Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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, 2023

☐ 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 49,634,150 shares of the Company’s Common Stock outstanding as of October 19, 2023.


	TABLE OF CONTENTS
		Page
	PART I - FINANCIAL INFORMATION

Item 1:	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Condensed Consolidated Statements of Comprehensive Earnings for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4:	Controls and Procedures	26

	PART II - OTHER INFORMATION

Item 1:	Legal Proceedings	27
Item 1A:	Risk Factors	27
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5:	Other Information	27
Item 6:	Exhibits	28
Signatures		29

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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales	$	4,208	$	3,942	$	12,481	$	11,426
Cost of goods sold	2,553		2,423		7,548		7,083
Gross profit	1,655		1,519		4,933		4,343
Selling, general and administrative expenses	988		916		2,925		2,672
Operating earnings	667		603		2,008		1,671
Other (income) expense:
Interest expense – net	22		25		70		70
Other – net	(7)		(9)		(21)		(20)
Total other expense – net	15		16		49		50
Earnings before income taxes	652		587		1,959		1,621
Income tax provision	159		145		468		405
Net earnings	493		442		1,491		1,216
Less net earnings attributable to noncontrolling interest	17		16		57		53
Net earnings attributable to W.W. Grainger, Inc.	$	476	$	426	$	1,434	$	1,163
Earnings per share:
Basic	$	9.47	$	8.31	$	28.45	$	22.64
Diluted	$	9.43	$	8.27	$	28.32	$	22.52
Weighted average number of shares outstanding:
Basic	49.9		50.8		50.1		51.0
Diluted	50.1		51.1		50.3		51.3

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions of dollars)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net earnings	$	493	$	442	$	1,491	1,216
Other comprehensive earnings (losses):
Foreign currency translation adjustments – net of reclassification to earnings	(39)		(71)		(69)		(180)


Postretirement benefit plan losses and other – net of tax benefit of $1, $2, $3 and $4, respectively	(3)		(3)		(9)		(10)

Total other comprehensive earnings (losses)	(42)		(74)		(78)		(190)
Comprehensive earnings – net of tax	451		368		1,413		1,026
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	17		16		57		53
Foreign currency translation adjustments	(7)		(14)		(39)		(61)
Total comprehensive earnings (losses) attributable to noncontrolling interest	10		2		18		(8)
Comprehensive earnings attributable to W.W. Grainger, Inc.	$	441	$	366	$	1,395	$	1,034

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except for share and per share amounts)


	As of
Assets	(Unaudited) September 30, 2023		December 31, 2022
Current assets
Cash and cash equivalents	$	601	$	325
Accounts receivable (less allowances for credit losses of $38 and $36, respectively)	2,444		2,133
Inventories – net	2,196		2,253
Prepaid expenses and other current assets	171		266


Total current assets	5,412		4,977
Property, buildings and equipment – net	1,543		1,461

Goodwill	364		371
Intangibles – net	238		232
Operating lease right-of-use	413		367
Other assets	170		180
Total assets	$	8,140	$	7,588

Liabilities and shareholders' equity
Current liabilities

Current maturities	$	34	$	35
Trade accounts payable	1,067		1,047
Accrued compensation and benefits	297		334

Operating lease liability	73		68
Accrued expenses	403		474
Income taxes payable	24		52
Total current liabilities	1,898		2,010
Long-term debt	2,260		2,284
Long-term operating lease liability	361		318
Deferred income taxes and tax uncertainties	135		121
Other non-current liabilities	104		120
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	1,343		1,310
Retained earnings	11,859		10,700
Accumulated other comprehensive losses	(219)		(180)
Treasury stock, at cost – 59,937,912 and 59,402,896 shares, respectively	(9,948)		(9,445)
Total W.W. Grainger, Inc. shareholders’ equity	3,090		2,440
Noncontrolling interest	292		295
Total shareholders' equity	3,382		2,735
Total liabilities and shareholders' equity	$	8,140	$	7,588

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)


	Nine Months Ended
	September 30,
	2023		2022
Cash flows from operating activities:
Net earnings	$	1,491	$	1,216
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	15		13
Deferred income taxes and tax uncertainties	20		20
Depreciation and amortization	162		159

Net (gains) losses from sale of assets	(4)		1
Stock-based compensation	49		38


Change in operating assets and liabilities:
Accounts receivable	(351)		(487)
Inventories	42		(253)
Prepaid expenses and other assets	104		(39)
Trade accounts payable	55		261
Accrued liabilities	(106)		51
Income taxes – net	(34)		8
Other non-current liabilities	(16)		(15)

Net cash provided by operating activities	1,427		973
Cash flows from investing activities:
Capital expenditures	(318)		(208)
Proceeds from sale of assets	11		7
Other – net	—		(11)


Net cash used in investing activities	(307)		(212)
Cash flows from financing activities:



Proceeds from debt	7		1
Payments of debt	(37)		—
Proceeds from stock options exercised	29		21
Payments for employee taxes withheld from stock awards	(32)		(22)
Purchases of treasury stock	(506)		(383)
Cash dividends paid	(300)		(285)

Net cash used in financing activities	(839)		(668)
Exchange rate effect on cash and cash equivalents	(5)		(19)
Net change in cash and cash equivalents	276		74
Cash and cash equivalents at beginning of year	325		241
Cash and cash equivalents at end of period	$	601	$	315

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)


	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2022	$	55	$	1,270	$	9,500	$	(96)	$	(8,855)	$	286	$	2,160
Stock-based compensation	—		10		—		—		3		—		13
Purchases of treasury stock	—		—		—		—		(75)		—		(75)
Net earnings	—		—		366		—		—		19		385
Other comprehensive earnings (losses)	—		—		—		(13)		—		(16)		(29)


Cash dividends paid ($1.62 per share)	—		—		(84)		—		—		—		(84)
Balance at March 31, 2022	$	55	$	1,280	$	9,782	$	(109)	$	(8,927)	$	289	$	2,370
Stock-based compensation	—		7		—		—		2		1		10
Purchases of treasury stock	—		—		—		—		(117)		(1)		(118)
Net earnings	—		—		371		—		—		18		389
Other comprehensive earnings (losses)	—		—		—		(56)		—		(31)		(87)

Cash dividends paid ($1.72 per share)	—		—		(87)		—		—		(12)		(99)
Balance at June 30, 2022	$	55	$	1,287	$	10,066	$	(165)	$	(9,042)	$	264	$	2,465
Stock-based compensation	$	—	$	12	$	—	$	—	$	3	$	—	$	15
Purchases of treasury stock	—		—		—		—		(184)		—		(184)
Net earnings	—		—		426		—		—		16		442
Other comprehensive earnings (losses)	—		—		—		(60)		—		(14)		(74)
Cash dividends paid ($1.72 per share)	—		—		(90)		—		—		(12)		(102)
Balance at September 30, 2022	$	55	$	1,299	$	10,402	$	(225)	$	(9,223)	$	254	$	2,562

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

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)


	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2023	$	55	$	1,310	$	10,700	$	(180)	$	(9,445)	$	295	$	2,735
Stock-based compensation	—		14		—		—		18		—		32
Purchases of treasury stock	—		—		—		—		(142)		—		(142)
Net earnings	—		—		488		—		—		20		508
Other comprehensive earnings (losses)	—		—		—		4		—		(5)		(1)


Cash dividends paid ($1.72 per share)	—		—		(87)		—		—		—		(87)
Balance at March 31, 2023	$	55	$	1,324	$	11,101	$	(176)	$	(9,569)	$	310	$	3,045
Stock-based compensation	—		7		—		—		(7)		2		2
Purchases of treasury stock	—		—		—		—		(168)		—		(168)
Net earnings	—		—		470		—		—		20		490
Other comprehensive earnings (losses)	—		—		—		(8)		—		(27)		(35)

Cash dividends paid ($1.86 per share)	—		—		(94)		—		—		(13)		(107)
Balance at June 30, 2023	$	55	$	1,331	$	11,477	$	(184)	$	(9,744)	$	292	$	3,227
Stock-based compensation	—		13		—		—		(1)		—		12
Purchases of treasury stock	—		—		—		—		(203)		(1)		(204)
Net earnings	—		—		476		—		—		17		493
Other comprehensive earnings (losses)	—		—		—		(35)		—		(7)		(42)
Capital contribution	—		(1)		—		—		—		3		2
Cash dividends paid ($1.86 per share)	—		—		(94)		—		—		(12)		(106)
Balance at September 30, 2023	$	55	$	1,343	$	11,859	$	(219)	$	(9,948)	$	292	$	3,382

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

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.

Basis of Presentation

The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The Condensed Consolidated Balance Sheet at December 31, 2022, 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, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2023 (2022 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 2022 Form 10-K.

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 segment and 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. In addition, the segments have unique underlying risks associated with customer purchasing behaviors. In the High-Touch Solutions N.A. segment, more than two-thirds of revenue is derived from customer contracts whereas in the Endless Assortment segment, a majority of revenue is derived from non-contractual purchases.

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended September 30,
	2023						2022(1)
	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Commercial Services	7	%	12	%	8	%	7	%	13	%	8	%
Contractors	5	%	12	%	6	%	5	%	12	%	6	%
Government	19	%	3	%	16	%	18	%	3	%	15	%
Healthcare	7	%	2	%	6	%	7	%	2	%	6	%
Manufacturing	30	%	30	%	30	%	31	%	30	%	30	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	5	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	2	%	3	%	2	%	3	%
Warehousing	4	%	—	%	4	%	5	%	—	%	4	%
Wholesale	7	%	17	%	9	%	7	%	16	%	9	%
Other(3)	9	%	16	%	11	%	9	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	81	%	17	%	100	%	81	%	18	%	100	%

(1) Customer industry results for the three months ended September 30, 2022 were reclassified to reflect the Company's current year classifications, which primarily uses the North American Industry Classification System (NAICS) beginning January 1, 2023.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% and 1% of total Company revenue for the three months ended September 30, 2023 and 2022, respectively.
(3) Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Nine Months Ended September 30,
	2023						2022(1)
	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Commercial Services	7	%	12	%	8	%	7	%	13	%	8	%
Contractors	5	%	12	%	6	%	5	%	12	%	6	%
Government	20	%	3	%	16	%	18	%	3	%	15	%
Healthcare	7	%	2	%	6	%	7	%	2	%	6	%
Manufacturing	30	%	30	%	30	%	31	%	30	%	31	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	4	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	3	%	3	%	2	%	3	%
Warehousing	4	%	1	%	3	%	5	%	—	%	4	%
Wholesale	7	%	16	%	9	%	7	%	16	%	8	%
Other(3)	9	%	16	%	11	%	9	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	81	%	18	%	100	%	80	%	18	%	100	%

(1) Customer industry results for the nine months ended September 30, 2022 were reclassified to reflect the Company's current year classifications, which primarily uses the North American Industry Classification System (NAICS) beginning January 1, 2023.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 1% and 2% of total Company revenue for the nine months ended September 30, 2023 and 2022.
(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 $102 million as of September 30, 2023 and December 31, 2022, respectively.

The Company had no material unsatisfied performance obligations, contract assets or liabilities as of September 30, 2023 and December 31, 2022.

NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT

Property, buildings and equipment consisted of the following (in millions of dollars):


	As of
	September 30, 2023		December 31, 2022
Land and land improvements	$	362	$	318
Building, structures and improvements	1,411		1,463
Furniture, fixtures, machinery and equipment	1,802		1,662
Property, buildings and equipment	$	3,575	$	3,443
Less accumulated depreciation	2,032		1,982
Property, buildings and equipment – net	$	1,543	$	1,461

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 and nine months ended September 30, 2023. 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, 2022	$	321	$	63	$	384


Translation	(8)		(5)		(13)
Balance at December 31, 2022	313		58		371


Translation	(1)		(6)		(7)
Balance at September 30, 2023	$	312	$	52	$	364

The Company's cumulative goodwill impairments as of September 30, 2023 were $137 million. No goodwill impairments were recorded for the nine months ended September 30, 2023 or the twelve months ended December 31, 2022.

