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What changed in W. W. Grainger's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of W. W. Grainger's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+229 added−221 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in W. W. Grainger's 2024 10-K

229 paragraphs added · 221 removed · 184 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeRobbins served as Senior Vice President and Chief Technology, Merchandising, Marketing, and Strategy Officer, a position assumed in November 2019, as Senior Vice President and Chief Merchandising, Marketing, Digital, Strategy Officer, a position assumed in May 2019, as Senior Vice President and Chief Digital Officer, a position assumed in September 2017, and as Senior Vice President, Global Supply Chain, Branch Network, Contact Centers and Corporate Strategy, a position assumed in 2016.
Biggest changeRobbins previously served as Senior Vice President and Chief Technology, Merchandising, Marketing, Strategy Officer from November 2019 to December 2020, Senior Vice President and Chief Merchandising, Marketing, Digital, Strategy Officer from May 2019 to October 2019, Senior Vice President and Chief Digital Officer from September 2017 to April 2019, Senior Vice President, Global Supply Chain, Branch Network, Contact Centers and Corporate Strategy from November 2016 to August 2017 and various other positions since joining Grainger in September 2010.
Addit ionally, Grainger offers comprehensive inventory management through its KeepStock® program that includes vendor-managed inventory, customer-managed inventory and onsite vending machines . 6 In the Endless Assortment segment, orders are placed primarily through online channels. Zoro leverages the High-Touch Solution N.A.'s DC network and third-party drop shipments to deliver seamless service and product fulfillment to customers.
Addit ionally, 6 Grainger offers comprehensive inventory management through its KeepStock® program that includes vendor-managed inventory, customer-managed inventory and onsite vending machines . In the Endless Assortment segment, orders are placed primarily through online channels. Zoro leverages the High-Touch Solution N.A.'s DC network and third-party drop shipments to deliver seamless service and product fulfillment to customers.
The Company believes an engaged workforce leads to a more innovative, productive and profitable company and measures team member engagement on an ongoing basis. The results from engagement surveys are used to inform programs and processes designed and implemented to enhance the inclusive culture Grainger aspires to achieve.
The Company believes an engaged workforce leads to a more innovative, productive and profitable company and measures team member engagement on an ongoing basis. The results from engagement surveys are used to inform programs and processes designed and implemented to enhance the culture Grainger aspires to achieve.
As part of its efforts in these areas, the Company offers competitive compensation and benefits to meet the diverse needs of team members and support their physical and mental health and well-being, financial future and work-life balance.
As part of its efforts in these areas, the Company offers competitive compensation and benefits to meet the needs of team members and support their physical and mental health and well-being, financial future and work-life balance.
No single supplier comprised more than 5% of Grainger's total purchases for the year ended December 31, 2023. In the High-Touch Solutions N.A. segment, DCs are the primary order fulfillment channel, mainly through direct shipments to customers. Automation in the DCs allows orders to ship complete with next-day delivery and also replenish branches that provide same-day availability to customers.
No single supplier comprised more than 5% of Grainger's total purchases for the year ended December 31, 2024. In the High-Touch Solutions N.A. segment, DCs are the primary order fulfillment channel, mainly through direct shipments to customers. Automation in the DCs allows orders to ship complete with next-day delivery and also replenish branches that provide same-day availability to customers.
For further segment information, see Part II, Item 7: Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations and Note 13 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Below is a description of Grainger’s reportable segments and other businesses. High-Touch Solutions N.A.
For further segment information, see Part II, Item 7: Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations and Note 12 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Below is a description of Grainger’s reportable segments and other businesses. High-Touch Solutions N.A.
Grainger’s customers range from smaller businesses to large corporations, government entities and other institutions, representing a broad collection of industries, including, but not limited to commercial, healthcare, and manufacturing. No single end customer accounted fo r more than 10% of to tal sales for the year ended December 31, 2023.
Grainger’s customers range from smaller businesses to large corporations, government entities and other institutions, representing a broad collection of industries, including, but not limited to commercial, healthcare, and manufacturing. No single end customer accounted fo r more than 10% of to tal sales for the year ended December 31, 2024.
Approximately 20% of 2023 sales were private label MRO items bearing Grainger’s registered trademarks, including DAYTON®, SPEEDAIRE®, AIR HANDLER®, TOUGH GUY®, WESTWARD®, CONDOR® and LUMAPRO®. Grainger also provides a suite of inventory services to its customers under the KEEPSTOCK® brand, which is a registered service mark.
Approximately 20% of 2024 sales were private label MRO items bearing Grainger’s registered trademarks, including DAYTON®, GRAINGER®, CONDOR®, WESTWARD®, TOUGH GUY®, SPEEDAIRE®, LUMAPRO®, and AIR HANDLER®. Grainger also provides a suite of inventory services to its customers under the KEEPSTOCK® brand, which is a registered service mark.
No single product category comprised more than 20% of the Company's sales for the year ended December 31, 2023. In the High-Touch Solutions N.A. segment, Grainger.com provides real-time price and product availability, detailed product information and features, such as product search and compare capabilities.
No single product category comprised more than 20% of the Company's sales for the year ended December 31, 2024. In the High-Touch Solutions N.A. segment, Grainger.com provides real-time price and product availability, detailed product information and features, such as product search and compare capabilities.
For further information on the Company's principles, see below "Workplace Practices and Policies." General Grainger's two reportable segments are High-Touch Solutions North America (High-Touch Solutions N.A.) and Endless Assortment. These reportable segments align with Grainger's go-to-market strategies and bifurcated business models of high-touch solutions and endless assortment.
