Grainger (NYSE: GWW) boosts 2026 guidance as Q2 sales reach $5.0B
Rhea-AI Filing Summary
W.W. Grainger reported strong second quarter 2026 results, with net sales of $5.021 billion, up 10.3% from $4.554 billion in the prior-year quarter, and diluted EPS of $12.01, up 20.5%. Sales on a daily, organic constant currency basis increased 13.7%, reflecting broad-based demand strength.
Gross profit margin improved to 39.5%, up 100 basis points, helped by both segments and $43 million of IEEPA tariff refunds tied to directly imported products. Operating earnings rose to $807 million, with operating margin expanding to 16.1%, up 120 basis points, aided by sales leverage in the Endless Assortment segment and benefits from exiting the U.K. market.
Operating cash flow for the quarter was $444 million, funding $111 million of capital expenditures and yielding free cash flow of $333 million. Grainger returned $341 million to shareholders through dividends and share repurchases. Based on its strong first half, the company raised full-year 2026 guidance, including net sales of $19.4–$19.7 billion and diluted EPS of $45.50–$47.25, with slightly higher targeted gross and operating margins versus prior guidance.
Positive
- Q2 2026 sales and EPS grew strongly, with revenue up 10.3% to $5.021 billion and diluted EPS up 20.5% to $12.01, alongside 120 basis points of operating margin expansion.
- Full-year 2026 guidance was raised, including higher net sales of $19.4–$19.7 billion and a higher diluted EPS range of $45.50–$47.25.
- Endless Assortment segment momentum remained robust, with daily, organic constant currency sales growth of 20.6% and gross margin up 90 basis points versus the prior-year quarter.
Negative
- None.
Filing Explained
The updated 2026 guidance is on an adjusted basis, and the company says a quantitative reconciliation of the forward-looking measures to GAAP cannot be provided without unreasonable effort.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q2 2026 Net Sales: $5,021 million
Q2 2026 Diluted EPS: $12.01
Q2 2026 Operating Margin: 16.1%
+5 more
8 metrics
Q2 2026 Net Sales
$5,021 million
Three months ended June 30, 2026; up 10.3% vs. Q2 2025
Q2 2026 Diluted EPS
$12.01
Three months ended June 30, 2026; up 20.5% vs. Q2 2025
Q2 2026 Operating Margin
16.1%
Three months ended June 30, 2026; up 120 basis points year over year
Q2 2026 Operating Cash Flow
$444 million
Cash flows from operating activities in the quarter
Q2 2026 Free Cash Flow
$333 million
Operating cash flow of $444 million less $111 million of capital expenditures
2026 Net Sales Guidance
$19.4–$19.7 billion
Updated full-year 2026 net sales guidance range as of August 4, 2026
2026 Diluted EPS Guidance
$45.50–$47.25
Updated full-year 2026 diluted EPS guidance range, adjusted basis
Daily Organic Constant Currency Growth
13.7%
Total company daily, organic constant currency sales growth vs. Q2 2025
Key Terms
daily, organic constant currency sales, IEEPA tariff refunds, Endless Assortment segment, High-Touch Solutions - N.A., +1 more
5 terms
daily, organic constant currency sales financial
"Daily, organic constant currency sales growth is adjusted for divested businesses"
IEEPA tariff refunds regulatory
"Results were inclusive of refunds recognized on IEEPA tariffs for products"
Refunds under the International Emergency Economic Powers Act (IEEPA) are repayments of import duties, fees, or penalties that were charged because of trade restrictions or sanctions put in place under emergency authority and later reversed, modified, or found inapplicable. For investors, these refunds can change a company’s past cash outflows and future cost structure—similar to getting a billed charge returned after a rule change—affecting reported earnings or cash available for other uses.
Endless Assortment segment financial
"In the Endless Assortment segment, sales were up 13.5% compared to"
High-Touch Solutions - N.A. financial
"In the High-Touch Solutions - N.A. segment, sales were up 11.9%"
free cash flow financial
"Free cash flow (FCF) is calculated using total cash provided by operating activities"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Earnings Snapshot
Net sales: $5,021 million · Guidance included
Three months ended June 30, 2026
Net sales
$5,021 million
up 10.3% vs. Q2 2025
Diluted EPS
$12.01
up 20.5% vs. Q2 2025
Operating margin
16.1%
up 120 basis points vs. Q2 2025
Daily organic constant currency sales growth
13.7%
total company growth vs. Q2 2025
Guidance
For 2026, Grainger raised adjusted guidance to net sales of $19.4–$19.7 billion, sales growth of 8.4%–10.0%, gross margin of 39.3%–39.6%, operating margin of 15.8%–16.2%, diluted EPS of $45.50–$47.25, operating cash flow of $2.25–$2.4 billion, and share buybacks of $0.975–$1.05 billion.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did W.W. Grainger (GWW) perform financially in Q2 2026?