The balances and changes in intangible assets – net are as follows (in millions of dollars):


		As of
		September 30, 2023						December 31, 2022
	Weighted average life	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer lists and relationships	11.7 years	$	214	$	184	$	30	$	217	$	181	$	36
Trademarks, trade names and other	14.4 years	32		24		8		32		22		10
Non-amortized trade names and other	Indefinite	19		—		19		22		—		22
Capitalized software	4.2 years	632		451		181		580		416		164
Total intangible assets	6.7 years	$	897	$	659	$	238	$	851	$	619	$	232

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5 - DEBT

Total debt, including long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):


	As of
	September 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	857	$	1,000	$	916
1.85% senior notes due 2025	500		475		500		470
4.20% senior notes due 2047	400		328		400		338
3.75% senior notes due 2046	400		299		400		317



MonotaRO term loan	34		34		69		69

Other	(21)		(21)		(29)		(29)
Subtotal	2,313		1,972		2,340		2,081
Less current maturities	(34)		(34)		(35)		(35)

Debt issuance costs and discounts – net of amortization	(19)		(19)		(21)		(21)
Long-term debt	$	2,260	$	1,919	$	2,284	$	2,025

Senior Notes

Between 2015 and 2020, Grainger issued $2.3 billion in unsecured long-term debt (Senior Notes) primarily to provide flexibility in funding general working capital needs, share repurchases and long-term cash requirements. The Senior Notes require no principal payments until maturity and interest is paid semi-annually.

The Company incurred debt issuance costs related to its Senior Notes of approximately $29 million, representing underwriting fees and other expenses, that were recorded as a contra-liability within Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net.

The Company uses interest rate swaps to manage the risks associated with its 1.85% Senior Notes. These swaps were designated for hedge accounting treatment as fair value hedges. The resulting carrying value adjustments as of September 30, 2023 and December 31, 2022, are presented within Other in the table above. For further discussion on the Company's hedge accounting policies, see Note 6.

MonotaRO Term Loan

In August 2020, MonotaRO entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center (DC) network. As of September 30, 2023 and December 31, 2022, the carrying amount of the term loan, including current maturities due within one year, was $34 million and $69 million, respectively. The term loan matures in August 2024, payable over four equal semi-annual principal installments in 2023 and 2024 and bears an average interest of 0.05%.

Fair Value

The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.

For further information on the Company’s debt instruments, see Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2022 Form 10-K.

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 6 - DERIVATIVE INSTRUMENTS

The Company's earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. Grainger currently enters into certain derivatives or other financial instruments to hedge against these risks, and may continue to do so in the future.

Fair Value Hedges

The Company uses interest rate swaps to hedge a portion of its fixed-rate long-term debt. These swaps are treated as fair value hedges and consequently the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item, are recognized in the Consolidated Statements of Earnings in Interest expense – net. The notional amount of the Company’s outstanding fair value hedges as of September 30, 2023 and December 31, 2022 was $450 million and $500 million, respectively.

The liability hedged by the interest rate swaps is recorded on the Condensed Consolidated Balance Sheets in Long-term debt. As of September 30, 2023 and December 31, 2022, the carrying amount of the hedged item, including the cumulative amount of fair value hedging adjustments was $424 million and $466 million, respectively.

The effect of the Company's fair value hedges on the Condensed Consolidated Statements of Earnings in Interest expense – net for the three and nine months ended September 30, 2023 and 2022, are shown in the following table (in millions of dollars):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gain or (loss):


Interest rate swaps:
Hedged item	$	(2)	$	11	$	(8)	$	36
Derivatives designated as hedging instrument	$	2	$	(11)	$	8	$	(36)

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, are shown in the following table (in millions of dollars):


	As of
	September 30, 2023		December 31, 2022



Interest rate swaps reported in Other non-current liabilities	$	23	$	34

Fair Value

The estimated fair values of the Company's derivative instruments were based on quoted market forward rates, which are classified as Level 2 inputs within the fair value hierarchy and reflect the present value of the amount that the Company would pay for contracts involving the same notional amounts and maturity dates. No adjustments were required during the current period to reflect the counterparty’s credit risk or the Company’s own nonperformance risk.

NOTE 7 - SEGMENT INFORMATION

Grainger's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The remaining businesses, which include the Company's Cromwell business, are classified as Other to reconcile to consolidated results. These remaining businesses individually and in the aggregate do not meet the criteria of a reportable segment.

The Company's corporate costs are allocated to each reportable segment based on benefits received. Additionally, intersegment sales transactions, which are sales between Grainger businesses in separate reportable segments, are eliminated within the segment to present only the impact of sales to external customers. Service fees for

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

intersegment sales are included in each segment's selling, general and administrative expenses and are also eliminated in the Company's Consolidated Financial Statements.

Following is a summary of segment results (in millions of dollars):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,403	$	612	$	3,180	$	550	$	10,052	$	1,833	$	9,111	$	1,506
Endless Assortment	732		55		701		58		2,207		178		2,117		175
Other	73		—		61		(5)		222		(3)		198		(10)
Total Company	$	4,208	$	667	$	3,942	$	603	$	12,481	$	2,008	$	11,426	$	1,671

The Company is a broad line distributor of MRO products and services. Products are regularly added and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. Assets for reportable segments are not disclosed as such information is not regularly reviewed by the Company's Chief Operating Decision Maker.

NOTE 8 - CONTINGENCIES AND LEGAL MATTERS

From time to time the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties.

There have been no material changes to the contingencies and legal matters from those disclosed in Note 15 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2022 Form 10-K and the Company's Form 10-Q for the quarterly period ended March 31, 2023. Although the Company is unable to determine the probability of the outcome of these matters or the estimate of potential loss or range of loss, the Company anticipates that any potential liability, which may arise of or with respect to these matters, will not have, either individually or in the aggregate, a material adverse effect on the Company's financial position, results of operations or cash flows.

NOTE 9 - SUBSEQUENT EVENTS

Revolving Credit Facility

On October 11, 2023, the Company entered into a five-year syndicated $1.25 billion revolving credit facility (the 2023 Credit Facility). The 2023 Credit Facility is unsecured and subject to two one-year extensions if sufficient lenders agree. The 2023 Credit Facility replaced the Company's previous revolving credit facility entered into in February 2020.

Dividend

On October 25, 2023, the Company’s Board of Directors declared a quarterly dividend of $1.86 per share, payable December 1, 2023, to shareholders of record on November 13, 2023.

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, 2022 included in the Company's 2022 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.

General

Grainger is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and the U.K. 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 2023, 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 2022 Form 10-K.

Recent Events

Inflationary Cost Environment and Macroeconomic Pressures

The global economy continues to experience volatile disruptions including to the commodity, labor and transportation markets, arising from a combination of geopolitical events and various economic and financial factors. These disruptions have contributed to an inflationary environment which has affected, and may continue to affect, the price and availability of certain products and services necessary for the Company's operations. Such disruptions have impacted, and may continue to impact, the Company's business, financial condition and results of operations.

The Company continues to monitor economic conditions in the U.S. and globally, and the impact of macroeconomic pressures, including repercussions from rising interest rates, fluctuating currency exchange rates, inflation and a potential recession on the Company’s business, customers, suppliers and other third parties. As a result of continued inflation, the Company has implemented strategies designed to mitigate certain adverse effects of higher costs while also remaining market price competitive. Historically, the Company’s broad and diverse customer base and the nondiscretionary nature of the Company’s products to its customers has helped to insulate it from the effects of recessionary periods in the industrial MRO market. The full extent and impact of these conditions are uncertain and cannot be predicted at this time.

For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2022 Form 10-K.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Results of Operations –Three Months Ended September 30, 2023

The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings (in millions of dollars except per share amounts):


	Three Months Ended September 30,
					Percent Increase/(Decrease) from Prior Year		As a Percent of Net Sales
	2023		2022				2023		2022
Net sales(1)	$	4,208	$	3,942	6.7	%	100.0	%	100.0	%
Cost of goods sold	2,553		2,423		5.3		60.7		61.5
Gross profit	1,655		1,519		9.1		39.3		38.5
Selling, general and administrative expenses	988		916		7.9		23.4		23.2
Operating earnings	667		603		10.7		15.9		15.3
Other expense – net	15		16		(4.1)		0.4		0.4
Income tax provision	159		145		9.6		3.8		3.7
Net earnings	493		442		11.7		11.7		11.2
Noncontrolling interest	17		16		6.4		0.4		0.4
Net earnings attributable to W.W. Grainger, Inc.	$	476	$	426	11.9		11.3		10.8
Diluted earnings per share:	$	9.43	$	8.27	14.1	%

(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 in Grainger's total net sales and daily sales from the prior-year period to the most recent period (in millions of dollars):


	Three Months Ended September 30,
	2023			2022
Net sales	$	4,208		$	3,942
$ Change from prior-year period	266			570
% Change from prior-year period	6.7		%	16.9		%


Daily sales(1)	$	66.8		$	61.6
$ Change from prior-year period	5.2			8.9
% Change from prior-year period	8.4		%	16.9		%

Daily sales impact of currency fluctuations	(0.3)		%	(3.4)		%

(1) Daily sales are defined as the total net sales for the period divided by the number of U.S. selling days in the period. There were 63 and 64 sales days in the three months ended September 30, 2023 and 2022, respectively.

Net sales of $4,208 million for the three months ended September 30, 2023 increased $266 million, or 7%, and on a daily basis, net sales increased 8% compared to the same period in 2022. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $1,655 million for the three months ended September 30, 2023 increased $136 million, or 9%, compared to the same period in 2022. Gross profit margin of 39.3% increased 80 basis points compared to the same period in 2022. For further discussion on the Company's gross profit, see the Segment Analysis section below.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

SG&A of $988 million for the three months ended September 30, 2023 increased $72 million, or 8%, compared to the same period in 2022. The increase was primarily due to higher marketing expenses.

Operating earnings of $667 million for the three months ended September 30, 2023 increased $64 million, or 11%, compared to the same period in 2022.

Income taxes of $159 million for the three months ended September 30, 2023 increased $14 million, or 10%, compared to the same period in 2022. The increase in tax expense was driven by higher taxable operating earnings for the third quarter of 2023. Grainger's effective tax rates were 24.4% and 24.7% for the three months ended September 30, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily due to favorable tax impacts related to mix of foreign earnings.

Net earnings of $476 million attributable to W.W. Grainger, Inc. for the three months ended September 30, 2023 increased $50 million, or 12%, compared to the same period in 2022.

Diluted earnings per share was $9.43 for the three months ended September 30, 2023, an increase of 14% compared to $8.27 for the same period in 2022.

Segment Analysis

For further segment information, see Note 7 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 September 30,
	2023		2022		Percent Increase
Net sales	$	3,403	$	3,180	7.0	%

Gross profit	$	1,418	$	1,291	9.8	%
Selling, general and administrative expenses	$	806	$	741	8.6	%
Operating earnings	$	612	$	550	11.4	%

Net sales of $3,403 million for the three months ended September 30, 2023 increased $223 million, or 7%, and on a daily basis, increased 9% compared to the same period in 2022. The increase was due to price, which includes customer mix, of 3% and volume, which includes product mix of 6%.

Gross profit of $1,418 million for the three months ended September 30, 2023 increased $127 million, or 10%, compared to the same period in 2022. Gross profit margin of 41.7% increased 110 basis points compared to the same period in 2022. The increase was driven by freight and supply chain efficiencies as well as improved product mix in the third quarter of 2023.

SG&A of $806 million for the three months ended September 30, 2023 increased $65 million, or 9%, compared to the same period in 2022. The increase was primarily due to higher marketing expenses. SG&A leverage decreased 40 basis points compared to the same period in 2022.