For further information on the Company's principles, see below "Human Capital - Workplace Practices and Policies." General Grainger's two reportable segments are High-Touch Solutions North America (High-Touch Solutions N.A.) and Endless Assortment. These reportable segments align with Grainger's go-to-market strategies and bifurcated business models of high-touch solutions and endless assortment.
The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 9 Information about Executive Officers Following is information about the executive officers of Grainger, including age, as of January 31, 2024.
The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 9 Information about Executive Officers Following is information about the executive officers of Grainger, including age, as of January 31, 2025.
Compliance with these laws, regulations and standards requires the dedication of time and effort of team members as well as financial resources. In 2023, compliance with the applicable laws, regulations and standards did not have a material effect on capital expenditures, earnings or competitive position.
Compliance with these laws, regulations and standards requires the dedication of time and effort of team members as well as financial resources. In 2024, compliance with the applicable laws, regulations and standards did not have a material effect on capital expenditures, earnings or competitive position.
In addition to Grainger’s U.S. based operations, which in 2023 generated approximately 82% of its consolidated net sales, Grainger operates its business principally through wholly owned subsidiaries in Canada, Mexico and the U.K., and through its majority-owned subsidiary in Japan.
In addition to Grainger’s U.S. based operations, which in 2024 generated approximately 82% of its consolidated net sales, Grainger operates its business principally through wholly owned subsidiaries in Canada, Mexico and the U.K., and through its majority-owned subsidiary in Japan.
In 2023 , the Company’s Occupational Safety and Health Administration Total Recordable Incident Rate in the U .S. was 1.3 and the Company’s Lost Time Incident Rate in the U.S. was 0.4 based upon the number of incidents per 100 team members (or per 200,000 work hours).
In 2024 , the Company’s Occupational Safety and Health Administration Total Recordable Incident Rate in the U .S. was 1.3 and the Company’s Lost Time Incident Rate in the U.S. was 0.5 based upon the number of incidents per 100 team members (or per 200,000 work hours).
Grainger believes that a purpose-driven culture is an asset that creates a sustainable, competitive advantage for the Company. Building on its strong foundation while evolving a framework to address the future is critical to Grainger’s continued success. Grainger has been consistently recognized for its commitment to its culture, diversity, equity and inclusion efforts and team member engagement.
Grainger believes that a purpose-driven culture is an asset that creates a sustainable, competitive advantage for the Company. Building on its strong foundation while evolving a framework to address the future is critical to Grainger’s continued success. Grainger has been consistently recognized for its commitment to its culture, an inclusive workplace and team member engagement.
Thomson is a certified public accountant and prior to Grainger served as Director, Internal Audit at CVS Health Corporation, a pharmacy healthcare provider, and Audit Manager at Arthur Andersen LLP, a professional services firm. 11
Thomson served as Director, Internal Audit at CVS Health Corporation, a pharmacy healthcare provider, and Audit Manager at Arthur Andersen LLP, a professional services firm. Ms. Thomson is a certified public accountant. 11
Executive officers of Grainger generally serve until the next annual appointment of officers, or until earlier resignation or removal. Name and Age Positions and Offices Held and Principal Occupation and Employment Nancy L. Berardinelli-Krantz (46) Senior Vice President and Chief Legal Officer, a position assumed in January 2023. Previously, Ms.
Executive officers of Grainger generally serve until the next annual appointment of officers, or until earlier resignation or removal. Name and Age Positions and Offices Held and Principal Occupation and Employment Nancy L. Berardinelli-Krantz (47) Senior Vice President and Chief Legal Officer since January 2023. Ms.
Zoro offers more than 13 million products and MonotaRO provides access to more than 22 million products, primarily through its websites and catalogs. The endless assortment businesses continue to enhance assortment by strategically adding products and expanding the offer of third party held products.
Zoro offers more than 14 million products and MonotaRO provides access to more than 24 million products, primarily through its websites and catalogs. The endless assortment businesses continue to enhance assortment by strategically ad ding products and expanding the offer of third party held products.
Merriwether held various positions of increasing responsibility at Sears Holdings Corporation, a broadline retailer, PriceWaterhouseCoopers, a global professional services firm, and Eli Lilly & Company, a global pharmaceutical company. 10 Paige K. Robbins (55) Senior Vice President and President, Grainger Business Unit, a position assumed in January 2021. Previously, Ms.
Merriwether held various positions of increasing responsibility at Sears Holdings Corporation, a broadline retailer, PricewaterhouseCoopers LLP, a global professional services firm, and Eli Lilly & Company, a global pharmaceutical company. Paige K. Robbins (56) Senior Vice President and President, Grainger Business Unit since January 2021. Ms.
Team Member Profile As of December 31, 2023, Gr ainger had more than 26,000 team members worldwide, of whom approximately 23,200 were full-time and 2,900 were part-time or temporary.
Team Member Profile As of December 31, 2024, Gr ainger had more than 26,000 team members worldwide, of whom approximately 23,500 were full-time and 3,000 were part-time or temporary.
Berardinelli-Krantz held various positions of senior leadership at The Goodyear Tire & Rubber Company, a multinational tire manufacturer, and worked for the international law firm of Jones Day. Ms.
Berardinelli-Krantz served in senior leadership positions at The Goodyear Tire & Rubber Company, a multinational tire manufacturer, and worked at Jones Day, an international law firm. Ms.
