W.W. Grainger, Inc. (GWW) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. W.W. Grainger, Inc. is a broad-line distributor of maintenance, repair, and operating (MRO) products and services, operating primarily in North America and Japan. In Q4 2025, the company exited the U.K. market by selling the Cromwell business and closing Zoro U.K. operations. As of July 28, 2026, there were 47,100,942 shares of Common Stock outstanding.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales | $5,021 million | $4,554 million | $9,763 million | $8,860 million |
| Gross Profit | $1,984 million | $1,755 million | $3,880 million | $3,465 million |
| Gross Margin | 39.5% | 38.5% | 39.7% | 39.1% |
| Operating Earnings | $807 million | $678 million | $1,600 million | $1,350 million |
| Net Earnings (Attributable to GWW) | $570 million | $482 million | $1,125 million | $961 million |
| Diluted EPS | $12.01 | $9.97 | $23.66 | $19.83 |
| Operating Cash Flow (YTD) | $1,183 million | $1,023 million | - | - |
| Total Debt | $2,408 million | - | - | - |
| Cash & Equivalents | $589 million | - | - | - |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 10.3% in Q2 and 10.2% YTD compared to the prior year. On a daily, organic constant currency basis, sales grew 13.7% in Q2 and 12.9% YTD.
- Margin Expansion: Gross profit margin improved by 100 basis points in Q2 and 60 basis points YTD, driven by tariff refund benefits and favorable product mix, partially offset by higher freight costs.
- Profitability: Operating earnings rose 19% in Q2 and 18.5% YTD. Diluted EPS increased 20.5% in Q2 and 19.3% YTD.
- Segment Performance:
- High-Touch Solutions N.A.: Sales up 11.9% (Q2) and 11.2% (YTD), driven primarily by volume.
- Endless Assortment: Sales up 13.5% (Q2) and 16.3% (YTD), driven by repeat business and enterprise growth at MonotaRO, though partially offset by unfavorable currency exchange (USD/JPY).
- Capital Allocation: The company repurchased $461 million of treasury stock YTD and paid $253 million in cash dividends. Total debt decreased slightly to $2.408 billion as of June 30, 2026.
Guidance, Outlook, and Risks
- Outlook: Management notes the global economy faces volatility due to geopolitical developments, tariff policies, and supply chain disruptions. The company believes its strategy is well-positioned to navigate these conditions.
- Tax Rate: The effective tax rate increased to 24.8% in Q2 (from 23.2% in 2025) due to decreased tax credit activity and new 2026 tax legislation.
- Dividends: On July 29, 2026, the Board declared a quarterly dividend of $2.49 per share, payable September 1, 2026.
- Risks: Key risks include inflation, rising fuel and transportation costs, foreign currency fluctuations, potential economic recession, and evolving trade/tariff policies. The company is actively monitoring these factors.
Investor Verification Checklist
- Organic Growth Quality: Verify the sustainability of the 13.7% daily organic constant currency sales growth, particularly the contribution from the Endless Assortment segment.
- Tariff Refund Impact: Assess the one-time nature of the tariff refund benefits recognized in Q2 and their impact on future gross margins.
- Currency Exposure: Monitor the impact of the strengthening U.S. dollar against the Japanese Yen on the Endless Assortment segment's reported results.
- Capital Return: Confirm the remaining capacity under the share repurchase program (2.74 million shares remaining as of June 30, 2026) and dividend sustainability given the increased tax rate.
- Working Capital: Review the increase in accounts receivable ($510 million increase in cash flow usage YTD) to ensure collection trends remain healthy.