Operating earnings of $612 million for the three months ended September 30, 2023 increased $62 million, or 11%, compared to the same period in 2022.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Endless Assortment

The following table shows reported segment results (in millions of dollars):


	Three Months Ended September 30,
	2023		2022		Percent Increase/(Decrease)
Net sales	$	732	$	701	4.3	%

Gross profit	$	216	$	209	3.5	%
Selling, general and administrative expenses	$	161	$	152	6.4	%
Operating earnings	$	55	$	58	(4.3)	%

Net sales of $732 million for the three months ended September 30, 2023 increased $31 million, or 4%, and on a daily basis, increased 6% compared to the same period in 2022. The increase was due to sales growth of 9% driven by customer acquisition for the segment and enterprise growth at MonotaRO, partially offset by declining sales to non-core, consumer-like customers and slower overall market demand at Zoro. Sales growth was offset by unfavorable foreign exchange of 3% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $216 million for the three months ended September 30, 2023 increased $7 million, or 4%, compared to the same period in 2022. Gross profit margin of 29.6% decreased 20 basis points compared to the same period in 2022. The decrease was driven by unfavorable Zoro product mix partially offset by price realization and freight efficiencies at MonotaRO in the third quarter of 2023.

SG&A of $161 million for the three months ended September 30, 2023 increased $9 million, or 6%, compared to the same period in 2022. The increase was primarily driven by higher marketing expenses. SG&A leverage decreased 50 basis points compared to the same period in 2022.

Operating earnings of $55 million for the three months ended September 30, 2023 decreased $3 million, or 4%, compared to the same period in 2022.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Results of Operations – Nine Months Ended September 30, 2023

The following table is included as an aid to understanding the changes in Grainger's Condensed Consolidated Statements of Earnings (in millions of dollars except per share amounts):


	Nine Months Ended September 30,
					Percent Increase/(Decrease) from Prior Year		As a Percent of Net Sales
	2023		2022				2023		2022
Net sales(1)	$	12,481	$	11,426	9.2	%	100.0	%	100.0	%
Cost of goods sold	7,548		7,083		6.6		60.5		62.0
Gross profit	4,933		4,343		13.6		39.5		38.0
Selling, general and administrative expenses	2,925		2,672		9.5		23.4		23.4
Operating earnings	2,008		1,671		20.2		16.1		14.6
Other expense – net	49		50		(1.6)		0.4		0.4
Income tax provision	468		405		15.4		3.7		3.5
Net earnings	1,491		1,216		22.6		11.9		10.7
Noncontrolling interest	57		53		7.5		0.5		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	1,434	$	1,163	23.3		11.5		10.2
Diluted earnings per share:	$	28.32	$	22.52	25.7	%

(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 in Grainger's total net sales and daily sales from the prior period to the most recent period (in millions of dollars):


	Nine Months Ended September 30,
	2023			2022
Net sales	$	12,481		$	11,426
$ Change from prior-year period	1,055			1,763
% Change from prior-year period	9.2		%	18.2		%

Daily sales(1)	$	65.3		$	59.5
$ Change from prior-year period	5.8			8.9
% Change from prior-year period	9.8		%	17.6		%

Daily sales impact of currency fluctuations	(1.3)		%	(2.5)		%

(1) Daily sales are defined as the total net sales for the period divided by the number U.S. selling days in the period. There were 191 and 192 sales days in the nine months ended September 30, 2023 and 2022, respectively.

Net sales of $12,481 million for the nine months ended September 30, 2023 increased $1,055 million, or 9%, and on a daily basis, increased 10% compared to the same period in 2022. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $4,933 million for the nine months ended September 30, 2023 increased $590 million, or 14%, compared to the same period in 2022. Gross profit margin of 39.5% increased 150 basis points compared to the

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

same period in 2022. For further discussion on the Company's gross profit, see the Segment Analysis section below.

SG&A of $2,925 million for the nine months ended September 30, 2023 increased $253 million, or 9%, compared to the same period in 2022. The increase was primarily due to higher marketing and payroll expenses.

Operating earnings of $2,008 million for the nine months ended September 30, 2023 increased $337 million, or 20%, compared to the same period in 2022.

Income taxes of $468 million for the nine months ended September 30, 2023 increased $63 million or 15%, compared to the same period in 2022. The increase in tax expense was driven by higher taxable operating earnings for the nine months ended September 30, 2023. Grainger's effective tax rates were 23.9% and 25.0% for the nine months ended September 30, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily due to increased stock compensation tax benefit compared to the same period in 2022.

Net earnings of $1,434 million attributable to W.W. Grainger, Inc. for the nine months ended September 30, 2023 increased $271 million, or 23%, compared to the same period in 2022.

Diluted earnings per share was $28.32 for the nine months ended September 30, 2023, an increase of 26% compared to $22.52 for the same period in 2022.

Segment Analysis

For further segment information, see Note 7 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):


	Nine Months Ended September 30,
	2023		2022		Percent Increase
Net sales	$	10,052	$	9,111	10.3	%

Gross profit	$	4,213	$	3,666	14.9	%
Selling, general and administrative expenses	$	2,380	$	2,160	10.2	%
Operating earnings	$	1,833	$	1,506	21.7	%

Net sales of $10,052 million for the nine months ended September 30, 2023 increased $941 million, or 10%, and on a daily basis, increased 11% compared to the same period in 2022. The increase was due to price, which includes customer mix, of 5% and volume, which includes product mix, of 6%.

Gross profit of $4,213 million for the nine months ended September 30, 2023 increased $547 million, or 15%, compared to the same period in 2022. Gross profit margin of 41.9% increased 170 basis points compared to the same period in 2022. The increase was driven by freight efficiencies and improved product mix in 2023.

SG&A of $2,380 million for the nine months ended September 30, 2023 increased $220 million, or 10%, compared to the same period in 2022. The increase was primarily due to higher marketing and payroll expenses. SG&A leverage remained consistent compared to the same period in 2022.

Operating earnings of $1,833 million for the nine months ended September 30, 2023 increased $327 million, or 22%, compared to the same period in 2022.

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Endless Assortment

The following table shows reported segment results (in millions of dollars):


	Nine Months Ended September 30,
	2023		2022		Percent Increase
Net sales	$	2,207	$	2,117	4.2	%

Gross profit	$	654	$	615	6.3	%
Selling, general and administrative expenses	$	476	$	441	8.1	%
Operating earnings	$	178	$	175	1.9	%

Net sales of $2,207 million for the nine months ended September 30, 2023 increased $90 million, or 4%, and on a daily basis, increased 5% compared to the same period in 2022. The increase was due to sales growth of 11% driven by customer acquisition for the segment and enterprise growth at MonotaRO, partially offset by unfavorable foreign exchange of 6% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $654 million for the nine months ended September 30, 2023 increased $39 million, or 6%, compared to the same period in 2022. Gross profit margin of 29.6% increased 50 basis points compared to the same period in 2022. The increase was driven by freight efficiencies at MonotaRO in 2023.

SG&A of $476 million for the nine months ended September 30, 2023 increased $35 million, or 8%, compared to the same period in 2022. The increase was primarily due to higher marketing and payroll and benefit expenses. SG&A leverage decreased 80 basis points compared to the same period in 2022.

Operating earnings of $178 million for the nine months ended September 30, 2023 increased $3 million, or 2%, compared to the same period in 2022.

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 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 September 30, 2023 and December 31, 2022, Grainger had cash and cash equivalents of $601 million and $325 million, respectively. The Company had approximately $1.9 billion in available liquidity as of September 30, 2023.

Cash Flows

The following table shows the Company's cash flow activity for the periods presented (in millions of dollars):


	Nine Months Ended September 30,
	2023		2022
Total cash provided by (used in):
Operating activities	$	1,427	$	973
Investing activities	(307)		(212)
Financing activities	(839)		(668)
Effect of exchange rate changes on cash and cash equivalents	(5)		(19)
Increase in cash and cash equivalents	$	276	$	74

Net cash provided by operating activities was $1,427 million and $973 million for the nine months ended September 30, 2023 and 2022, respectively. The increase was driven by higher net earnings and favorable year-over-year working capital primarily due to sales growth and inflation.

Net cash used in investing activities was $307 million and $212 million for the nine months ended September 30, 2023 and 2022, respectively. The change was driven by increased U.S. supply chain investments.

Net cash used in financing activities was $839 million and $668 million for the nine months ended September 30, 2023 and 2022, respectively. The increase was primarily due to higher treasury stock repurchases.

Working Capital

Working capital as of September 30, 2023 was $3,129 million, an increase of $265 million compared to $2,864 million as of December 31, 2022. The increase was driven by increased accounts receivable due to continued sales growth and lower accrued current liabilities. As of September 30, 2023 and December 31, 2022, the ratio of current assets to current liabilities was 2.7 and 2.5, respectively.

Debt

Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. In addition to internally generated funds, Grainger has various sources of financing available, including bank borrowings under lines of credit.

Total debt, which is defined as total interest-bearing debt and lease liabilities, as a percent of total capitalization was 44.9% and 49.9% as of September 30, 2023 and December 31, 2022, 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.

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 September 30, 2023:

Corporate

Senior Unsecured

Short-term

Moody's

S&P

A+

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 2022 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 of operations 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: (i) it involves assumptions that are uncertain when judgment was applied, and (ii) 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 2022 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 2022 Form 10-K.

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.

The Company cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to assumptions, risks and uncertainties, many of which are beyond the Company’s control, which could cause the Company’s actual 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; the impact of macroeconomic pressures and geopolitical trends, changes and events; 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 the Company’s eCommerce platforms; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in the Company's gross profit margin; the Company’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; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving the Company or third parties on which the Company depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of the Company’s common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; outbreaks of pandemic disease or viral contagions such as the COVID-19 pandemic; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key employees; loss of key members of management or key employees; changes in effective tax rates; changes in credit ratings or outlook; the Company’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 in the Company's latest Form 10-K, as updated from time to time in the Company's Quarterly Form 10-Q.

The preceding list is not intended to be an exhaustive list of all of the factors that could impact the Company's forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company 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.

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 and interest rates.

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 2022 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 September 30, 2023, that have materially affected, or are reasonably likely to materially affect, Grainger’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1: Legal Proceedings

For a description of the Company’s legal proceedings, see Note 15 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2022 Form 10-K and the Company's Form 10-Q for the quarterly period ended March 31, 2023.

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 2022 Form 10-K.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities – Third Quarter 2023


Period	Total Number of Shares Purchased (A)(B)	Average Price Paid per Share (C)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (D)	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Jul. 1 – Jul. 31	15,915	$732.26	15,915	2,257,170
Aug. 1 – Aug. 31	143,643	$714.07	143,643	2,113,527
Sep. 1 – Sep. 30	126,007	$693.55	125,583	1,987,944
Total	285,565		285,141

A.There were no shares withheld to satisfy tax withholding obligations.

B.The difference of 424 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans of Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc. Retirement Saving Plan for the benefit of the employees who participate in the plan.

C.Average price paid per share excludes commissions of $0.01 per share paid.

D.Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced on April 28, 2021 (2021 Program). The 2021 Program authorized the repurchase of up to 5 million shares with no expiration date.

Item 5: Other Information

On August 29, 2023, D.G. Macpherson, Grainger’s Chairman of the Board and Chief Executive Officer, adopted a written plan for the sale of shares received pursuant to the vesting of an equity award on October 1, 2023. The aggregate number of shares subject to the plan is 4,995 and excludes shares withheld by the Company to satisfy income tax withholding obligations in connection with the net settlement of such equity award. The plan is a multi-trade plan, is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and will expire on December 31, 2023, or any earlier date on which all of the shares have been sold. None of the Company's other 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 September 30, 2023.

W.W. Grainger, Inc. and Subsidiaries

Item 6: Exhibits


EXHIBIT NO.						DESCRIPTION

10.1						Transition Agreement and General Release by and between W.W. Grainger, Inc. and John L. Howard, dated July 6, 2023.*
10.2						Credit Agreement dated as of October 11, 2023, by and among W.W. Grainger, Inc., the lenders party thereto, and JP Morgan Chase Bank, N.A., as Administrative Agent, incorporated by reference to Exhibit 10.1 to W.W. Grainger, Inc.'s Current Report on Form 8-K filed on October 12, 2023.
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.