W.W. Grainger delivered Q2 2026 net sales of $5.021 billion, up 10.3%, and diluted EPS of $12.01, up 20.5% versus Q2 2025. Operating margin rose to 16.1%, reflecting stronger gross margins and operating leverage across both major segments.
What guidance did W.W. Grainger (GWW) provide for full-year 2026?
Grainger increased its 2026 net sales guidance to $19.4–$19.7 billion and raised diluted EPS guidance to $45.50–$47.25. The outlook also calls for gross margin of 39.3%–39.6% and operating margin of 15.8%–16.2%, on an adjusted basis.
How did Grainger’s (GWW) business segments perform in Q2 2026?
In Q2 2026, High-Touch Solutions – N.A. sales grew 11.9%, or 11.7% on a daily, constant currency basis. The Endless Assortment segment grew sales 13.5%, or 20.6% on a daily, organic constant currency basis, driven by strong results at MonotaRO and Zoro.
How did margins and tariffs affect W.W. Grainger (GWW) in Q2 2026?
Grainger’s gross margin improved to 39.5%, up 100 basis points from Q2 2025, aided by segment strength and $43 million of IEEPA tariff refunds that reduced cost of goods sold. Operating margin rose to 16.1% for the quarter.
What was W.W. Grainger’s (GWW) effective tax rate in Q2 2026?
The effective tax rate was 24.8% in Q2 2026, compared with 23.2% in Q2 2025. The increase mainly reflected reduced tax credit activity and the effect of tax legislation that became effective in 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
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Registrant’s telephone number, including area code: (847 ) 535-1000
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 4, 2026, W.W. Grainger, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2026. A copy is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description of Exhibit | ||||
99.1 | Press release announcing financial results for the second quarter ended June 30, 2026. | ||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL Document) | ||||
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 hereunto duly authorized.
Date: August 4, 2026
W.W. GRAINGER, INC. | ||||||||
| By: | /s/ Deidra C. Merriwether | |||||||
| Name: | Deidra C. Merriwether | |||||||
| Title: | Senior Vice President and Chief Financial Officer | |||||||
GRAINGER REPORTS RESULTS FOR THE SECOND QUARTER 2026
Continued strong results across the business;
Company increases full year 2026 outlook
Second Quarter Highlights
•Delivered sales of $5.0 billion, up 10.3%, or 13.7% on a daily, organic constant currency basis
•Achieved operating margin of 16.1%, up 120 basis points, inclusive of IEEPA tariff refunds
•Generated diluted EPS of $12.01, up 20.5%
•Produced $444 million in operating cash flow and returned $341 million to Grainger shareholders through dividends and share repurchases
•Increasing full year 2026 guidance, including diluted adjusted EPS range of $45.50 to $47.25
CHICAGO, August 4, 2026 - Grainger (NYSE: GWW) today reported results for the second quarter of 2026 with sales of $5.0 billion, up 10.3%, or 13.7% on a daily, organic constant currency basis, and diluted EPS of $12.01, up 20.5% compared to the second quarter of 2025.
“Despite ongoing geopolitical uncertainty, we executed well during the second quarter and delivered exceptional service to customers. Sales remained strong and core operating profitability was in line with expectations,” said D.G. Macpherson, Chairman and CEO. “Looking ahead, we are increasing our outlook to reflect our strong first half performance and the continued momentum we are seeing across the demand environment.”