Diversity, Equity and Inclusion Grainger believes a diverse talent pool is essential to live its principles, foster innovation, build high-performing teams and drive business results.
Inclusive Workplace Grainger believes a broad talent pool is essential to live its principles, foster innovation, build high-performing teams and drive business results.
This framework helps the Company execute its strategy and create value for shareholders. The Grainger Edge principles also guide the Company’s actions supporting health and safety, diversity, equity and inclusion, and team member experience, including talent acquisition and team member retention, development and compensation and benefits.
This framework helps the Company execute its strategy and create value for shareholders. The Grainger Edge principles work as a system and guide the Company’s actions supporting health and safety, an inclusive workplace, and team member experience, including talent acquisition, retention, development and compensation and benefits.
Berardinelli-Krantz is a veteran of the United States Army and Judge Advocate General’s Corps, where she served as a trial attorney in Fort Hood, Texas, and for the Contract Appeals Division in Washington, D.C. She also served as a trial defense counsel in Baghdad, Iraq.
Berardinelli-Krantz is a veteran of the United States Army and Judge Advocate General’s Corps, where she served as a trial attorney in Fort Hood, Texas, and for the Contract Appeals Division in Washington, D.C. She also served as a trial defense counsel in Baghdad, Iraq. Jonny LeRoy (53) Senior Vice President and Chief Technology Officer since April 2020. Mr.
Macpherson served as Partner and Managing Director at Boston Consulting Group, a global management consulting firm. Deidra C. Merriwether (55) Senior Vice President and Chief Financial Officer, a position assumed in January 2021. Previously, Ms. Merriwether served as Senior Vice President, and President, North American Sales & Services, a position assumed in November 2019, Senior Vice President, U.S.
Prior to Grainger, Mr. Macpherson served as Partner and Managing Director at Boston Consulting Group, a global management consulting firm. Deidra C. Merriwether (56) Senior Vice President and Chief Financial Officer, since January 2021. Ms. Merriwether previously served as Senior Vice President, and President, North American Sales & Services, from November 2019 to December 2020, Senior Vice President, U.S.
Direct Sales and Strategic Initiatives, a position assumed in September 2017, Vice President, Pricing and Indirect Procurement, a position assumed in 2016 and as a Vice President in Finance from 2013 to 2016. Prior to Grainger, Ms.
Direct Sales and Strategic Initiatives, from September 2017 to November 2019, Vice President, Pricing and Indirect Procurement from April 2016 to August 2017 and Vice President in Finance from 2013 to 2016. Prior to Grainger, Ms.
Macpherson (56) Chairman of the Board, a position assumed in October 2017, and Chief Executive Officer, a position assumed in October 2016 at which time he was also appointed to the Board of Directors. Previously, Mr.
D.G. Macpherson (57) Chairman of the Board, since October 2017 and Chief Executive Officer since October 2016 at which time he was also appointed to the Board of Directors. Mr.
Thomson served as Vice President, Internal Audit and Finance Continuous Improvement of the Company, a position assumed in November 2019, Vice President, Internal Audit from October 2016 to November 2019, Senior Director, Finance from June 2011 to September 2016, and Director, Internal Audit from February 2008 to June 2011. Ms.
Thomson previously served as Vice President, Internal Audit and Finance Continuous Improvement from November 2019 to April 2021, Vice President, Internal Audit from October 2016 to November 2019, as Senior Director, Finance from June 2011 to September 2016, and Director, Internal Audit from February 2008 to June 2011. Prior to Grainger, Ms.
As of December 31, 2023, within Grainger’s U.S. workforce, approximately 39% of team members were women and approximately 37% of team members were racially and ethnically diverse. Talent Acquisition, Retention and Development Grainger believes that a great customer experience starts with a great team member experience.
The U.S. based executive leadership team is comprised of approximately 27% racially and ethnically diverse leaders. Within Grainger’s global workforce, approximately 42% of team members were women and approximately 39% of U.S. team members were racially and ethnically diverse. Talent Acquisition, Retention and Development Grainger believes that a great customer experience starts with a great team member experience.
The Company understands that future business success requires a mix of current and new skill sets, multiple experiences, and a diversity of backgrounds and perspectives, and strives to reflect this priority in its hiring, retention and promotion practices.
The Company understands that future business success requires a mix of current and new skill sets, multiple experiences, and a broad array of backgrounds and perspectives, and strives to reflect this in its hiring, retention and promotion practices. The Company aspires to increasingly promote a welcoming, inclusive culture that values all people. Grainger's commitment to inclusion applies throughout the organization.
The Company’s Board of Directors is comprised of approximately 31% female and 23% racially and ethnically diverse directors. Grainger also maintains this strong commitment with the CEO's leadership team and throughout the organization. The CEO's U.S. based leadership team is comprised of approximately 40% women and approximately 30% racially and ethnically diverse leaders.
As of December 31, 2024, the Company’s Board of Directors is comprised of approximately 31% female and 23% racially and ethnically diverse directors. Grainger also maintains this commitment with the executive leadership teams. Grainger's global executive leadership team is comprised of approximately 33% women leaders.
Macpherson served as Chief Operating Officer, a position assumed in 2015, Senior Vice President and Group President, Global Supply Chain and International, a position assumed in 2013, Senior Vice President and President, Global Supply Chain and Corporate Strategy, a position assumed in 2012, and Senior Vice President, Global Supply Chain, a position assumed in 2008. Prior to Grainger, Mr.