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:	October 26, 2023	By:	/s/ Deidra C. Merriwether
			Deidra C. Merriwether
			Senior Vice President
			and Chief Financial Officer
			(Principal Financial Officer)
Date:	October 26, 2023	By:	/s/ Laurie R. Thomson
			Laurie R. Thomson
			Vice President and Controller
			(Principal Accounting Officer)

Exhibit 10.1

TRANSITION AGREEMENT AND GENERAL RELEASE

This Transition Agreement and General Release ("Agreement") is made and entered into this 6th day of July 2023, by and between W.W. Grainger, Inc. ("Grainger") and John Howard (the "Officer''). The Officer understands and voluntarily enters into this Agreement with Grainger and, in consideration of the respective payments and benefit continuation described herein, agrees as follows:

1. Resignation as Officer. The Officer hereby acknowledges that he has voluntarily resigned effective January 30, 2023 (the "Resignation Date") as General Counsel of Grainger but will remain as a Senior Vice President and Corporate Secretary of Grainger. In an effort to support an orderly transfer of duties and responsibilities, Officer has also agreed while serving in the capacity of Senior Vice President to provide related services associated with role transition through July 31, 2023 (the "Transition Date"). On or before the Transition Date, Officer will voluntarily resign from all positions with all corporations that are direct or indirect subsidiaries of or otherwise affiliated with Grainger ("Affiliates"), and as trustee, member or fiduciary of all trusts, committees, or similar bodies of or otherwise affiliated with Grainger and the Affiliates.

2. Transitionary Services and Accompanying Payments. Thereafter, for a twelve-month period, beginning August 1, 2023 and ending August 1, 2024 (such ending date, the “Retirement Termination Date”), the Officer will continue as an active employee of Grainger and provide transitionary services as may be requested, it being understood that as of the Transition Date the Officer will have incurred a “separation from service” under Code Section 409A, and it is intended that the requested services will be consistent with the Officer’s status as having incurred a “separation from service.” During this twelve-month period, Officer shall be paid an amount representing the equivalent of six months’ pay based upon the Officer’s then current regular rate of pay. Payments will be pro-rated through the Retirement Termination Date. Each payment shall be pro-rated and paid in bi-weekly installments less required deductions in accordance with Grainger's then existing payroll schedule. Upon reaching the Retirement Termination Date, Officer shall be considered a Grainger Retirement Savings Plan Retiree of the Company, and eligible to receive all benefits associated with that status. No such payments shall be made to the Officer until at least the eighth (8th) day following the day on which this Agreement is fully executed, and provided that the Agreement is not revoked by the Officer pursuant to Section 22 prior to that date.

3. Benefits.

a. Health, Dental, Life and Vision. To the extent that the Officer currently participates, Grainger will continue to provide, through deductions from the Officer's pay at the same rate paid by employees, group health, dental and vision benefits and life insurance as currently maintained for the Officer, or as subsequently modified by Grainger, through the Retirement Termination Date. After the Officer's benefit coverage ceases on August 1, 2024, the Officer may elect to continue group health, dental and vision benefits under COBRA or retiree health benefits under Grainger’s Retiree Health Program for himself and his spouse.

b. Unemployment Benefits. The Officer agrees that he will not apply for unemployment benefits at any time in the future that would otherwise be chargeable to Grainger's unemployment insurance account.

c. PTO Time. The Officer will continue to be eligible for and accrue PTO through the Retirement Termination Date in accordance with the terms of Grainger’s PTO policy. Payment for any earned but unused PTO will be paid to the Officer in conjunction with his Retirement Termination Date.

d. Management Incentive Program (MIP). As an additional payment to those provided for in

Section 2, the Officer received a full MIP payment for the year 2022 as well as participate and will receive a 7/12ths pro-rata MIP payment for the year 2023. For such periods, the Officer's payment shall be based upon the Officer's current salary, target percentage level and adjusted for Company performance. These payments have been and will be made to Officer during the first quarter of 2023 and 2024 at the time when such payments are made to other Program participants in accordance with the terms of the MIP. Officer will not be eligible for any MIP or other cash incentive award other than the above referenced amounts or for any other periods following the Transition Date.

e. Career Continuation Retirement Planning - Outplacement Assistance. Upon Officer's request, Officer shall be eligible to receive professional Career Continuation Retirement Planning Outplacement Services. Officer shall have the opportunity to interview and then select a service provider from those designated firms made available to him for this purpose by Grainger. Shields – Meneley has been both agreed upon and selected for this purpose. In addition, Officer shall be eligible to participate in continuing legal education seminars as generally made available the Company’s lawyers.

f. Retirement Savings Plan - Profit Sharing Contribution. Officer shall be eligible to participate in and receive contributions under the Grainger Retirement Savings Plan (“GRSP”) and the Grainger Supplemental Profit Sharing Plan II (“SPSP II”) for the years 2023 and 2024 during the period of his active employment as well as a payout of any vested funds contained within Officer's existing accounts under GRSP, SPSP II, and other qualified and nonqualified retirement and deferred compensation plans, in each case pursuant to the provisions of the plan then in effect and in accordance with its terms.

g. Executive Physical Examination Program. Officer shall be eligible to participate in Grainger’s 2023 Executive Physical Examination Program.

h. Discontinued Executive Death Benefit Plan Payment. As a grandfathered participant in the Company’s Executive Death Benefit Plan (EDBP) (which was closed to new participants effective December 31, 2009), Officer is eligible to receive a cash payout of all applicable funds pursuant to the provisions of the EDBP based on his current salary and target percentage level. Said payment / payments shall be made to the Officer consistent his payment elections and with the EDBP’s established terms and payment schedule.

i.Continuation of Benefits. All other benefits and the Officer's eligibility to participate in any other Grainger employee programs will continue through the Officer’s Retirement Termination Date unless such benefits cease pursuant to terms of such program and except as provided or referenced in this Agreement. The amounts and benefits payable to the Officer under this Agreement shall be in lieu of any amounts or benefits otherwise provided under any plan or policy of Grainger.

4. LTIP - Restricted Stock Units and Restricted Performance Shares. Pursuant to the provisions of the applicable Plans, Officer has received a full 2023 LTIP Grant and Officer’s outstanding equity awards will vest, settle and/or remain exercisable in accordance with the terms of the applicable Plans and his award agreements and he will be eligible for the treatment applicable to “retirement” thereunder. Officer will not be eligible to receive any further LTIP grants following the Transition Date.

5. General Release and Waiver of Claims. In exchange and in consideration for the promises, obligations, and agreements undertaken by Grainger herein, which the Officer agrees and acknowledges are adequate and sufficient consideration, the Officer, on behalf of himself, his spouse, agents, representatives, attorneys, assigns, heirs, executors, administrators, and other personal representatives, releases and forever discharges Grainger, the Affiliates, and all of their officers, employees, directors, agents, attorneys, personal representatives, predecessors, successors, and assigns (hereinafter collectively referred to as the "Releasees") from any and all claims of any kind which he has, or might have, as of the date of this Agreement; or which are based on any facts which exist or existed on or

before the date of this Agreement. The claims the Officer is releasing include, but are not limited to, all claims relating in any way to his employment at Grainger or his separation from that employment; and all claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the Equal Pay Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Federal Rehabilitation Act, the Age Discrimination in Employment Act ("ADEA"), the Older Worker Benefit Protection Act, the Equal Pay Act, as amended, the Illinois Fair Employment Practices Act, the Illinois Wage Payment and Collection Act, or any other federal, state or local law relating to employment, discrimination, retaliation, or wages, or under the common law of any state (including, without limitation, claims relating to contracts, wrongful discharge, retaliatory discharge, defamation, intentional or negligent infliction of emotional distress, and wrongful termination of benefits). The Officer also releases and forever discharges Grainger and all other Releasees from any and all other demands, claims, causes of action, obligations, agreements, promises, representations, damages, suits, and liabilities whatsoever, both known and unknown, in law or in equity, which he has or might have as of the date of this Agreement. The Officer understands that this Section 5 of this Agreement contains a complete and general release of any claim that he now has against Grainger and all other Releasees or could ever have against Grainger and all other Releasees, based on any fact, event, or omission that has occurred up to the time at which he signs the Agreement.

The Officer does not intend nor is he waiving any rights or claims that may arise after the date that he signs this Agreement, or any right on the Officer's part to challenge the knowing and voluntary nature of this release with respect to claims under ADEA.

Notwithstanding the foregoing, the Officer does not waive any rights he may have to benefits available after termination under any company-sponsored employee benefit plan, or any rights he may have to insurance protection. Further, it is agreed that that Officer does not waive any rights he may have to indemnification for actions taken by the Officer while an employee and or Officer of Grainger, including the indemnification rights provided by Grainger’s By-Laws and/or by the Indemnification Agreement entered into between Grainger and the Officer on May 11, 2009. The indemnification protections afforded the Officer by the By-Laws and the Indemnification agreement expressly survive.

The Officer acknowledges that this is an individually negotiated agreement and he agrees that his retirement termination of employment with Grainger is not pursuant to an employment termination program as that term is used in the ADEA.

Excluded from this General Release and Waiver are any claims or rights which Officer cannot waive by law, including workers' compensation claims, as well as any claims for breach of this Agreement. Also excluded from this Agreement are Officer's rights to file a charge with the Equal Employment Opportunity Commission or any other federal, state, or local agency, and to participate in an agency investigation. Officer, however, waives all rights to recover money or other individual relief if any administrative agency or another person or entity pursues any claim on Officer's behalf arising out of or related to Officer's employment with Grainger. Officer represents that there is no lawsuit or other claim against Grainger pending in any federal, state, or municipal court or other tribunal which has not been addressed herein.

The Officer understands and agrees that this waiver and release is an essential and material term of this Agreement and that, without such provision, no agreement would have been reached by the parties.

6. Covenants Not to Sue. a) The Officer agrees not to pursue or permit to be filed or pursued against Grainger or any Releasee, any claim or action before any federal, state, or local, administrative, legislative or judicial body based on any claim or liability described in the foregoing section, or otherwise related in any way to the Officer's employment with Grainger, and understands that the purpose of this waiver and release is to dispose of, with finality, any claims that the Officer may have against Grainger and all other Releasees so that there will be no disputes or controversies concerning any matters following the Separation Date. The Officer has no such claim or lawsuit outstanding at this time, and the Officer does not know of any such potential claim or lawsuit that may be asserted by the Officer or any other person in connection with the Officer's employment with Grainger. The Officer understands that the terms of this section do not apply to a challenge to the knowing and voluntary nature of this release with

respect to claims under ADEA. b) In turn, except as otherwise provided in Section 13 below, Grainger agrees not to pursue any claim or sue Officer for any action or conduct that may otherwise be attributable to Officer during the term of his active employment and through the date that he executes this Agreement.

7. Unfair Competition.

a. The Officer acknowledges that in connection with the performance of his duties for Grainger, he has either created, used, or accessed confidential and trade secret information of Grainger and the Affiliates (as further described in Section 11 below). The Officer further acknowledges that his employment with or other work on behalf of a Competitor (defined in Section 7(b) and 7(c)below) would necessarily and inevitably lead to his unauthorized use or disclosure of such confidential and trade secret information. Accordingly, the Officer agrees that based upon the special consideration provided by way of this Agreement, and for a period beginning on the date hereof and continuing until the first anniversary of the Retirement Termination Date, and within one hundred (100) miles of any office of Grainger or an Affiliate to which he was assigned either physically or electronically within two years prior to ceasing active employment with the Company, as well as on behalf of any Competitor specifically identified on Exhibit A, anywhere in the United States (the "Restricted Area"), he will not directly or indirectly, whether as executive, officer, director, owner, shareholder, partner, associate, consultant, advisor, contractor, joint venturer, manager, agent, representative or otherwise, work for a Competitor at said location or within the above designated 100 mile radius in any capacity that would involve:

i. the same or substantially similar functions or responsibilities to those the Officer performed for Grainger within two years of the Transitionary Date; or

ii. supervision over the same or substantially similar responsibilities to those the Officer performed for Grainger within two years of the Transitionary Date; or

iii. assisting a Competitor in decisions that involve or affect the same or a substantially similar area of operations to those the Officer was involved in with Grainger within two years of the Transitionary Date.

