ended September 30, 2023, were $1,395 million, compared to $1,034 million in the same period of 2022, reflecting a 35.0% increase[14] - Net earnings for the three months ended June 30, 2023, were $493 million, compared to $508 million for the same period in 2022[24] - Net earnings attributable to W.W. Grainger, Inc. for the three months ended September 30, 2023, were $476 million, an increase of $50 million or 12% from the previous year[76] Assets and Equity - Total assets as of September 30, 2023, increased to $8,140 million from $7,588 million at the end of 2022, marking a 7.3% growth[16] - As of September 30, 2023, the total shareholders' equity was $3,382 million, an increase from $2,735 million at the beginning of 2023[24] - The company reported a total of $11,859 million in retained earnings as of September 30, 2023, up from $10,700 million at the beginning of 2023[24] - Cash and cash equivalents at the end of Q3 2023 were $601 million, up from $325 million at the end of 2022[16] Cash Flow and Expenditures - Net cash provided by operating activities for the nine months ended September 30, 2023, was $1,427 million, compared to $973 million in the same period of 2022[19] - Capital expenditures for the nine months ended September 30, 2023, totaled $318 million, an increase from $208 million in the same period of 2022[19] - Cash dividends paid in the third quarter of 2023 were $106 million, with a dividend of $1.86 per share[24] Segment Performance - The High-Touch Solutions N.A. segment accounted for 81% of total company revenue for the three months ended September 30, 2023[33] - The Endless Assortment segment contributed 17% to total company revenue for the three months ended September 30, 2023[33] - Total net sales for the nine months ended September 30, 2023, accounted for 81% from High-Touch Solutions N.A. and 18% from Endless Assortment, compared to 80% and 18% respectively in 2022[35] - High-Touch Solutions N.A. segment net sales were $3,403 million, a 7% increase from $3,180 million in 2022, driven by a 3% price increase and a 6% volume increase[78] - Gross profit for the High-Touch Solutions N.A. segment was $1,418 million, up $127 million or 10%, with a gross profit margin of 41.7%[79] Expenses - Selling, general and administrative expenses for the three months ended September 30, 2023, were $988 million, an increase of $72 million or 8% compared to the same period in 2022[74] - SG&A expenses for the nine months increased to $2,925 million, up $253 million, or 9%, driven by higher marketing and payroll expenses[92] Debt and Financial Obligations - The Company’s total debt as of September 30, 2023, was $2,313 million, up from $1,972 million as of December 31, 2022[43] - The carrying amount of the MonotaRO term loan was $34 million as of September 30, 2023, down from $69 million as of December 31, 2022[47] - The estimated fair value of the Company's Senior Notes was based on external pricing data, with a carrying value of $2,260 million as of September 30, 2023[48] Shareholder Actions - The company repurchased a total of 285,565 shares in Q3 2023, with an average price of $732.26 per share in July, $714.07 in August, and $693.55 in September[129] - A quarterly dividend of $1.86 per share was declared on October 25, 2023, payable on December 1, 2023, to shareholders of record on November 13, 2023[61] - The maximum number of shares that may yet be purchased under the repurchase program is 1,987,944[129] Risk and Compliance - The company continues to face market risks related to foreign currency exchange and interest rates, with no material changes reported[123] - The company emphasizes that forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially[120] - The company has not experienced any material changes in its critical accounting estimates from the previous year[116] - There were no changes in the company's internal control over financial reporting that materially affected its reporting[125] Credit Ratings - As of September 30, 2023, the company's credit ratings are A2 from Moody's and A+ from S&P for corporate and senior unsecured ratings[113] Miscellaneous - The company has adopted a written plan for the sale of shares related to an equity award, set to expire on December 31, 2023[130] - There were no material changes to the company's commitments and other contractual obligations from the previous year[114] - The company’s management evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[124]