Macpherson previously served as Chief Operating Officer from August 2015 to September 2016, Senior Vice President and Group President, Global Supply Chain and International from September 2013 to July 2015, Senior Vice President and President, Global Supply Chain and Corporate Strategy from January 2012 to August 2013, and Senior Vice President, Global Supply Chain from November 2008 to December 2011.
Since joining Grainger in September 2010, Ms. Robbins has held various positions as a Vice President, including in the areas of Global Supply Chain and Logistics. Prior to Grainger, Ms. Robbins served as Partner and Managing Director at Boston Consulting Group, a global management consulting firm. Laurie R.
Prior to Grainger, Ms. Robbins served as Partner and Managing Director at Boston Consulting Group, a global management consulting firm. 10 Laurie R. Thomson (51) Vice President, Controller and principal accounting officer since May 2021. Ms.
Berardinelli-Krantz served in roles of increasing responsibility at Eaton Corporation (Eaton), a power management company, from 2011-2015 and again from 2017-2022. Her most recent position was Senior Vice President and Deputy Chief Legal Officer.
Berardinelli-Krantz previously served as Senior Vice President and Deputy Chief Legal Officer at Eaton Corporation (Eaton), a power management company, from June 2022 to December 2022. Prior to being promoted to that role, she held a variety of senior leadership roles at Eaton. Ms.
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The Company aspires to increasingly promote a welcoming, inclusive culture that values all people – regardless of sex, gender, race, color, religion, national origin, age, disability, veteran status, sexual orientation, gender expression or experiences – through recruiting outreach, internal networking, business resource groups and mentoring programs. Grainger's commitment to diversity, equity and inclusion starts at the top.
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LeRoy previously served as Head of Technology for North America for ThoughtWorks, a technology consultancy, from 2013 to March 2020. Prior to being promoted to Head of Technology for North America, Mr. LeRoy held roles of increasing responsibility at ThoughtWorks. Prior to joining ThoughtWorks, Mr. LeRoy was a founder and Chief Technology Officer of Whatsonwhen, an online travel information company.
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After her return to Eaton, her other positions were: Senior Vice President and General Counsel, Digital, Innovation and Technology; Senior Vice President, Ethics and Compliance; and Vice President and Chief Counsel, Litigation. Ms.
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Matt Fortin (57) Senior Vice President and Chief Human Resources Officer, a position assumed in September 2023. Previously, Mr.
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Fortin served as Group Vice President, Merchandising and Supplier Management, Grainger Business Unit, a position assumed in 2022, Vice President and President, Merchandising and Supplier Management, a position assumed in May 2018, and as Vice President and President, Global Product Management and Indirect Procurement, a position assumed in September 2017. Since joining Grainger in 2006, Mr.
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Fortin has held various other positions, including in the areas of supply chain, sourcing and operations in China. Prior to Grainger, Mr. Fortin spent 16 years at General Motors, a multinational automotive manufacturing company, in various leadership roles in manufacturing, purchasing, continuous improvement and general management. D.G.
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Thomson (50) Vice President, Controller and principal accounting officer, a position assumed in May 2021. Previously, Ms.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe transition in recent years to remote and “hybrid” working arrangements may increase Grainger’s vulnerability to cybersecurity incidents, including breaches of information systems security, which could damage Grainger’s reputation and commercial relationships, disrupt operations, increase costs and/or decrease revenues, and expose Grainger to claims or other actions from customers, suppliers, financial institutions, regulators, payment card associations, team members and others. 16 Grainger's IT infrastructure also includes products and services provided by suppliers, vendors and other third parties, and these providers can experience breaches of their systems and products that impact the security of systems and proprietary or confidential information.
Biggest changeGrainger's IT infrastructure also includes products and services provided by suppliers, vendors and other third-party business partners, and these third parties can experience cybersecurity threats, breaches, attacks, disruptions, and cybersecurity incidents that impact the security of systems and proprietary or confidential information.
Market variables, such as inflation of product costs, labor rates and fuel, freight and energy costs, as well as geopolitical events, could negatively impact Grainger's ability to effectively manage its operating and administrative expenses. For example, geopolitical conflicts and related international responses have and may continue to exacerbate inflationary pressures, including increases in fuel and other energy costs.
Market variables, such as inflation of product costs, labor rates, fuel, freight and energy costs, as well as geopolitical events, could negatively impact Grainger's ability to effectively manage its operating and administrative expenses. For example, geopolitical conflicts and related international responses have and may continue to exacerbate inflationary pressures, including increases in fuel and other energy costs.
In addition, Grainger must pay certain transaction fees relating to these transactions, which may increase over time and could have an impact on product margin, profitability and operating costs.
In addition, Grainger must pay certain transaction fees relating to these transactions, which may increase over time and could have an impact on product margin, operating costs and profitability.
The wide array of laws, regulations and standards in each jurisdiction where Grainger operates, include, but are not limited to, advertising, marketing and Internet regulations (including the use of proprietary or third-party “cookies” in connection with Grainger’s eCommerce platforms), anti-bribery and corruption laws, competition and antitrust regulations, data protection (including, because Grainger accepts credit cards, the Payment Card Industry Data Security Standard), data privacy (including in the U.S., the California Consumer Privacy Act and Privacy Rights Act, 18 in Japan, the Act on Protection of Personal Information, and in the European Union, the General Data Protection Regulation) and cybersecurity requirements (including protection of information and incident responses), environmental protection laws, currency exchange controls and cash repatriation restrictions, health and safety laws, import and export compliance (including the U.S.