Nothing herein shall prevent the Officer from the general practice of law.

The Officer may not circumvent the purpose of this restriction by engaging in business within the Restricted Area through remote means such as telephone, correspondence, electronic or any other form of computerized communication.

b. A "Competitor" is any person or legal entity or branch, office or operation thereof (a "Firm") that engages in business that is competitive with the business activities of Grainger through, but not limited to: (i) selling maintenance, repair and operating (MRO) supplies to North American businesses; (ii) providing indirect materials management services to North American businesses; (iii) aggregating information regarding indirect materials for the purpose of conducting business-to-business Internet commerce with North American businesses; or (iv) indirect materials procurement services to North American businesses. Without limiting the generality of the foregoing, each of the Firms identified on Exhibit A hereto constitutes a Competitor.

c. A Firm shall not be deemed a Competitor unless the aggregate revenue of such Firm for its most recently completed fiscal year that is attributable to the categories of products and services set forth in clauses (i) through (iv) of Section 7(b) above equals more than 5% of the aggregate amount of consolidated revenue that Grainger derived from such categories of products and services during its most recently completed fiscal year.

d. The Officer may at any time, or from time to time, request Grainger to advise the Officer

in writing whether or not Grainger considers a specified Firm to be a Competitor. Any such request shall be made by written notice to Grainger that includes: (i) the name of the specific business unit for which the Officer proposes to work; (ii) the name or names of any parent companies of such business unit; (iii) a description of the specific services which the Officer proposes to perform for such business unit; (iv) a statement as to why the Officer believes that the performance of such services will not adversely affect Grainger's legitimate protectible interests; and (v) the requested date of Grainger's response (which date shall be at least 14 days after the date of Grainger's receipt of the Officer's request).

e. The Officer specifically recognizes and affirms that Section 7(a) is a material and important term of this Agreement. If any court of competent jurisdiction determines that the covenant set forth in Section 7(a), or any part thereof, would be unenforceable due to the stated duration or geographical scope of such covenant, such court shall have the power to reduce the duration or scope of such provision and as so reduced, such provision shall then be enforceable. If the court does not modify such provision as aforeseaid, or if the provision is otherwise held or found invalid or unenforceable for any reason whatsoever, then (without limiting any other remedies which may be available to Grainger under this Agreement or otherwise, including, without limitation, Section 13 hereof), Grainger shall be entitled to cease making payments and furnishing benefits to the Officer pursuant to this Agreement and shall be further entitled to receive from the Officer reimbursement of all payments and benefits theretofore furnished to the Employee pursuant to this Agreement. Pending such reimbursement, and without limiting Grainger's rights under Section 13 hereof or any other rights and remedies of Grainger, Grainger shall have the right to offset the amount of such reimbursement against any amount or benefit otherwise payable to the Officer.

8. Non-Disparagement. The Officer agrees to take no action in derogation or disparagement of Grainger or the Affiliates, or their respective businesses or strategic interests, or the Releasees. The Officer further agrees not to discuss or otherwise comment on Grainger or any Affiliate, or their respective businesses or strategic interests, or the Releasees, in public, for publication on electronic media (including but not limited to chat rooms, message boards, or the like), in similar public forums, or otherwise, other than communication of publicly available information. In turn, Grainger agrees that its Senior Corporate Officers shall make no public statements nor sanction any action in derogation or disparagement of the retiring Officer.

9. Non-Interference with Business Relationships. The Officer agrees not to interfere with the employment of any Grainger employee or otherwise with the business relationships of Grainger, and to the extent required to enforce this promise, agrees not to induce, directly or indirectly, any Grainger customer or supplier to breach any contract with Grainger, and further agrees not to solicit, attempt to hire, or hire, directly or indirectly, any Grainger employee, or request, induce or advise any such employee to leave the employment of Grainger at any time before the Retirement Termination Date as well as for the one year thereafter. Should the Officer wish to hire a Grainger employee in contravention of this Section 9, or to perform work which is precluded by the Officer's noncompetition obligations set forth in Section 7 hereof, the Officer understands that he may request that Grainger agree that the Officer may perform such work or offer employment to such employee, and that with Grainger's prior written agreement, which it may withhold at its sole discretion, the Officer may do so.

10. Return of Property: Business Expenses. The Officer shall promptly account for and return to Grainger all Grainger property, including but not limited to proprietary information, which is in the Officer's possession or control. This property includes (but is not limited to) Officer's correspondence, financial materials, files, reports, minutes, plans, records, surveys, diagrams, computer print-outs, floppy disks, manuals, client/customer information and documentation, and any company research, goals, objectives, recommendations, proposals or other information relating to Grainger, its business, or its clients or customers, which is not generally known to the public, and which the Officer acquired in the course of his employment with Grainger. Notwithstanding, Officer shall be permitted to retain his Grainger cell phone along with his current telephone number, IPad and Laptop Computer and related video screens. The

Officer further agrees that all business expenses incurred prior to the Retirement Termination Date that are reimbursable in accordance with Grainger's normal policies and procedures have been reimbursed to the Officer or submitted for reimbursement, and that other than as specifically provided in this Agreement, the Officer will not incur any additional business expenses after that Date unless previously authorized and approved in writing by Grainger. The Company and the Officer acknowledge that the Officer will receive some general administrative services and support through the Company’s Use Agreement with The Grainger Foundation.

11. Confidential Information. The Officer agrees to refrain from disclosing to anyone outside the employment of Grainger any confidential or trade secret information, whether in oral, written and/or electronic form, including but not limited to information that (a) relates to Grainger's or the Affiliates' past, present and future research, development, technical and non-technical data and designs, finances, marketing, products, services, customers, suppliers, and other business activities of any kind or (b) has been identified, either orally or in writing, as confidential by Grainger or any Affiliate; provided that this limitation shall not apply to information that is part of the public domain through no breach of this Agreement or is acquired from a third party not under similar nondisclosure obligations to Grainger or such Affiliate. The Officer acknowledges that his obligations under any confidentiality or nondisclosure or similar agreements or provisions that the Officer previously executed will remain in full force and effect. Further, through the Retirement Termination Date, the Officer agrees to fully comply with all policies of Grainger regarding confidential or trade secret information. The restrictions in this Section 11 as to nondisclosure shall last for 15 years for all information that is confidential to Grainger and shall be perpetual for all information that is a trade secret of Grainger, or for so long as the information remains a trade secret under applicable law.

12. Cooperation with Company. The Officer agrees, during the term of this Agreement as well as during the 6-month period immediately thereafter, to both make himself available and to provide reasonable cooperation to Grainger or its attorneys to assist Grainger or serve as a witness in connection with any matter, litigation, potential litigation, or other business matter in which the Officer may have knowledge, information, or expertise. The Officer also agrees to provide Grainger or its designated representatives, upon request, with information and assistance about programs, processes, and projects related to the Officer's job responsibilities while employed by Grainger; to answer any questions relating to the work to which the Officer was assigned; and to otherwise provide reasonable cooperation to Grainger regarding matters relating to this Agreement and the Officer's employment with Grainger. Grainger will reimburse the Officer for any reasonable expenses he incurs in activities which he undertakes at Grainger's request pursuant to this Section 12.

13. Breach of Agreement - Misconduct. The Officer understands and agrees that if, after receiving all or any part of the payments and benefits described herein, the Officer breaches this Agreement, or commits or is discovered to have committed any act of misconduct including any violation of Company Policy, embezzlement, fraud or theft with respect to the property of Grainger, or causes or is discovered to have caused, any loss, damage, injury or other endangerment to Grainger's property, reputation or past, present, or future directors, officers or employees, Grainger reserves the right to demand repayment of all such payments and benefits. Grainger shall further be released from any future payment then or thereafter otherwise due and shall discontinue any and all benefit coverage (other than vested benefits under Granger’s qualified and nonqualified retirement and deferred compensation plans, or COBRA coverage). To the extent permitted by law, the Officer further understands and agrees that Grainger reserves the right to pursue all other available remedies in an effort to preserve its legitimate business interests. The Officer also agrees to indemnify and hold harmless Grainger from any loss, cost, damage, or expense, including fees, which Grainger may incur because of the Officer's violation of this Agreement. The Officer understands that this Section 13 does not apply to a challenge to the knowing and voluntary nature of this release with respect to claims under ADEA. Should a dispute arise relative to any claim associated with this Section that is not otherwise privately resolved between Grainger and the Officer, it is understood and agreed that such dispute shall then be submitted to an Administrative or Civil Tribunal of competent jurisdiction for purposes of resolution.

14. Supersedes Other Agreements. Other than any vested rights that the Officer may have under employee benefit plans subject to ERISA, any Director and Officer Indemnity Insurance Coverage or

Plan, Indemnity Agreement (including the May 11, 2009 Indemnification Agreement), Grainger By-Law, Long Term Incentive Plan or other related obligation on the part of Grainger designed and intended for the benefit and protection of Officer, the Officer understands that this Agreement supersedes any and all obligations (written or oral) which Grainger might otherwise have to the Officer for compensation or other expectations of remuneration or benefits on the Officer's part. The Officer specifically acknowledges that all of Grainger's obligations under the Change in Control Employment Agreement entered into between Grainger and the Officer (the "Change in Control Agreement") shall become null and void as of the Transition Date. Notwithstanding the above and based upon the special consideration provided by way of this Agreement, all obligatory provisions relating to the Officer that are contained within any Grainger Non-Competition Agreement, Long Term Incentive Program Stock Option, Restricted Stock Unit, Performance Stock Unit, or Performance Share Agreement entered into between the Officer and Grainger, or other Grainger governance document or policy shall remain in full force and effect as originally executed and be incorporated by reference as being materials parts of this Agreement.

15. References. At the Officer's request, Grainger will provide appropriate references to prospective future employers of the Officer. Those references will be provided by DG Macpherson or his designee on behalf of Grainger, with the specific content of such references to be mutually agreed between Grainger and the Officer in the future.

16. Continuation After Death. The Officer understands that in the event of the Officer's death, Grainger's obligations under this Agreement will extend to the Officer's beneficiaries, heirs, executors, administrators, personal representatives, and assigns.

17. Agreement Not Assignable. The Officer may not assign, and the Officer represents that he has not assigned, this Agreement or any rights or Grainger's obligations under this Agreement to any other person.

18. Entire Understanding. The Officer understands and agrees that this Agreement, including Exhibit A hereto, contains the entire understanding between the parties and may not be amended except by mutual agreement in an amendment executed by both parties.

19. Severability. The provisions of this Agreement are declared to be severable, which means that if any provision of this Agreement or the application thereof is found to be invalid, the invalidity shall not affect other provisions or applications of this Agreement, which will be given effect without the invalid provisions or applications. In the event that a Court or Administrative Tribunal of competent jurisdiction concludes that any term, provision or section of this Agreement is invalid or unenforceable (and, in the case of Section 7(a) of this Agreement, such provision is not modified by a Court or Administrative Tribunal to be enforceable as described in Section 7(e) hereof), then said term, provision, or section shall be deemed eliminated from this Agreement to the extent necessary and in order to permit the remaining portions of the Agreement to be enforced. Any such eliminations shall not affect Grainger's entitlement, if any, to receive, pursuant to Sections 7(e) and 13 hereof, amounts paid, and benefits provided to the Officer under this Agreement.

20. Confidentiality of Agreement. The Officer represents and agrees, except as otherwise required by law, to keep the terms, amounts and facts surrounding this Agreement completely confidential, save claims involving workplace harassment, and that the Officer will not disclose any information concerning this Agreement to anyone; provided, however, that this section will not prevent the Officer from disclosing information concerning this Agreement to the Officer's current spouse, attorneys, accountants, financial or tax advisors, a designated Grainger official, or as required by law. Notwithstanding, in accordance with U.S. Treasury Regulation 1.6011-4(b)(3)(iii), each party (and each employee, representative, or other agent of each party) to this Agreement may disclose to all persons, without limitation of any kind, the tax treatment, tax structure, and all materials of any kind provided to the other party relating to such tax treatment and tax structure. Nothing in this confidentiality provision prohibits Officer from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Officer does not need the prior authorization of the Company to

make any such reports or disclosures and Officer is not required to notify the Company that Officer has made such reports or disclosures and nothing in this confidentiality provision prohibits Officer from receiving a monetary award for providing information directly to a government agency. Officer may disclose Trade Secrets in confidence, either directly or indirectly, to a Federal, State, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, Officer may file a lawsuit, to include retaliation, in conjunction with reporting a suspected violation of law and may disclose related Trade Secrets to his attorney and use them in related court proceedings, as long as the individual files documents containing the Trade Secret under seal and does not otherwise disclose the Trade Secret except pursuant to Court Order.