Financial Performance - Net sales for Q2 2023 reached $4,182 million, a 9% increase from $3,837 million in Q2 2022[11] - Gross profit for the first half of 2023 was $3,278 million, up 16% from $2,824 million in the same period last year[11] - Net earnings attributable to W.W. Grainger, Inc. for Q2 2023 were $470 million, a 27% increase compared to $371 million in Q2 2022[11] - Earnings per share (diluted) for the first half of 2023 were $18.89, up 32% from $14.26 in the same period last year[11] - For the three months ended June 30, 2023, net sales increased to $4,182 million, up from $3,837 million in the same period of 2022, reflecting a growth of about 9%[56] - Gross profit for the same period was $1,644 million, up $203 million or 14%, with a gross profit margin of 39.3%, an increase of 170 basis points year-over-year[72] - Operating earnings for the three months ended June 30, 2023, were $661 million, reflecting a $127 million or 24% increase compared to the prior year[74] - For the six months ended June 30, 2023, net sales reached $8,273 million, an increase of $789 million or 10.6% compared to the same period in 2022[88] - Gross profit for the six months ended June 30, 2023, was $3,278 million, up $454 million or 16%, with a gross profit margin of 39.6%, an increase of 190 basis points year-over-year[89] - Net earnings attributable to W.W. Grainger, Inc. for the six months ended June 30, 2023, were $958 million, an increase of $221 million or 30% compared to the same period in 2022[93] Cash and Assets - Total assets as of June 30, 2023, increased to $8,031 million from $7,588 million at the end of 2022[17] - Cash and cash equivalents at the end of Q2 2023 were $515 million, compared to $325 million at the end of 2022[17] - Net cash provided by operating activities for the first half of 2023 was $904 million, an increase from $593 million in the same period last year[19] - Working capital as of June 30, 2023, was $3,144 million, an increase of $280 million compared to $2,864 million as of December 31, 2022[109] - As of June 30, 2023, property, buildings, and equipment net value was $1,485 million, an increase from $1,461 million as of December 31, 2022[38] - The balance of retained earnings increased to $11,477 million as of June 30, 2023, from $10,700 million at the beginning of the year[24] Segment Performance - The High-Touch Solutions N.A. segment accounted for 80% of total company revenue in the first half of 2023, while the Endless Assortment segment contributed 18%[36] - Net sales for the High-Touch Solutions segment for the six months ended June 30, 2023, were $6,649 million, an increase of $718 million or 12% compared to the same period in 2022[95] - Gross profit for the High-Touch Solutions segment for the six months ended June 30, 2023, was $2,795 million, an increase of $420 million or 18% compared to the same period in 2022[96] - Net sales for the Endless Assortment segment for the six months ended June 30, 2023, were $1,475 million, an increase of $59 million or 4% compared to the same period in 2022[100] Debt and Equity - The carrying value of total debt as of June 30, 2023, was $2,275 million, compared to $2,284 million as of December 31, 2022, indicating a slight decrease of about 0.4%[44] - The Company issued $2.3 billion in unsecured long-term debt (Senior Notes) between 2015 and 2020 to support working capital needs and share repurchases[45] - Total debt as a percent of total capitalization was 46.3% as of June 30, 2023, down from 49.9% as of December 31, 2022[110] - A total of 244,299 shares were repurchased in Q2 2023, with an average price of $671.69 per share[131] - The maximum number of shares that may yet be purchased under the share repurchase program is 2,273,085[131] - The share repurchase program authorized the repurchase of up to 5 million shares with no expiration date[131] Operational Insights - The increase in SG&A expenses for the three months ended June 30, 2023, was primarily due to higher marketing and payroll expenses, totaling $983 million, an increase of 8.4% from the previous year[74] - SG&A expenses for the six months ended June 30, 2023, were $1,937 million, an increase of $181 million or 10% compared to the same period in 2022[91] - The Company has implemented strategies to mitigate the adverse effects of inflation and maintain market price competitiveness[68] - The Company continues to monitor macroeconomic pressures, including inflation and recession fears, which may impact its business operations[68] Compliance and Controls - Grainger's disclosure controls and procedures were evaluated as effective by the CEO and CFO as of the end of the reporting period[125] - There were no changes in Grainger's internal control over financial reporting for the quarter ended June 30, 2023[126]

| --- | --- | --- | |-------|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------| | | Progressing on our near-term ESG initiatives Customer sustainability solutions | $ 1 B Revenue from Environmentally Preferable Products in HTS – U.S. | | | Supplier diversity | $ 2 B Spent on products from underrepresented business (1) > | | | Energy and emissions | 26 % Reduction in t ...