The wide array of laws, regulations and standards in each jurisdiction where Grainger operates, include, but are not limited to, advertising, marketing and internet regulations (including the use of proprietary or third-party “cookies” in connection with Grainger’s eCommerce platforms), anti-bribery and corruption laws, competition and antitrust regulations, data protection (including, because Grainger accepts credit cards, the Payment Card Industry Data Security Standard), data privacy (including in the U.S., the California Consumer Privacy Act and Privacy Rights Act, in Japan, the Act on Protection of Personal Information, and in the European Union, the General Data Protection Regulation) and cybersecurity requirements (including protection of information and incident responses), environmental protection laws, currency exchange controls and cash repatriation restrictions, health and safety laws, import and export compliance (including the U.S.
These factors could include economic downturns, recessions, outbreaks of pandemic disease, natural or human induced disasters, cybersecurity attacks, extreme weather, geopolitical unrest, new or increased tariffs, trade issues and policies, detention orders or withhold release orders on imported products, labor problems or shortages experienced by Grainger’s suppliers or others in the supply chain, transportation availability, staffing and cost, shortage of raw materials, supplier consolidation, unilateral product cost increases by suppliers of products in short supply, inflation and other factors, any of which could adversely affect a supplier’s ability to manufacture or deliver products or could result in an increase in Grainger’s product costs.
These factors could include economic downturns, recessions, outbreaks of pandemic disease, natural or human induced disasters, cybersecurity attacks, extreme weather, geopolitical unrest, new, threatened or increased tariffs, trade issues and policies, detention orders or withhold release orders on imported products, labor problems or shortages experienced by Grainger’s suppliers or others in the supply chain, transportation availability, staffing and cost, shortage of raw materials, supplier consolidation, unilateral product cost increases by suppliers of products in short supply, inflation and other factors, any of which could adversely affect a supplier’s ability to manufacture or deliver products or could result in an increase in Grainger’s product costs.
Many of these customers operate in markets that are subject to fluctuations resulting from market uncertainty, trade and tariff policies, costs of goods sold, currency exchange rates, interest rate fluctuations, government spending and government shutdowns, economic downturns, recessions, foreign competition, offshoring of production, oil and natural gas prices, geopolitical developments, labor shortages, work stoppages, inflation, natural or human induced disasters, extreme weather, outbreaks of pandemic disease, inflation, deflation, and a variety of other factors beyond Grainger’s control.
Many of these customers operate in markets that are subject to fluctuations resulting from market uncertainty, trade and tariff policies, costs of goods 12 sold, currency exchange rates, interest rate fluctuations, government spending and government shutdowns, economic downturns, recessions, foreign competition, offshoring of production, oil and natural gas prices, geopolitical developments, labor shortages, work stoppages, natural or human induced disasters, extreme weather, outbreaks of pandemic disease, inflation, deflation, and a variety of other factors beyond Grainger’s control.
Grainger has a controlling ownership interest in MonotaRO, which is listed on the Tokyo Stock Exchange (TSE). MonotaRO's disclosure and reporting obligations under TSE listing requirements and Japanese securities laws, including the timing of such obligations, may vary from Grainger's obligations under New York Stock Exchange 15 listing requirements and U.S. securities laws.
Grainger has a controlling ownership interest in MonotaRO, which is listed on the Tokyo Stock Exchange (TSE). MonotaRO's disclosure and reporting obligations under TSE listing requirements and Japanese securities laws, including the timing of such obligations, may vary from Grainger's obligations under New York Stock Exchange listing requirements and U.S. securities laws.
Regulatory, Legal and Tax Risks Grainger is subject to a complex array of laws, regulations and standards globally. Failure to comply or unforeseen developments in related contingencies such as litigation and other regulatory proceedings could adversely affect Grainger's financial condition, profitability and cash flows.
Regulatory, Legal and Tax Risks Grainger is subject to a complex array of laws, regulations and standards globally. Failure to comply or unforeseen developments in related contingencies such as litigation and other regulatory proceedings could adversely affect Grainger's financial condition, profitability, reputation, and cash flows.
For example, Grainger relies in part on Internet search engines to drive traffic to its websites, and the reach of Grainger’s eCommerce channels is impacted by how and where its websites rank in both paid and unpaid search results.
For example, Grainger relies in part on internet search engines to drive traffic to its websites, and the reach of Grainger’s eCommerce channels is impacted by how and 15 where its websites rank in both paid and unpaid search results.
While the Consolidated Financial Statements are reported in U.S. dollars, 13 the Financial Statements of Grainger’s subsidiaries outside the U.S. are prepared using the local currency as the functional currency and translated into U.S. dollars.
While the Consolidated Financial Statements are reported in U.S. dollars, the Financial Statements of Grainger’s subsidiaries outside the U.S. are prepared using the local currency as the functional currency and translated into U.S. dollars.
Grainger also may be subject to disputes and proceedings incidental to its business, including product-related claims for personal injury or illness, death, environmental or property damage or other commercial disputes, and the types of matters discussed in Note 14 to the Consolidated Financial Statements included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K.
Grainger also may be subject to disputes and proceedings incidental to its business, including product-related claims for personal injury or illness, death, environmental or property damage or other commercial disputes, and the types of matters discussed in Note 13 to the Consolidated Financial Statements included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K.