21. Jurisdiction and Governing Law. The Officer acknowledges that for the purpose of this Agreement as well as his employment with Grainger, he is an Illinois employee. This Agreement shall in all respects be interpreted, enforced, and governed by and under the laws of the State of Illinois, without regard to its conflicts of law principles.

22. Voluntary Agreement. The Officer acknowledges that the payments and benefits that Grainger is providing hereunder exceed the compensation and benefits otherwise payable to the Officer or on the Officer's behalf and that such payments and benefits are provided by Grainger in exchange for execution of this Agreement. The Officer acknowledges that he was given twenty-one (21) days to consider the terms of this Agreement, that the Officer may revoke this Agreement at any time within seven (7) days after the date that the Officer signs it, and that he has been advised to and has had the opportunity to seek out counsel of his own choice. Any revocation must be communicated in writing, via personal delivery or overnight mail, to Nancy Berardinelli-Krantz, Senior Vice President and Chief Legal Officer, W.W. Grainger, Inc., 100 Grainger Parkway, Lake Forest, Illinois 60045. The Officer further understands that this Agreement does not take effect until after the expiration of the seven (7) day period for revocation. All referenced payments and applicable benefits identified in this Agreement will automatically cease on the 21st day should the Officer not return a fully executed copy of this Agreement to Grainger within the specified 21-day consideration period. The Officer has read this Agreement and understands its terms.

23. Tax Matters.

a. Grainger may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

b. The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively "Code Section 409A") and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Officer and Grainger of the applicable provision without violating the provisions of Code Section 409A. Notwithstanding any other provision of this Agreement, Grainger shall not be obligated to guarantee any particular tax result for the Officer with respect to any payment provided to the Officer hereunder, and the Officer shall be responsible for any taxes imposed on the Officer with respect to any such payment.

c. Notwithstanding anything to the contrary in this Agreement, with respect to any amounts referenced herein that constitute an earned and vested payment pursuant to a separate “nonqualified deferred compensation” agreement that is subject to the requirements of Code Section 409A (a “409A Arrangement”), such amounts shall be paid at the original times provided in the 409A Arrangement to the extent required by Code Section 409A.

d. Notwithstanding anything to the contrary in this Agreement, if the Officer is deemed on the

date of termination to be a "specified employee" within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered “nonqualified deferred compensation” under Code Section 409A payable on account of a "separation from service," such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such "separation from service" of the Officer, and (B) the date of the Officer’s death, in each case to the extent required under Code Section 409A. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Officer in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

e. To the extent that reimbursements or other in-kind benefits under this Agreement constitute "nonqualified deferred compensation" for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Officer, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

f. For purposes of Code Section 409A, the Officer’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

g. Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes "nonqualified deferred compensation" for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

I have read this Transition Agreement and General Release and understand all terms contained herein. I voluntarily execute this Transition Agreement and General Release with full knowledge of its meaning on this 6th day of July 2023.


	W.W. Grainger, Inc.
/s/ John L. Howard	By:	/s/ D.G. Macpherson
John L. Howard		On Behalf of W.W. Grainger, Inc.

EXHIBIT A

List of Competitors

Exhibit A to this agreement has been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of the omitted exhibit will be furnished to the SEC upon request.

CERTIFICATION

Exhibit 31.1

I, D.G. Macpherson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 26, 2023


By:			/s/ D.G. Macpherson
Name:			D.G. Macpherson
Title:			Chairman and Chief Executive Officer

CERTIFICATION

Exhibit 31.2

I, Deidra C. Merriwether, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 26, 2023


By:			/s/ Deidra C. Merriwether
Name:			Deidra C. Merriwether
Title:			Senior Vice President and Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of W.W. Grainger, Inc. (“Grainger”) for the quarterly period ended September 30, 2023, (the “Report”), D.G. Macpherson, as Chairman and Chief Executive Officer of Grainger, and Deidra C. Merriwether, as Senior Vice President and Chief Financial Officer of Grainger, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Grainger.


/s/ D.G. Macpherson
D.G. Macpherson
Chairman and Chief Executive Officer
October 26, 2023



/s/ Deidra C. Merriwether
Deidra C. Merriwether
Senior Vice President and Chief Financial Officer
October 26, 2023

COVER - shares	9 Months Ended
COVER - shares	Sep. 30, 2023	Oct. 19, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	1-5684
Entity Registrant Name	W.W. Grainger, Inc.
Entity Incorporation, State or Country Code	IL
Entity Tax Identification Number	36-1150280
Entity Address, Address Line One	100 Grainger Parkway
Entity Address, City or Town	Lake Forest,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60045-5201
City Area Code	847
Local Phone Number	535-1000
Title of 12(b) Security	Common Stock
Trading Symbol	GWW
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		49,634,150
Entity Central Index Key	0000277135
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net sales	$ 4,208	$ 3,942	$ 12,481	$ 11,426
Cost of goods sold	2,553	2,423	7,548	7,083
Gross profit	1,655	1,519	4,933	4,343
Selling, general and administrative expenses	988	916	2,925	2,672
Operating earnings	667	603	2,008	1,671
Other (income) expense:
Interest expense – net	22	25	70	70
Other – net	(7)	(9)	(21)	(20)
Total other expense – net	15	16	49	50
Earnings before income taxes	652	587	1,959	1,621
Income tax provision	159	145	468	405
Net earnings	493	442	1,491	1,216
Less net earnings attributable to noncontrolling interest	17	16	57	53
Net earnings attributable to W.W. Grainger, Inc.	$ 476	$ 426	$ 1,434	$ 1,163
Earnings per share:
Basic (in dollars per share)	$ 9.47	$ 8.31	$ 28.45	$ 22.64
Diluted (in dollars per share)	$ 9.43	$ 8.27	$ 28.32	$ 22.52
Weighted average number of shares outstanding:
Basic (in shares)	49.9	50.8	50.1	51.0
Diluted (in shares)	50.1	51.1	50.3	51.3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net earnings	$ 493	$ 442	$ 1,491	$ 1,216
Other comprehensive earnings (losses):
Foreign currency translation adjustments – net of reclassification to earnings	(39)	(71)	(69)	(180)
Postretirement benefit plan losses and other – net of tax benefit of $1, $2, $3 and $4, respectively	(3)	(3)	(9)	(10)
Total other comprehensive earnings (losses)	(42)	(74)	(78)	(190)
Comprehensive earnings – net of tax	451	368	1,413	1,026
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	17	16	57	53
Foreign currency translation adjustments	(7)	(14)	(39)	(61)
Total comprehensive earnings (losses) attributable to noncontrolling interest	10	2	18	(8)
Comprehensive earnings attributable to W.W. Grainger, Inc.	$ 441	$ 366	$ 1,395	$ 1,034

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICAL) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Postretirement benefit plan reclassification, net of tax benefit	$ 1	$ 2	$ 3	$ 4

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 601	$ 325
Accounts receivable (less allowances for credit losses of $38 and $36, respectively)	2,444	2,133
Inventories – net	2,196	2,253
Prepaid expenses and other current assets	171	266
Total current assets	5,412	4,977
Property, buildings and equipment – net	1,543	1,461
Goodwill	364	371
Intangibles – net	238	232
Operating lease right-of-use	413	367
Other assets	170	180
Total assets	8,140	7,588
Current liabilities
Current maturities	34	35
Trade accounts payable	1,067	1,047
Accrued compensation and benefits	297	334
Operating lease liability	73	68
Accrued expenses	403	474
Income taxes payable	24	52
Total current liabilities	1,898	2,010
Long-term debt	2,260	2,284
Long-term operating lease liability	361	318
Deferred income taxes and tax uncertainties	135	121
Other non-current liabilities	104	120
Shareholders' equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding	0	0
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued	55	55
Additional contributed capital	1,343	1,310
Retained earnings	11,859	10,700
Accumulated other comprehensive losses	(219)	(180)
Treasury stock, at cost – 59,937,912 and 59,402,896 shares, respectively	(9,948)	(9,445)
Total W.W. Grainger, Inc. shareholders’ equity	3,090	2,440
Noncontrolling interest	292	295
Total shareholders' equity	3,382	2,735
Total liabilities and shareholders' equity	$ 8,140	$ 7,588

CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 38	$ 36
Cumulative preferred stock, par value (in dollars per share)	$ 5	$ 5
Cumulative preferred stock, shares authorized	12,000,000	12,000,000
Cumulative preferred stock, shares issued	0	0
Cumulative preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.50	$ 0.50
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	109,659,219	109,659,219
Treasury stock, shares at cost	59,937,912	59,402,896

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net earnings	$ 1,491	$ 1,216
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	15	13
Deferred income taxes and tax uncertainties	20	20
Depreciation and amortization	162	159
Net (gains) losses from sale of assets	(4)	1
Stock-based compensation	49	38
Change in operating assets and liabilities:
Accounts receivable	(351)	(487)
Inventories	42	(253)
Prepaid expenses and other assets	104	(39)
Trade accounts payable	55	261
Accrued liabilities	(106)	51
Income taxes – net	(34)	8
Other non-current liabilities	(16)	(15)
Net cash provided by operating activities	1,427	973
Cash flows from investing activities:
Capital expenditures	(318)	(208)
Proceeds from sale of assets	11	7
Other – net	0	(11)
Net cash used in investing activities	(307)	(212)
Cash flows from financing activities:
Proceeds from debt	7	1
Payments of debt	(37)	0
Proceeds from stock options exercised	29	21
Payments for employee taxes withheld from stock awards	(32)	(22)
Purchases of treasury stock	(506)	(383)
Cash dividends paid	(300)	(285)
Net cash used in financing activities	(839)	(668)
Exchange rate effect on cash and cash equivalents	(5)	(19)
Net change in cash and cash equivalents	276	74
Cash and cash equivalents at beginning of year	325	241
Cash and cash equivalents at end of period	$ 601	$ 315

CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY - USD ($) $ in Millions	Total	Common Stock	Additional Contributed Capital	Retained Earnings	Accumulated Other Comprehensive Earnings (Losses)	Treasury Stock	Noncontrolling Interest
Beginning balance at Dec. 31, 2021	$ 2,160	$ 55	$ 1,270	$ 9,500	$ (96)	$ (8,855)	$ 286
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	13		10			3
Purchases of treasury stock	(75)					(75)
Net earnings	385			366			19
Other comprehensive earnings (losses)	(29)				(13)		(16)
Cash dividends paid	(84)			(84)
Ending balance at Mar. 31, 2022	2,370	55	1,280	9,782	(109)	(8,927)	289
Beginning balance at Dec. 31, 2021	2,160	55	1,270	9,500	(96)	(8,855)	286
Increase (Decrease) in Stockholders' Equity
Net earnings	1,216
Other comprehensive earnings (losses)	(190)
Ending balance at Sep. 30, 2022	2,562	55	1,299	10,402	(225)	(9,223)	254
Beginning balance at Mar. 31, 2022	2,370	55	1,280	9,782	(109)	(8,927)	289
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	10		7			2	1
Purchases of treasury stock	(118)					(117)	(1)
Net earnings	389			371			18
Other comprehensive earnings (losses)	(87)				(56)		(31)
Cash dividends paid	(99)			(87)			(12)
Ending balance at Jun. 30, 2022	2,465	55	1,287	10,066	(165)	(9,042)	264
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	15		12			3
Purchases of treasury stock	(184)					(184)
Net earnings	442			426			16
Other comprehensive earnings (losses)	(74)				(60)		(14)
Cash dividends paid	(102)			(90)			(12)
Ending balance at Sep. 30, 2022	2,562	55	1,299	10,402	(225)	(9,223)	254
Beginning balance at Dec. 31, 2022	2,735	55	1,310	10,700	(180)	(9,445)	295
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	32		14			18
Purchases of treasury stock	(142)					(142)
Net earnings	508			488			20
Other comprehensive earnings (losses)	(1)				4		(5)
Cash dividends paid	(87)			(87)
Ending balance at Mar. 31, 2023	3,045	55	1,324	11,101	(176)	(9,569)	310
Beginning balance at Dec. 31, 2022	2,735	55	1,310	10,700	(180)	(9,445)	295
Increase (Decrease) in Stockholders' Equity
Net earnings	1,491
Other comprehensive earnings (losses)	(78)
Ending balance at Sep. 30, 2023	3,382	55	1,343	11,859	(219)	(9,948)	292
Beginning balance at Mar. 31, 2023	3,045	55	1,324	11,101	(176)	(9,569)	310
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	2		7			(7)	2
Purchases of treasury stock	(168)					(168)	0
Net earnings	490			470			20
Other comprehensive earnings (losses)	(35)				(8)		(27)
Cash dividends paid	(107)			(94)			(13)
Ending balance at Jun. 30, 2023	3,227	55	1,331	11,477	(184)	(9,744)	292
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	12		13			(1)
Purchases of treasury stock	(204)					(203)	(1)
Net earnings	493			476			17
Other comprehensive earnings (losses)	(42)				(35)		(7)
Capital contribution	2		(1)				3
Cash dividends paid	(106)			(94)			(12)
Ending balance at Sep. 30, 2023	$ 3,382	$ 55	$ 1,343	$ 11,859	$ (219)	$ (9,948)	$ 292

CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY (PARENTHETICAL) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
Statement of Stockholders' Equity (Parentheticals) [Abstract]
Cash dividends paid per share (in dollars per share)	$ 1.86	$ 1.86	$ 1.72	$ 1.72	$ 1.72	$ 1.62
Capital contribution	$ 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries. Basis of Presentation The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The Condensed Consolidated Balance Sheet at December 31, 2022, 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, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2023 (2022 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 2022 Form 10-K.

REVENUE

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:


	Three Months Ended September 30,
	2023						2022(1)
	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Commercial Services	7	%	12	%	8	%	7	%	13	%	8	%
Contractors	5	%	12	%	6	%	5	%	12	%	6	%
Government	19	%	3	%	16	%	18	%	3	%	15	%
Healthcare	7	%	2	%	6	%	7	%	2	%	6	%
Manufacturing	30	%	30	%	30	%	31	%	30	%	30	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	5	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	2	%	3	%	2	%	3	%
Warehousing	4	%	—	%	4	%	5	%	—	%	4	%
Wholesale	7	%	17	%	9	%	7	%	16	%	9	%
Other(3)	9	%	16	%	11	%	9	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	81	%	17	%	100	%	81	%	18	%	100	%

(1) Customer industry results for the three months ended September 30, 2022 were reclassified to reflect the Company's current year classifications, which primarily uses the North American Industry Classification System (NAICS) beginning January 1, 2023.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% and 1% of total Company revenue for the three months ended September 30, 2023 and 2022, respectively.
(3) Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.


	Nine Months Ended September 30,
	2023						2022(1)
	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Commercial Services	7	%	12	%	8	%	7	%	13	%	8	%
Contractors	5	%	12	%	6	%	5	%	12	%	6	%
Government	20	%	3	%	16	%	18	%	3	%	15	%
Healthcare	7	%	2	%	6	%	7	%	2	%	6	%
Manufacturing	30	%	30	%	30	%	31	%	30	%	31	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	4	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	3	%	3	%	2	%	3	%
Warehousing	4	%	1	%	3	%	5	%	—	%	4	%
Wholesale	7	%	16	%	9	%	7	%	16	%	8	%
Other(3)	9	%	16	%	11	%	9	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	81	%	18	%	100	%	80	%	18	%	100	%

(1) Customer industry results for the nine months ended September 30, 2022 were reclassified to reflect the Company's current year classifications, which primarily uses the North American Industry Classification System (NAICS) beginning January 1, 2023.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 1% and 2% of total Company revenue for the nine months ended September 30, 2023 and 2022.
(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 $102 million as of September 30, 2023 and December 31, 2022, respectively.

The Company had no material unsatisfied performance obligations, contract assets or liabilities as of September 30, 2023 and December 31, 2022.

PROPERTY, BUILDINGS AND EQUIPMENT

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

PROPERTY, BUILDINGS AND EQUIPMENT

Property, buildings and equipment consisted of the following (in millions of dollars):


	As of
	September 30, 2023		December 31, 2022
Land and land improvements	$	362	$	318
Building, structures and improvements	1,411		1,463
Furniture, fixtures, machinery and equipment	1,802		1,662
Property, buildings and equipment	$	3,575	$	3,443
Less accumulated depreciation	2,032		1,982
Property, buildings and equipment – net	$	1,543	$	1,461

GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

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, 2022	$	321	$	63	$	384


Translation	(8)		(5)		(13)
Balance at December 31, 2022	313		58		371


Translation	(1)		(6)		(7)
Balance at September 30, 2023	$	312	$	52	$	364

The balances and changes in intangible assets – net are as follows (in millions of dollars):


		As of
		September 30, 2023						December 31, 2022
	Weighted average life	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer lists and relationships	11.7 years	$	214	$	184	$	30	$	217	$	181	$	36
Trademarks, trade names and other	14.4 years	32		24		8		32		22		10
Non-amortized trade names and other	Indefinite	19		—		19		22		—		22
Capitalized software	4.2 years	632		451		181		580		416		164
Total intangible assets	6.7 years	$	897	$	659	$	238	$	851	$	619	$	232

DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

DEBT

Total debt, including long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):


	As of
	September 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	857	$	1,000	$	916
1.85% senior notes due 2025	500		475		500		470
4.20% senior notes due 2047	400		328		400		338
3.75% senior notes due 2046	400		299		400		317



MonotaRO term loan	34		34		69		69

Other	(21)		(21)		(29)		(29)
Subtotal	2,313		1,972		2,340		2,081
Less current maturities	(34)		(34)		(35)		(35)

Debt issuance costs and discounts – net of amortization	(19)		(19)		(21)		(21)
Long-term debt	$	2,260	$	1,919	$	2,284	$	2,025

Senior Notes

MonotaRO Term Loan

Fair Value

DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

Fair Value Hedges


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gain or (loss):


Interest rate swaps:
Hedged item	$	(2)	$	11	$	(8)	$	36
Derivatives designated as hedging instrument	$	2	$	(11)	$	8	$	(36)


	As of
	September 30, 2023		December 31, 2022



Interest rate swaps reported in Other non-current liabilities	$	23	$	34

Fair Value

SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

intersegment sales are included in each segment's selling, general and administrative expenses and are also eliminated in the Company's Consolidated Financial Statements.

Following is a summary of segment results (in millions of dollars):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,403	$	612	$	3,180	$	550	$	10,052	$	1,833	$	9,111	$	1,506
Endless Assortment	732		55		701		58		2,207		178		2,117		175
Other	73		—		61		(5)		222		(3)		198		(10)
Total Company	$	4,208	$	667	$	3,942	$	603	$	12,481	$	2,008	$	11,426	$	1,671

CONTINGENCIES AND LEGAL MATTERS	9 Months Ended
CONTINGENCIES AND LEGAL MATTERS	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES AND LEGAL MATTERS	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 employees, consumers, competitors, suppliers, customers, governmental entities and other third parties. There have been no material changes to the contingencies and legal matters from those disclosed in Note 15 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2022 Form 10-K and the Company's Form 10-Q for the quarterly period ended March 31, 2023. Although the Company is unable to determine the probability of the outcome of these matters or the estimate of potential loss or range of loss, the Company anticipates that any potential liability, which may arise of or with respect to these matters, will not have, either individually or in the aggregate, a material adverse effect on the Company's financial position, results of operations or cash flows.

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS Revolving Credit Facility On October 11, 2023, the Company entered into a five-year syndicated $1.25 billion revolving credit facility (the 2023 Credit Facility). The 2023 Credit Facility is unsecured and subject to two one-year extensions if sufficient lenders agree. The 2023 Credit Facility replaced the Company's previous revolving credit facility entered into in February 2020. Dividend On October 25, 2023, the Company’s Board of Directors declared a quarterly dividend of $1.86 per share, payable December 1, 2023, to shareholders of record on November 13, 2023.

Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ 476	$ 426	$ 1,434	$ 1,163

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 29, 2023, D.G. Macpherson, Grainger’s Chairman of the Board and Chief Executive Officer, adopted a written plan for the sale of shares received pursuant to the vesting of an equity award on October 1, 2023. The aggregate number of shares subject to the plan is 4,995 and excludes shares withheld by the Company to satisfy income tax withholding obligations in connection with the net settlement of such equity award. The plan is a multi-trade plan, is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and will expire on December 31, 2023, or any earlier date on which all of the shares have been sold. None of the Company's other 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 September 30, 2023.
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
D.G. Macpherson [Member]
Trading Arrangements, by Individual
Name	D.G. Macpherson
Title	Chairman of the Board and Chief Executive Officer
Rule 10b5-1 Arrangement Adopted	true
Non-Rule 10b5-1 Arrangement Adopted	false
Adoption Date	August 29, 2023
Aggregate Available	4,995	4,995

REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenues

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:


	Three Months Ended September 30,
	2023						2022(1)
	High-Touch Solutions N.A.		Endless Assortment		Total Company(2)		High-Touch Solutions N.A.		Endless Assortment		Total Company(2)
Commercial Services	7	%	12	%	8	%	7	%	13	%	8	%
Contractors	5	%	12	%	6	%	5	%	12	%	6	%
Government	19	%	3	%	16	%	18	%	3	%	15	%
Healthcare	7	%	2	%	6	%	7	%	2	%	6	%
Manufacturing	30	%	30	%	30	%	31	%	30	%	30	%
Retail	4	%	4	%	4	%	4	%	4	%	4	%
Transportation	5	%	2	%	4	%	4	%	2	%	4	%
Utilities	3	%	2	%	2	%	3	%	2	%	3	%
Warehousing	4	%	—	%	4	%	5	%	—	%	4	%
Wholesale	7	%	17	%	9	%	7	%	16	%	9	%
Other(3)	9	%	16	%	11	%	9	%	16	%	11	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	81	%	17	%	100	%	81	%	18	%	100	%

(1) Customer industry results for the three months ended September 30, 2022 were reclassified to reflect the Company's current year classifications, which primarily uses the North American Industry Classification System (NAICS) beginning January 1, 2023.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% and 1% of total Company revenue for the three months ended September 30, 2023 and 2022, respectively.
(3) Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources.