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2026 Second Quarter Financial Summary
| ($ in millions, except per share amounts) | Q2 2026(1) | Q2 2025(1) | Q2'26 vs. Q2'25 Fav. / (Unfav.) | ||||||||
| Net Sales | $5,021 | $4,554 | 10.3% | ||||||||
| Gross Profit | $1,984 | $1,755 | 13.0% | ||||||||
| Operating Earnings | $807 | $678 | 19.0% | ||||||||
| Net Earnings Attributable to W.W. Grainger, Inc. | $570 | $482 | 18.3% | ||||||||
| Diluted Earnings Per Share | $12.01 | $9.97 | 20.5% | ||||||||
| Gross Profit Margin | 39.5% | 38.5% | 100 bps | ||||||||
| Operating Margin | 16.1% | 14.9% | 120 bps | ||||||||
| Effective Tax Rate | 24.8% | 23.2% | (160) bps | ||||||||
(1) Results are consistent on a reported and adjusted basis. | |||||||||||
Revenue
Sales in the quarter increased 10.3% compared to the second quarter of 2025. When normalizing for the Company's exit from the U.K. market and the impact of foreign currency exchange, sales on a daily, organic constant currency basis increased 13.7% compared to the second quarter of 2025.
In the High-Touch Solutions - N.A. segment, sales were up 11.9%, or 11.7% on a daily, constant currency basis compared to the second quarter of 2025. Results for the segment were driven by volume growth and price inflation as tariff costs are passed. In the Endless Assortment segment, sales were up 13.5% compared to the second quarter of 2025, or up 20.6% on a daily, organic constant currency basis. Growth for the segment was driven by strong performance at both MonotaRO and Zoro.
Gross Profit Margin
Gross profit margin was 39.5% in the second quarter of 2026, up 100 basis points compared to the second quarter of 2025, driven by strength from both segments and a benefit related to the Company's exit from the U.K. market. Results were inclusive of refunds recognized on IEEPA tariffs for products directly imported by Grainger, which reduced cost of goods sold by $43 million.
In the High-Touch Solutions - N.A. segment, gross profit margin was 41.8%, up 80 basis points compared to the prior year quarter as the benefit from the IEEPA tariff refunds and positive mix were partly offset by unfavorable freight and headwinds from certain private label products. In
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the Endless Assortment segment, gross profit margin increased by 90 basis points from the second quarter of 2025 due to improvement across the segment.
Earnings
For the second quarter of 2026, total Company operating earnings were $807 million, up 19.0% compared to the second quarter of 2025. Operating margin was 16.1%, a 120 basis point increase compared to the second quarter of 2025. This increase in operating margin was driven by gross margin improvement in both segments, sales leverage improvement in Endless Assortment, and a benefit related to the Company's exit from the U.K. market.
Diluted earnings per share for the second quarter of 2026 were $12.01, up 20.5% compared to the second quarter of 2025. The increase was due primarily to strong operating performance and fewer shares outstanding, partly offset by a higher effective tax rate.
Tax Rate
For the second quarter of 2026, the effective tax rate was 24.8%, compared to 23.2% in the second quarter of 2025. The increase in the effective tax rate was primarily due to decreased tax credit activity in the current year period and the impact of tax legislation effective in 2026.
Cash Flow
During the second quarter of 2026, the Company generated $444 million of cash flow from operating activities as net earnings were partly offset by unfavorable working capital. The Company invested $111 million in capital expenditures, resulting in free cash flow of $333 million. During the quarter, the Company returned $341 million to Grainger shareholders through dividends and share repurchases.
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Guidance
The Company is updating the following guidance ranges for 2026:
Total Company(1) | Previous 2026 Guidance Range (as of May 7, 2026) | Updated 2026 Guidance Range (as of August 4, 2026) | ||||||
| Net Sales | $19.2 - $19.6 billion | $19.4 - $19.7 billion | ||||||
| Sales growth | 6.7% - 9.1% | 8.4% - 10.0% | ||||||
| Daily, organic constant currency sales growth | 9.5% - 12.0% | 11.5% - 13.0% | ||||||
| Gross Profit Margin | 39.2% - 39.5% | 39.3% - 39.6% | ||||||
| Operating Margin | 15.6% - 16.0% | 15.8% - 16.2% | ||||||
| Diluted Earnings per Share | $44.25 - $46.25 | $45.50 - $47.25 | ||||||
| Operating Cash Flow | $2.2 - $2.4 billion | $2.25 - $2.4 billion | ||||||
| CapEx (cash basis) | $0.55 - $0.65 billion | $0.575 - $0.65 billion | ||||||
| Share Buyback | $0.95 - $1.05 billion | $0.975 - $1.05 billion | ||||||
| Effective Tax Rate | ~25.0% | ~25.0% | ||||||
| Segment Operating Margin | ||||||||
| High-Touch Solutions - N.A. | 17.0% - 17.4% | 17.2% - 17.6% | ||||||
| Endless Assortment | 10.2% - 10.6% | 10.4% - 10.8% | ||||||
(1) Guidance provided is on an adjusted basis. Daily, organic constant currency sales growth is adjusted for the impact of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. For further details see the supplemental information of this release.