If critical information systems fail or otherwise become unavailable, Grainger’s ability to operate its eCommerce platforms, process orders, maintain proper levels of inventories, collect accounts receivable, disburse funds, manage its supply chain, monitor results of operations, and process and store team member or customer data, among other functions, could be adversely affected.
If critical information systems fail or otherwise become unavailable, Grainger’s ability to operate its digital platforms, process orders, maintain proper levels of inventories, collect accounts receivable, disburse funds, manage its supply chain, monitor results of operations, and process and store team member or customer data, among other functions, could be adversely affected.
Any such penalties could result in damage to Grainger’s reputation, increased costs of compliance and/or remediation and could adversely affect Grainger’s financial condition and results of operations.
Any such 20 penalties could result in damage to Grainger’s reputation, increased costs of compliance and/or remediation and could adversely affect Grainger’s financial condition and results of operations.
Developing, upgrading, managing or implementing new technologies, business applications, strategies and innovations may require significant investment of resources by Grainger, may result in unexpected costs and disruptions to operations, may take longer than expected, may increase Grainger's vulnerability to cyber breaches, attacks or intrusions, and may not provide all anticipated benefits.
Developing, upgrading, managing or implementing new technologies, including AI, business applications, strategies and innovations may require significant investment of resources by Grainger, may result in unexpected costs and disruptions to operations, may take longer than expected, may increase Grainger's vulnerability to cyber breaches, attacks or intrusions, and may not provide all anticipated benefits.
Grainger’s business is subject to legislative, legal, and regulatory risks and conditions specific to the countries in which it operates. In addition to Grainger’s U.S. operations, which in 2023 generated approximately 82% of its consolidated net sales, Grainger operates its business principally through wholly owned subsidiaries in Canada, Mexico, and the U.K., and its majority-owned subsidiary in Japan.
Grainger’s business is subject to legislative, legal, and regulatory risks and conditions specific to the countries in which it operates. In addition to Grainger’s U.S. operations, which in 2024 generated approximately 82% of its consolidated net sales, Grainger operates its business principally through wholly owned subsidiaries in Canada, Mexico, and the U.K., and its majority-owned subsidiary in Japan.
In addition, Grainger is exposed to foreign currency exchange rate risk with respect to the U.S. dollar relative to the local currencies of Grainger’s international subsidiaries, primarily the Japanese yen, Mexican peso, Canadian dollar, British pound sterling, Chinese renminbi and euro, arising from transactions in the normal course of business, such as sales and loans to wholly owned subsidiaries, sales to customers, purchases from suppliers, and bank loans and lines of credit denominated in foreign currencies.
In addition, Grainger is exposed to foreign currency exchange rate risk with respect to the U.S. dollar relative to the local currencies of Grainger’s international subsidiaries, primarily the Japanese yen, Mexican peso, Canadian dollar, and British pound sterling, arising from transactions in the normal course of business, such as sales and loans to wholly owned subsidiaries, sales to customers, purchases from suppliers, and bank loans and lines of credit denominated in foreign currencies.
Loss of customer, supplier, and team member information, intellectual property or other business information, or failure to comply with data privacy and security laws could, for example, disrupt operations, damage Grainger’s reputation and expose Grainger to claims from customers, suppliers, financial institutions, regulators, payment card associations, team members and others, any of which could have a material adverse effect on Grainger, including its financial condition and results of operations.
Loss of customer, supplier, and team member information, intellectual property or other business information, or failure to comply with data privacy and security laws, or failure to maintain systems or software, could, for example, disrupt operations, damage Grainger’s reputation and expose Grainger to claims from customers, suppliers, financial institutions, regulators, payment card associations, team members and others, any of which could have a material adverse effect on Grainger, including its business strategy, financial condition and results of operations.
Grainger is, and from time to time may become, party to a number of legal proceedings or governmental investigations for alleged violations of laws, rules or regulations.
Grainger is, and from time to time may become, party to legal proceedings or governmental investigations for alleged violations of laws, rules or regulations.
In addition, Grainger's inability to pass on increases in costs to customers in a timely manner, or at all, could cause Grainger's operating and administrative expenses to grow, which could result in lower gross profit margins and lower net earnings. Disruptions in Grainger’s supply chain could result in an adverse impact on results of operations.
In addition, Grainger's inability to pass on increases in costs to customers in a timely manner, or at all, could cause Grainger's operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross profit margins and lower net earnings. Disruptions in Grainger’s supply chain could result in an adverse impact on results of operations.
Grainger’s logistics or supply chain network could be disrupted by the occurrence of: one or more natural or human induced disasters, including earthquakes, tsunamis, storms, hurricanes, floods, fires, droughts, tornados and other extreme weather events or conditions; pandemic diseases or viral contagions; geopolitical events, such as war, civil unrest or terrorist attacks in a country in which Grainger operates or in which its suppliers are located; disruptions to transportation infrastructure and networks, including from transport providers or third-party work stoppages related to labor strikes or lockouts; and the imposition of measures that create barriers to or increases in costs associated with international trade.
Grainger’s logistics or supply chain network could be disrupted by the occurrence of: one or more natural or weather-related disasters, including earthquakes, tsunamis, storms, hurricanes, floods, fires, droughts, tornados and other extreme weather events or conditions; longer-term climate shifts that affect transportation infrastructure or material availability; pandemic diseases or viral contagions; geopolitical events, such as war, civil unrest or terrorist attacks in a country in which Grainger operates or in which its suppliers are located; disruptions to transportation infrastructure and networks, including from transport providers or third-party work stoppages related to labor strikes or lockouts; and the imposition of measures that create barriers to or increases in costs associated with international trade.