PROPERTY, BUILDINGS AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property, Buildings and Equipment

Property, buildings and equipment consisted of the following (in millions of dollars):


	As of
	September 30, 2023		December 31, 2022
Land and land improvements	$	362	$	318
Building, structures and improvements	1,411		1,463
Furniture, fixtures, machinery and equipment	1,802		1,662
Property, buildings and equipment	$	3,575	$	3,443
Less accumulated depreciation	2,032		1,982
Property, buildings and equipment – net	$	1,543	$	1,461

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Balances and Changes in Carrying Amounts of Goodwill

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, 2022	$	321	$	63	$	384


Translation	(8)		(5)		(13)
Balance at December 31, 2022	313		58		371


Translation	(1)		(6)		(7)
Balance at September 30, 2023	$	312	$	52	$	364

Schedule of Balance in Intangible Assets, Net

The balances and changes in intangible assets – net are as follows (in millions of dollars):


		As of
		September 30, 2023						December 31, 2022
	Weighted average life	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer lists and relationships	11.7 years	$	214	$	184	$	30	$	217	$	181	$	36
Trademarks, trade names and other	14.4 years	32		24		8		32		22		10
Non-amortized trade names and other	Indefinite	19		—		19		22		—		22
Capitalized software	4.2 years	632		451		181		580		416		164
Total intangible assets	6.7 years	$	897	$	659	$	238	$	851	$	619	$	232

DEBT (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Debt Instruments

long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):


	As of
	September 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	857	$	1,000	$	916
1.85% senior notes due 2025	500		475		500		470
4.20% senior notes due 2047	400		328		400		338
3.75% senior notes due 2046	400		299		400		317



MonotaRO term loan	34		34		69		69

Other	(21)		(21)		(29)		(29)
Subtotal	2,313		1,972		2,340		2,081
Less current maturities	(34)		(34)		(35)		(35)

Debt issuance costs and discounts – net of amortization	(19)		(19)		(21)		(21)
Long-term debt	$	2,260	$	1,919	$	2,284	$	2,025

DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Effect of Fair Value Hedges in Interest Expense, Net


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gain or (loss):


Interest rate swaps:
Hedged item	$	(2)	$	11	$	(8)	$	36
Derivatives designated as hedging instrument	$	2	$	(11)	$	8	$	(36)

Schedule of Fair Value and Carrying Amounts of Outstanding Derivative Instruments


	As of
	September 30, 2023		December 31, 2022



Interest rate swaps reported in Other non-current liabilities	$	23	$	34

SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Summary of Segment Results

Following is a summary of segment results (in millions of dollars):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,403	$	612	$	3,180	$	550	$	10,052	$	1,833	$	9,111	$	1,506
Endless Assortment	732		55		701		58		2,207		178		2,117		175
Other	73		—		61		(5)		222		(3)		198		(10)
Total Company	$	4,208	$	667	$	3,942	$	603	$	12,481	$	2,008	$	11,426	$	1,671

REVENUE - Disaggregation of Revenues (Details)	3 Months Ended		9 Months Ended
REVENUE - Disaggregation of Revenues (Details)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	100.00%	100.00%	100.00%	100.00%
Operating earnings (losses)
Disaggregation of Revenue [Line Items]
Total company revenue (as a percent)	2.00%	1.00%	1.00%	2.00%
Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	8.00%	8.00%	8.00%	8.00%
Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	6.00%	6.00%	6.00%	6.00%
Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	16.00%	15.00%	16.00%	15.00%
Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	6.00%	6.00%	6.00%	6.00%
Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	30.00%	30.00%	30.00%	31.00%
Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	4.00%	4.00%	4.00%
Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	4.00%	4.00%	4.00%
Utilities
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	3.00%	3.00%	3.00%
Warehousing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	4.00%	3.00%	4.00%
Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	9.00%	9.00%	9.00%	8.00%
Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	11.00%	11.00%	11.00%	11.00%
High-Touch Solutions N.A.
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	81.00%	81.00%	81.00%	80.00%
High-Touch Solutions N.A. \| Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	7.00%	7.00%	7.00%	7.00%
High-Touch Solutions N.A. \| Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	5.00%	5.00%	5.00%	5.00%
High-Touch Solutions N.A. \| Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	19.00%	18.00%	20.00%	18.00%
High-Touch Solutions N.A. \| Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	7.00%	7.00%	7.00%	7.00%
High-Touch Solutions N.A. \| Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	30.00%	31.00%	30.00%	31.00%
High-Touch Solutions N.A. \| Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	4.00%	4.00%	4.00%
High-Touch Solutions N.A. \| Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	5.00%	4.00%	4.00%	4.00%
High-Touch Solutions N.A. \| Utilities
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	3.00%	3.00%	3.00%	3.00%
High-Touch Solutions N.A. \| Warehousing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	5.00%	4.00%	5.00%
High-Touch Solutions N.A. \| Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	7.00%	7.00%	7.00%	7.00%
High-Touch Solutions N.A. \| Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	9.00%	9.00%	9.00%	9.00%
Endless Assortment
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	17.00%	18.00%	18.00%	18.00%
Endless Assortment \| Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	12.00%	13.00%	12.00%	13.00%
Endless Assortment \| Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	12.00%	12.00%	12.00%	12.00%
Endless Assortment \| Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	3.00%	3.00%	3.00%	3.00%
Endless Assortment \| Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	2.00%	2.00%	2.00%
Endless Assortment \| Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	30.00%	30.00%	30.00%	30.00%
Endless Assortment \| Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	4.00%	4.00%	4.00%	4.00%
Endless Assortment \| Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	2.00%	2.00%	2.00%
Endless Assortment \| Utilities
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	2.00%	2.00%	2.00%
Endless Assortment \| Warehousing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	0.00%	0.00%	1.00%	0.00%
Endless Assortment \| Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	17.00%	16.00%	16.00%	16.00%
Endless Assortment \| Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	16.00%	16.00%	16.00%	16.00%

REVENUE - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Accrued sales incentives	$ 116	$ 102

PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	$ 3,575	$ 3,443
Less accumulated depreciation	2,032	1,982
Property, buildings and equipment – net	1,543	1,461
Land
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	362	318
Building, Structures and Improvements
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	1,411	1,463
Furniture, Fixtures, Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	$ 1,802	$ 1,662

GOODWILL AND OTHER INTANGIBLE ASSETS - Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 371	$ 384
Translation	(7)	(13)
Goodwill, ending balance	364	371
High-Touch Solutions N.A. \| Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Goodwill [Roll Forward]
Goodwill, beginning balance	313	321
Translation	(1)	(8)
Goodwill, ending balance	312	313
Endless Assortment \| Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Goodwill [Roll Forward]
Goodwill, beginning balance	58	63
Translation	(6)	(5)
Goodwill, ending balance	$ 52	$ 58

GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Segment Reporting Information [Line Items]
Translation	$ (7)	$ (13)
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Cumulative goodwill impairments	137
High-Touch Solutions N.A. \| Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Translation	$ (1)	$ (8)

GOODWILL AND OTHER INTANGIBLE ASSETS - Balance in Intangible Assets, Net (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Intangible Assets, Gross (Excluding Goodwill), Total	$ 897	$ 851
Accumulated amortization	659	619
Total intangible assets, net	$ 238	$ 232
Weighted average life
Weighted average life	6 years 8 months 12 days	6 years 8 months 12 days
Customer lists and relationships
Gross carrying amount	$ 214	$ 217
Accumulated amortization	184	181
Net carrying amount	$ 30	$ 36
Customer lists and relationships \| Weighted average life
Weighted average life	11 years 8 months 12 days	11 years 8 months 12 days
Trademarks, trade names and other
Gross carrying amount	$ 32	$ 32
Accumulated amortization	24	22
Net carrying amount	$ 8	$ 10
Trademarks, trade names and other \| Weighted average life
Weighted average life	14 years 4 months 24 days	14 years 4 months 24 days
Non-amortized trade names and other
Gross carrying amount	$ 19	$ 22
Accumulated amortization	0	0
Non-amortized trade names and other	19	22
Capitalized software
Gross carrying amount	632	580
Accumulated amortization	451	416
Net carrying amount	$ 181	$ 164
Capitalized software \| Weighted average life
Weighted average life	4 years 2 months 12 days	4 years 2 months 12 days

DEBT - Long-Term Debt Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022	Feb. 29, 2020
Debt Instrument [Line Items]
Long-term debt, gross	$ 2,313	$ 2,340
Other	(21)	(29)
Debt issuance costs and discounts – net of amortization	(19)	(21)
Long-term debt	2,260	2,284
Other, fair value	(21)	(29)
Long-term debt, gross, fair value	1,972	2,081
Current maturities	(34)	(35)
Less current maturities	(34)	(35)
Debt issuance costs and discounts, fair value	(19)	(21)
Long-term debt, excluding current maturities, , fair value	1,919	2,025
Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Long-term debt, gross	34	69
Long-term debt, fair value	34	69
Senior Notes, 4.60% due 2045 \| Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	1,000	1,000
Long-term debt, fair value	$ 857	916
Interest rate	4.60%
Unsecured Senior Notes, 1.85% \| Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 500	500
Long-term debt, fair value	$ 475	470
Interest rate	1.85%		1.85%
Senior Notes, 4.20% due 2047 \| Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 400	400
Long-term debt, fair value	$ 328	338
Interest rate	4.20%
Senior Notes, 3.75% due 2046 \| Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 400	400
Long-term debt, fair value	$ 299	$ 317
Interest rate	3.75%

DEBT - Narrative (Details) $ in Millions	1 Months Ended
DEBT - Narrative (Details) $ in Millions	Aug. 31, 2020 JPY (¥) payment	Sep. 30, 2023 USD ($)	Sep. 30, 2023 JPY (¥)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 JPY (¥)	Dec. 31, 2021 USD ($)	Feb. 29, 2020
Debt Instrument [Line Items]
Long-term debt, gross		$ 2,313		$ 2,340
Senior Notes
Debt Instrument [Line Items]
Debt principal amount						$ 2,300
Debt issuance costs						$ 29
Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Long-term debt, gross		$ 34		69
Unsecured Senior Notes, 1.85% \| Senior Notes
Debt Instrument [Line Items]
Interest rate		1.85%	1.85%				1.85%
Long-term debt, gross		$ 500		$ 500
Term Loan Agreement, 0.05% \| Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Debt principal amount \| ¥	¥ 9,000,000,000
Long-term debt, gross \| ¥			¥ 34,000,000		¥ 69,000,000
Number of semi-annual principal payments \| payment	4
Average interest rate	0.05%

DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Derivative [Line Items]
Derivative instruments and hedges, liabilities	$ 424	$ 466
Designated as Hedging Instrument \| Fair Value Hedging
Derivative [Line Items]
Derivative, notional amount	$ 450	$ 500

DERIVATIVE INSTRUMENTS - Effect of Fair Value Hedges in Interest Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	$ (22)	$ (25)	$ (70)	$ (70)
Other Contract \| Fair Value Hedging \| Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	(2)	11	(8)	36
Interest rate swaps \| Fair Value Hedging \| Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	$ 2	$ (11)	$ 8	$ (36)

DERIVATIVE INSTRUMENTS - Fair Value and Carrying Amounts of Outstanding Derivative Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Interest rate swaps \| Designated as Hedging Instrument \| Other Noncurrent Liabilities
Derivative [Line Items]
Interest rate swaps reported in Other non-current liabilities	$ 23	$ 34

SEGMENT INFORMATION - Narrative (Details)	9 Months Ended
SEGMENT INFORMATION - Narrative (Details)	Sep. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	2

SEGMENT INFORMATION - Summary of Segment Results (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Segment Reporting Information [Line Items]
Total net sales	$ 4,208	$ 3,942	$ 12,481	$ 11,426
Segment operating earnings	667	603	2,008	1,671
Other
Segment Reporting Information [Line Items]
Total net sales	73	61	222	198
Segment operating earnings	0	(5)	(3)	(10)
High-Touch Solutions N.A. \| Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Total net sales	3,403	3,180	10,052	9,111
Segment operating earnings	612	550	1,833	1,506
Endless Assortment \| Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Total net sales	732	701	2,207	2,117
Segment operating earnings	$ 55	$ 58	$ 178	$ 175

SUBSEQUENT EVENTS (Details) - Subsequent event $ / shares in Units, $ in Millions	Oct. 11, 2023 USD ($) numberOfPayments	Oct. 25, 2023 $ / shares
Subsequent Event [Line Items]
Dividend declared (in dollars per share) \| $ / shares		$ 1.86
Revolving Credit Facility \| 2023 Credit Facility \| Line of Credit
Subsequent Event [Line Items]
Line of credit facility, expiration period	5 years
Maximum availability of revolving credit facility \| $	$ 1,250
Line of credit facility, number of extension \| numberOfPayments	2
Line of credit facility, extension period	1 year

Grafico Azioni WW Grainger (NYSE:GWW)
Storico
Da Mag 2024 a Giu 2024

Grafico Azioni WW Grainger (NYSE:GWW)
Storico
Da Giu 2023 a Giu 2024

GWW WW Grainger Inc

Notizie WW Grainger Inc - GWW

La tua Cronologia

Più Attivi

Toplist

GWW WW Grainger Inc

Notizie WW Grainger Inc - GWW

La tua Cronologia