W.W. Grainger, Inc. (GWW) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. W.W. Grainger, Inc. is a broad-line distributor of maintenance, repair, and operating (MRO) products and services, with primary operations in North America and Japan. In the fourth quarter of 2025, the company exited the United Kingdom market by selling the Cromwell business and closing the Zoro U.K. business.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $4,742 million | $4,306 million |
| Gross Profit | $1,896 million | $1,710 million |
| Gross Margin | 40.0% | 39.7% |
| Operating Earnings | $793 million | $672 million |
| Operating Margin | 16.7% | 15.6% |
| Net Earnings (Attributable to GWW) | $555 million | $479 million |
| Diluted EPS | $11.65 | $9.86 |
| Operating Cash Flow | $739 million | $646 million |
| Cash and Equivalents | $695 million | $666 million |
| Total Debt | $2,411 million | $2,488 million |
| Debt-to-Capitalization | 35.7% | 37.5% |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 10.1% year-over-year. On a daily, organic constant currency basis, sales grew 12.2%, driven by both volume and price increases.
- Segment Performance:
- High-Touch Solutions N.A.: Sales up 10.5%; Operating earnings up 14.7% to $688 million.
- Endless Assortment: Sales up 19.6%; Operating earnings surged 45.8% to $105 million, driven by repeat business and enterprise growth at MonotaRO.
- Profitability: Gross margin expanded 30 basis points to 40.0%. Operating margin improved 110 basis points to 16.7%.
- Expenses: SG&A expenses rose 6.3% to $1.103 billion, primarily due to higher payroll and benefits, partially offset by savings from the U.K. exit.
- Tax Rate: The effective tax rate increased to 25.1% from 23.9%, attributed to decreased tax credit activity and new 2026 tax legislation.
- Capital Allocation: The company repurchased $237 million of treasury stock and paid $108 million in dividends. Capital expenditures increased to $170 million, largely for MonotaRO supply chain investments.
Outlook, Risks, and Management Commentary
- Macro Environment: Management notes elevated volatility in commodity, labor, and transportation markets due to geopolitical developments and evolving tariff/trade policies. The company is monitoring inflationary pressures and potential supply chain disruptions.
- Strategic Position: Grainger believes its diverse customer base and non-discretionary product mix provide resilience. Strategies are in place to mitigate tariff impacts and maintain competitiveness.
- Liquidity: The company maintains approximately $1.9 billion in available liquidity and holds investment-grade credit ratings (A1/A+).
- Dividend: A quarterly dividend of $2.49 per share was declared on April 29, 2026, payable June 1, 2026.
- Risks: Key risks include trade policy changes, inflation, currency fluctuations, cybersecurity threats, and potential disruptions in global supply chains.
Investor Verification Checklist
- Verify the sustainability of the 12.2% organic constant currency sales growth, particularly the contribution from the Endless Assortment segment.
- Monitor the impact of 2026 tax legislation on future effective tax rates and net earnings.
- Assess the execution of MonotaRO supply chain investments and their return on capital.
- Track the company's ability to manage SG&A growth relative to revenue expansion.
- Review ongoing developments in U.S. and international trade policies for potential margin compression risks.