Webcast
The Company will conduct a live conference call and webcast at 11:00 a.m. ET on Tuesday, August 4, 2026, to discuss the second quarter results. The event will be hosted by D.G. Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO, and can be accessed at invest.grainger.com. To access the conference call via phone, please send a request to InvestorRelations@grainger.com. For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com.
About Grainger
W.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America and Japan. At Grainger, We Keep the World Working® by serving more than 4.6 million customers worldwide with maintenance, repair and operating (MRO) products and value-added solutions delivered through innovative technology and deep customer expertise. Known for its commitment to service and purpose-driven culture, the Company reported 2025 revenue of $17.9 billion. For more information, visit www.grainger.com.
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Visit invest.grainger.com to view information about the Company, including a supplement regarding 2026 second quarter results and additional Company information.
Safe Harbor Statement
All statements in this communication, other than those relating to historical facts, are “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will,” or “would,” and similar terms and phrases, including references to assumptions. Grainger cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond Grainger's control, which could cause Grainger's results to differ materially from those that are presented. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third-party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives, acquisitions or business strategies including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect our intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters, including new or revised provisions relating to contract compliance or performance; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions, including existing, new, or increased tariffs, trade issues and changes in trade policies, inflation, and interest rates; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; an incident that adversely impacts Grainger’s reputation or brand; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; effects of outbreaks of pandemic disease or viral contagions, global conflicts, natural or human-induced disasters, extreme weather, and other catastrophes or conditions; effects of climate change; failure to execute on our corporate responsibility efforts; competition for, or failure to attract, retain, train, motivate and develop executives and key team members; loss of key members of management or key team members; loss of operational flexibility and potential for work stoppages or slowdowns if team members unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
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Contacts:
| Media: | Investors: | ||||||||||
| Erin Ptacek | Kyle Bland | ||||||||||
| VP, Communications & Public Affairs | VP, Investor Relations | ||||||||||
| Robb Kristopher | Kevin Byrne | ||||||||||
| Director, External Affairs | Director, Investor Relations | ||||||||||
| Media_Inquiries@grainger.com | InvestorRelations@grainger.com | ||||||||||
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W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of dollars, except for share and per share amounts)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | $ | 5,021 | $ | 4,554 | $ | 9,763 | $ | 8,860 | |||||||||||||||
| Cost of goods sold | 3,037 | 2,799 | 5,883 | 5,395 | |||||||||||||||||||
| Gross profit | 1,984 | 1,755 | 3,880 | 3,465 | |||||||||||||||||||
| Selling, general and administrative expenses | 1,177 | 1,077 | 2,280 | 2,115 | |||||||||||||||||||
| Operating earnings | 807 | 678 | 1,600 | 1,350 | |||||||||||||||||||
| Other (income) expense: | |||||||||||||||||||||||
| Interest expense – net | 20 | 20 | 41 | 41 | |||||||||||||||||||
Other – net | (11) | (3) | (14) | (9) | |||||||||||||||||||
| Total other expense – net | 9 | 17 | 27 | 32 | |||||||||||||||||||
| Earnings before income taxes | 798 | 661 | 1,573 | 1,318 | |||||||||||||||||||
| Income tax provision | 198 | 153 | 392 | 310 | |||||||||||||||||||
| Net earnings | 600 | 508 | 1,181 | 1,008 | |||||||||||||||||||
| Less net earnings attributable to noncontrolling interest | 30 | 26 | 56 | 47 | |||||||||||||||||||
| Net earnings attributable to W.W. Grainger, Inc. | $ | 570 | $ | 482 | $ | 1,125 | $ | 961 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 12.02 | $ | 9.99 | $ | 23.69 | $ | 19.87 | |||||||||||||||
| Diluted | $ | 12.01 | $ | 9.97 | $ | 23.66 | $ | 19.83 | |||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
Basic | 47.2 | 48.0 | 47.3 | 48.1 | |||||||||||||||||||
Diluted | 47.2 | 48.1 | 47.3 | 48.2 | |||||||||||||||||||