In addition, Grainger's systems implementations may not result in productivity improvements at the levels anticipated. Systems implementation disruption and any other IT disruption could have an adverse effect on its business.
In addition, Grainger's systems implementations may not result in productivity improvements at the levels anticipated. Systems implementation disruption and any other IT disruption could have an adverse effect on the Company.
Grainger has incurred indebtedness and may incur additional indebtedness, which could adversely affect cash flow, decrease business flexibility, or prevent Grainger from fulfilling its obligations. As of December 31, 2023, Grainger’s consolidated indebtedness was approximately $2.3 billion.
Grainger has incurred indebtedness and may incur additional indebtedness, which could adversely affect cash flow, decrease business flexibility, or prevent Grainger from fulfilling its obligations. As of December 31, 2024, Grainger’s consolidated indebtedness was approximately $2.8 billion.
If successful, those attempting to penetrate Grainger’s or its vendors’ information systems may misappropriate intellectual property or personally identifiable, credit card, confidential, proprietary or other sensitive customer, supplier, team member or business information, or cause systems disruption.
If successful, those attempting to penetrate Grainger’s or its third-party business partners’ information systems may misappropriate intellectual property or personally identifiable, credit card, confidential, proprietary or other sensitive customer, supplier, team member or business information, or cause systems disruption.
The facilities maintenance industry is highly competitive, and changes in competition and other risks could impact demand for Grainger’s products and services. Grainger competes in a variety of ways, including product assortment and availability, services offered to customers, pricing, purchasing convenience and the overall experience Grainger offers.
The facilities maintenance industry is highly competitive, and changes in competition and other risks could increase our costs, impact demand for Grainger’s products and services or impact the profitability of our business. Grainger competes in a variety of ways, including product assortment and availability, services offered to customers, pricing, purchasing convenience and the overall experience Grainger offers.
Moreover, Grainger’s operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to its business, customers, suppliers and team member, and other sensitive matters. Cyber threats are rapidly evolving and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated.
Moreover, Grainger’s operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to its business, customers, suppliers and team members, and other sensitive matters. Cybersecurity threats are rapidly evolving and some of the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated.
Qualified individuals needed to fill open positions may be in short supply in some areas. Further, changes in market compensation rates may adversely affect Grainger's labor costs. Competition for qualified team members could require Grainger to pay higher wages to attract a sufficient number of team members.
Qualified individuals needed to fill open positions may be in short supply in some areas. Further, changes in market compensation rates may adversely affect Grainger's labor costs. Competition for qualified team members could require Grainger to pay higher wages to attract a sufficient number of team members. In addition to intense competition for talent, workforce dynamics are constantly evolving.
If successful, cyber-attacks may expose Grainger to risk of loss or misuse of proprietary or confidential information or disruptions of business operations.
If successful, cybersecurity incidents may expose Grainger to risk of loss or misuse of proprietary or confidential information or disruptions of business operations.
Further, failure to successfully hire executives and key team members or adequately plan for the succession, transition, and assimilation of executive leaders and team members in key roles, or to plan for the loss of executives and key team members, could adversely affect Grainger's business results and financial condition.
Further, failure to successfully hire executives and key team members or adequately plan for the succession, transition, and assimilation of executive leaders and team members in key roles, or to plan for the loss of executives and key team members, could adversely affect Grainger's business results and financial condition. 16 Grainger’s continued success is substantially dependent on positive perceptions of Grainger’s reputation.
The inclusion of Grainger-branded products in the product assortment could subject Grainger to increased claims and litigation activity. In addition, any insurance or indemnification rights, including against the manufacturer of such products, may be insufficient or unavailable to protect Grainger against potential loss exposures. Grainger’s common stock may be subject to volatility or price declines.
In addition, any insurance or indemnification rights, including against the manufacturer of such products, may be insufficient or unavailable to protect Grainger against potential loss exposures. Grainger’s common stock may be subject to volatility or price declines.
These efforts and programs could be difficult to achieve and costly to implement, and Grainger’s actual or perceived failure to execute its ESG programs as planned could adversely affect Grainger’s reputation, business and financial performance. To be successful in the future, Grainger must continue to preserve, grow and leverage the value of Grainger’s brand.
These programs could be challenging to implement and costly to maintain, and Grainger’s actual or perceived failure to achieve its goals or uphold its commitments could adversely affect its reputation, business, and financial performance. To be successful in the future, Grainger must continue to preserve, grow and leverage the value of Grainger’s brand.
Any inability to obtain financing when needed could materially adversely affect the Company’s business, financial condition or results of operations. 20 Item 1B: Unresolved Staff Comments None.
Any inability to obtain financing when needed could materially adversely affect the Company’s business, financial condition or results of operations. 21
Grainger’s inability to adequately protect its intellectual property or successfully defend against infringement claims by others may have an adverse impact on operations. 17 Grainger’s business relies on the use, validity and continued protection of certain proprietary information and intellectual property, which includes current and future patents, trade secrets, trademarks, service marks, copyrights and confidentiality agreements as well as license and sublicense agreements to use intellectual property owned by affiliated entities or third parties.
Grainger’s business relies on the use, validity and continued protection of certain proprietary information and intellectual property, which includes current and future patents, trade secrets, trademarks, service marks, copyrights and confidentiality agreements as well as license and sublicense agreements to use intellectual property owned by affiliated entities or third parties.