Financial Data and Key Metrics Changes - The company reported strong daily sales growth of 10.1% on a daily constant currency basis for Q2 2023, although year-over-year growth rates have decelerated compared to Q1 [11][17] - Total company operating margin increased by 190 basis points to 15.8%, driven by improved gross margin performance and strong top-line growth [32][109] - Diluted EPS for the quarter was $9.28, reflecting a 29% increase compared to Q2 2022 [109] Business Line Data and Key Metrics Changes - The High-Touch Solutions segment saw daily sales growth of 9.9%, with revenue growth across all geographies, although year-over-year growth rates slowed [35] - The Endless Assortment segment experienced a sales increase of 4.5%, with Zoro U.S. up 2.8% and MonotaRO achieving 12.6% growth in local currency [38] - The High-Touch North American segment's gross profit margin finished at 41.7%, up 200 basis points year-over-year, while operating margin improved by 230 basis points [36][37] Market Data and Key Metrics Changes - The U.S. MRO market is estimated to have grown between 4.5% and 5%, with the company achieving approximately 525 basis points of outgrowth in the quarter [14] - Positive growth was noted in nearly all customer end segments, with strong performance in government and healthcare, countering softness in manufacturing and commercial services [12] Company Strategy and Development Direction - The company is focused on advancing its proprietary product and customer information management systems to fuel growth and enhance marketing and merchandising efforts [8] - Plans to construct a new 500,000 square foot distribution center in Oregon and three smaller distribution centers in Pennsylvania, Texas, and North Carolina are aimed at meeting strong customer demand and improving service capabilities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve profitable growth and strong results for shareholders, raising the midpoint of the full-year 2023 outlook [17][19] - The company anticipates a decline in margin rates in Q3 due to the unwinding of a one-time supplier rebate and continued investments in demand generation [42] Other Important Information - The company returned a combined $265 million to shareholders through dividends and share repurchases in the quarter [32] - The company is committed to sustainability, having helped customers avoid approximately 4,000 tons of CO2 emissions through its sustainability services [6] Q&A Session All Questions and Answers Question: Can you provide details on the distribution center in Oregon? - The company plans to break ground in a couple of weeks, with the building expected to be fully operational by 2025. This expansion is necessary due to outgrowing existing facilities and aims to improve service and reduce transportation costs [47] Question: Can you elaborate on the B2B deceleration in Zoro? - The deceleration is attributed to Zoro's focus on smaller businesses, which are experiencing more softness compared to larger customers served by the High-Touch model. The company is working to increase repeat purchase rates among core B2B customers [70] Question: How should we think about price/cost dynamics moving forward? - Price/cost was slightly negative in the quarter, and the company expects this trend to continue into the second half of the year as favorable pricing from the previous year unwinds [56][78] Question: What is the outlook for gross margins in the second half? - The company expects gross margins to decline slightly due to the unwinding of price/cost dynamics, but remains confident in achieving long-term targets [72][76] Question: How are inventory levels being managed post-pandemic? - The company aims to maintain service levels while managing wasteful inventory, with expectations to return to historical inventory-to-revenue ratios as supply chain disruptions stabilize [87]

Safe Harbor Statement and Non-GAAP Financial Measures Additional information relating to certain non-GAAP financial measures referred to in this presentation including: daily sales; daily sales in constant currency; daily sales in constant currency and local days; free cash flow; adjusted return on invested capital; adjusted EBITDA; and net leverage ratio, is available in the appendix to this presentation. This communication also includes certain non-GAAP forward-looking information (including, but not limi ...

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, 2023 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 ...

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 ...