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W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars)
(Unaudited)
| As of | |||||||||||
| (Unaudited) | |||||||||||
| Assets | June 30, 2026 | December 31, 2025 | |||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 589 | $ | 585 | |||||||
Accounts receivable (less allowance for credit losses of $33 and $32, respectively) | 2,825 | 2,329 | |||||||||
| Inventories – net | 2,371 | 2,394 | |||||||||
| Prepaid expenses and other current assets | 213 | 176 | |||||||||
| Total current assets | 5,998 | 5,484 | |||||||||
| Property, buildings and equipment – net | 2,401 | 2,268 | |||||||||
| Goodwill | 354 | 360 | |||||||||
| Intangibles – net | 272 | 265 | |||||||||
| Operating lease right-of-use | 360 | 345 | |||||||||
| Other assets | 233 | 240 | |||||||||
| Total assets | $ | 9,618 | $ | 8,962 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Current maturities | $ | 2 | $ | 126 | |||||||
| Trade accounts payable | 1,280 | 963 | |||||||||
| Accrued compensation and benefits | 347 | 343 | |||||||||
| Operating lease liability | 72 | 73 | |||||||||
| Accrued expenses | 389 | 386 | |||||||||
| Income taxes payable | 48 | 49 | |||||||||
| Total current liabilities | 2,138 | 1,940 | |||||||||
| Long-term debt | 2,406 | 2,362 | |||||||||
| Long-term operating lease liability | 317 | 301 | |||||||||
| Deferred income taxes and tax uncertainties | 149 | 121 | |||||||||
| Other non-current liabilities | 95 | 97 | |||||||||
| Shareholders' equity | 4,513 | 4,141 | |||||||||
| Total liabilities and shareholders’ equity | $ | 9,618 | $ | 8,962 | |||||||
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W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net earnings | $ | 600 | $ | 508 | $ | 1,181 | $ | 1,008 | |||||||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||||||||
| Provision for credit losses | 7 | 6 | 13 | 13 | |||||||||||||||||||
| Deferred income taxes and tax uncertainties | 23 | 5 | 31 | 1 | |||||||||||||||||||
| Depreciation and amortization | 66 | 64 | 128 | 125 | |||||||||||||||||||
| Non-cash lease expense | 20 | 21 | 40 | 41 | |||||||||||||||||||
| Stock-based compensation | 25 | 23 | 39 | 35 | |||||||||||||||||||
| Change in operating assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | (207) | (84) | (510) | (212) | |||||||||||||||||||
| Inventories | 9 | (25) | 14 | (19) | |||||||||||||||||||
| Prepaid expenses and other assets | 18 | (14) | (32) | (33) | |||||||||||||||||||
| Trade accounts payable | 59 | 77 | 312 | 231 | |||||||||||||||||||
| Operating lease liabilities | (24) | (28) | (48) | (53) | |||||||||||||||||||
| Accrued liabilities | 26 | (18) | 21 | (60) | |||||||||||||||||||
| Income taxes – net | (177) | (143) | (4) | (37) | |||||||||||||||||||
| Other non-current liabilities | (1) | (15) | (2) | (17) | |||||||||||||||||||
| Net cash provided by operating activities | 444 | 377 | 1,183 | 1,023 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Capital expenditures | (111) | (175) | (281) | (300) | |||||||||||||||||||
| Proceeds from sale of assets | — | 4 | — | 4 | |||||||||||||||||||
| Other – net | (5) | 13 | (13) | 13 | |||||||||||||||||||
| Net cash used in investing activities | (116) | (158) | (294) | (283) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Short-term borrowings (repayments), original maturities of 90 days or less, net | — | — | (125) | — | |||||||||||||||||||
| Proceeds from debt | 2 | 62 | 52 | 63 | |||||||||||||||||||
| Payments of debt | (3) | (1) | (4) | (503) | |||||||||||||||||||
| Proceeds from stock options exercised | 2 | — | 8 | 2 | |||||||||||||||||||
| Payments for employee taxes withheld from stock awards | (25) | (27) | (30) | (30) | |||||||||||||||||||
| Purchases of treasury stock | (224) | (226) | (461) | (507) | |||||||||||||||||||
| Purchases of noncontrolling interests | (45) | — | (70) | — | |||||||||||||||||||
| Cash dividends paid | (145) | (110) | (253) | (225) | |||||||||||||||||||
| Other – net | 10 | (1) | 9 | (1) | |||||||||||||||||||
| Net cash used in financing activities | (428) | (303) | (874) | (1,201) | |||||||||||||||||||
| Exchange rate effect on cash and cash equivalents | (6) | 15 | (11) | 22 | |||||||||||||||||||
| Net change in cash and cash equivalents | (106) | (69) | 4 | (439) | |||||||||||||||||||
| Cash and cash equivalents at beginning of period | 695 | 666 | 585 | 1,036 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 589 | $ | 597 | $ | 589 | $ | 597 | |||||||||||||||
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SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (Unaudited)
The Company supplements the reporting of financial information determined under U.S. generally accepted accounting principles (GAAP) with the non-GAAP financial measures as defined below. The Company believes these non-GAAP financial measures provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.
