Grainger(GWW) - 2025 Q4 - Annual Results

Financial Performance - Fourth quarter 2025 sales reached $4.4 billion, an increase of 4.5%, or 4.6% on a daily, organic constant currency basis compared to Q4 2024[2] - Full year 2025 sales totaled $17.9 billion, also up 4.5%, or 4.9% on a daily, organic constant currency basis compared to the previous year[2] - Net sales for Q4 2025 reached $4,425 million, a 4.5% increase from $4,233 million in Q4 2024[28] - Reported sales growth for FY 2025 was 4.5%, with daily organic constant currency sales growth of 4.9%[43] Earnings and Margins - Operating margin for Q4 2025 was 14.3%, a decrease of 70 basis points year-over-year, primarily due to increased expenses and slower sales growth[12] - Diluted EPS for Q4 2025 was $9.44, down 2.8% compared to the prior year quarter, influenced by an unfavorable tax rate[13] - Full year 2025 reported operating earnings were $2.5 billion, down 5.4% year-over-year, with an operating margin of 13.9%, a decrease of 150 basis points[14] - Basic earnings per share for Q4 2025 was $9.45, compared to $9.74 in Q4 2024, indicating a decrease of 3.0%[28] - Diluted earnings per share for FY 2025 were $39.48, with an adjusted increase of 1.3% year-over-year[46] - Adjusted operating margin for FY 2025 was 15.0%, compared to a reported margin of 13.9%[46] Cash Flow and Expenditures - The company generated $2.0 billion in operating cash flow for the full year 2025, with free cash flow of $1.3 billion after $684 million in capital expenditures[20] - Free cash flow (FCF) for Q4 2025 was $269 million, and for FY 2025 it was $1,331 million[44] - Net cash provided by operating activities for the twelve months ended December 31, 2025, was $2,015 million, compared to $2,111 million in 2024, reflecting a decrease of 4.5%[32] - Capital expenditures for the twelve months ended December 31, 2025, totaled $684 million, an increase from $541 million in 2024[32] - The company reported a net cash used in financing activities of $1,825 million for the twelve months ended December 31, 2025, compared to $1,180 million in 2024, indicating a significant increase in cash outflows[32] Market and Segment Performance - The Endless Assortment segment saw a sales increase of 14.3%, or 15.7% on a daily, organic constant currency basis, driven by strong performance at MonotaRO and Zoro[7] - High-Touch Solutions in North America reported sales growth of 2.0% for FY 2025, while Endless Assortment saw a growth of 15.7%[43] Tax and Market Changes - The effective tax rate for the full year 2025 was reported at 25.6%, an increase from 23.0% in 2024, primarily due to the exit from the U.K. market[18] - The exit from the U.K. market, including the sale of the Cromwell business, was completed in Q4 2025[46] Assets and Liabilities - Total assets as of December 31, 2025, increased to $8,962 million from $8,829 million as of December 31, 2024[30] - Current liabilities decreased to $1,940 million as of December 31, 2025, from $2,305 million in 2024, showing a reduction of 15.9%[30]