Basis of presentation
The Company has a controlling ownership interest in MonotaRO, which is part of the Endless Assortment segment. MonotaRO’s results are fully consolidated, reflected in U.S. GAAP, and reported one-month in arrears. Results will differ from MonotaRO’s externally reported financials which follow Japanese GAAP.
Adjusted gross profit, adjusted SG&A, adjusted operating earnings, adjusted operating margin, adjusted net earnings, adjusted diluted EPS
Exclude certain non-recurring items, like restructuring charges, asset impairments, gains and losses associated with business divestitures or closures and other non-recurring, infrequent or unusual gains and losses (together referred to as “non-GAAP adjustments”), from the Company’s most directly comparable reported U.S. GAAP figures (reported gross profit, SG&A, operating earnings, net earnings and EPS). The Company believes these non-GAAP adjustments provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its business by excluding items that may not be indicative of core operating results.
Free cash flow (FCF)
Calculated using total cash provided by operating activities less capital expenditures. The Company believes the presentation of FCF allows investors to evaluate the capacity of the Company's operations to generate free cash flow.
Daily sales
Refers to sales for the period divided by the number of U.S. selling days for the period.
Daily, constant currency sales
Refers to daily sales adjusted for changes in foreign currency exchange rates.
Daily, organic constant currency sales
Refers to daily sales excluding the sales of certain divested or closed businesses in the comparable prior year period post date of divestiture or closure and changes in foreign currency exchange rates.
Foreign currency exchange
Calculated by dividing current period local currency daily sales by current period average exchange rate and subtracting the current period local currency daily sales divided by the prior period average exchange rate.
U.S. selling days:
2025: Q1-63, Q2-64, Q3-64, Q4-64, FY-255
2026: Q1-63, Q2-64, Q3-64, Q4-64, FY-255
2027: Q1-63, Q2-64, Q3-64, Q4-63, FY-254
As non-GAAP financial measures are not standardized, it may not be possible to compare these measures with other companies' non-GAAP measures having the same or similar names. These non-GAAP measures should not be considered in isolation or as a substitute for reported results. These non-GAAP measures reflect an additional way of viewing aspects of operations that, when viewed with GAAP results, provide a more complete understanding of the business. This press release also includes certain non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of future restructurings, asset impairments, and other charges. Neither of these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measures is not provided.
The reconciliations provided below reconcile GAAP financial measures to non-GAAP financial measures used in this release: daily sales; daily, organic constant currency sales; and free cash flow.
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Sales growth for the three months ended June 30, 2026
(percent change compared to prior year period)
(unaudited)
| Q2 2026 | |||||||||||
| Total Company | High-Touch Solutions - N.A. | Endless Assortment | |||||||||
| Reported sales | 10.3% | 11.9% | 13.5% | ||||||||
| Daily impact | —% | —% | —% | ||||||||
Daily sales(1) | 10.3% | 11.9% | 13.5% | ||||||||
Foreign currency exchange(2) | 1.1% | (0.2)% | 5.9% | ||||||||
Business divestiture(3) | 2.3% | —% | 1.2% | ||||||||
| Daily, organic constant currency sales | 13.7% | 11.7% | 20.6% | ||||||||
(1) Based on U.S. selling days, there were 64 selling days in Q2 2026 and Q2 2025. | |||||||||||
(2) Excludes the impact of year-over-year foreign currency exchange rate fluctuations. | |||||||||||
(3) Excludes the net sales results of the divested Cromwell business and closed Zoro U.K. business, announced in the third quarter of 2025 and completed in the fourth quarter of 2025, in the prior year period on a daily basis. | |||||||||||
Free cash flow (FCF) for the three months ended June 30, 2026
(in millions of dollars)
(unaudited)
| Q2 2026 | |||||
| Net cash flows provided by operating activities | $ | 444 | |||
| Capital expenditures | (111) | ||||
| Free cash flow | $ | 333 | |||
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