Through Grainger’s sales and eCommerce channels, Grainger collects and stores personally identifiable, confidential, proprietary and other information from customers so that they may, among other things, purchase products or services, enroll in promotional programs, register on Grainger’s websites or otherwise communicate or interact with Grainger.
Through Grainger’s sales and digital channels, as well as its ordinary course of business, Grainger collects and stores personally identifiable, confidential, proprietary and other information from customers, team members, suppliers, website visitors, and other entities or individuals so that they may, among other things, purchase products or services, enroll in promotional programs, register on Grainger’s websites or otherwise communicate or interact with Grainger.
Reputational value is based in large part on perceptions of subjective qualities. Even an isolated incident, or the aggregate effect of individually insignificant incidents, can erode trust and confidence, particularly if they result in adverse publicity, governmental investigations or litigation, and as a result, could tarnish Grainger’s brand and lead to adverse effects on Grainger’s business.
An isolated incident, or the aggregate effect of individually insignificant incidents, negative or inaccurate postings, articles, or comments on social media or the internet can erode trust and confidence, particularly if they result in adverse publicity, governmental investigations or litigation, and as a result, could tarnish Grainger’s brand and lead to adverse effects on Grainger’s business.
Any of these factors could cause customers to idle or close facilities, delay purchases, reduce production levels, or experience reductions in the demand for their own products or services. 12 Any of these events could also reduce the volume of products and services these customers purchase from Grainger or impair the ability of Grainger’s customers to make full and timely payments and could cause increased pressure on Grainger’s pricing and terms of sale.
Any of these events could also reduce the volume of products and services these customers purchase from Grainger or impair the ability of Grainger’s customers to make full and timely payments and could cause increased pressure on Grainger’s pricing and terms of sale.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and may not be recognized until they are launched against a target. Grainger may be unable to anticipate these techniques or implement preventative measures.
There can be no assurance that any future incidents will not be material to Grainger's business, operations or financial condition. Techniques used to obtain unauthorized access or to sabotage systems change frequently and may not be recognized until they are launched against a target. Grainger may be unable to anticipate these techniques or implement preventative measures.
These pressures could have a material effect on Grainger’s sales and profitability. To manage these potential pressures, Grainger continuously considers the adoption of new operating initiatives, including new marketing programs, productivity improvements, inventory management and loss prevention initiatives, and other similar strategies.
To manage these potential pressures, Grainger continuously considers the adoption of new operating initiatives, including new marketing programs, productivity improvements, inventory management and loss prevention initiatives, practical applications of artificial intelligence (AI) and other similar strategies.
Downward pressure on sales prices, changes in the volume of orders, and an inability to pass higher product costs on to customers could cause Grainger’s gross profit percentage to fluctuate or decline. Grainger may not be able to pass rising product costs to customers if those customers have ready product or supplier alternatives in the marketplace.
To remain competitive, Grainger must be willing and able to respond to market pressures. Downward pressure on sales prices, changes in the volume of orders, and an inability to pass higher product costs on to customers could cause Grainger’s gross profit percentage to fluctuate or decline.
Even when Grainger is able to find alternate sources for certain products, they may cost more or require Grainger to incur higher transportation costs, which could adversely impact Grainger's profitability and financial condition.
Even when Grainger is able to find alternate sources for certain products, they may cost more or require Grainger to incur higher transportation costs, which could adversely impact Grainger's profitability and financial condition. For example, disruptions to global transportation networks, such as rising sea levels impacting ports or extreme weather damaging logistics hubs, could increase delays and costs.
Moreover, Grainger shares information with these third parties in connection with the products and services they provide to the business. Although Grainger performs risk assessments on third parties where appropriate to learn about their security program, there is a risk that the confidentiality of data held or accessed by them may be compromised.
Although Grainger performs risk assessments on third parties where Grainger deems appropriate to learn about their security program, there is a risk that the confidentiality of data held or accessed by them may be compromised or their systems may be disrupted or interrupted by threat actors.
Any breach of Grainger’s security measures or any breach, error or malfeasance of those of its third-party service providers could cause Grainger to incur significant costs to protect any customers, suppliers, team members and other parties whose information is compromised.
Further, security measures and efforts may not be effective in each instance and may be subject to human error or failures. Any breach of Grainger’s security measures or any breach, error or 19 malfeasance by its third-party business partners could cause Grainger to incur significant costs to protect any customers, suppliers, team members and other parties whose information is compromised.
Any such acceleration could have a material adverse effect on Grainger’s business, financial condition, results of operations, cash flows, and its ability to obtain financing on favorable terms in the future. In addition, Grainger may in the future seek to raise additional financing for working capital, capital expenditures, refinancing of indebtedness, share repurchases or other general corporate purposes.
Any such acceleration could have a material adverse effect on Grainger’s business, financial condition, results of operations, cash flows, and its ability to obtain financing on favorable terms in the future.
Moreover, Grainger may face threats to its information systems, for example, unauthorized access, business email compromise, viruses, malicious code, ransomware, phishing, and organized cyber-attacks.
Moreover, Grainger, and its third-party business partners, may face cybersecurity threats and cybersecurity incidents which can include unauthorized access to information systems, business email compromise, viruses, malicious code, ransomware, denial-of-service attacks, and organized cyber-attacks.
Grainger’s eCommerce channels may become subject to further rules and regulations, and changes in these rules and regulations, or their interpretation, could increase the cost of doing business and adversely affect results of operations.
Grainger’s eCommerce channels may become subject to further rules and regulations, and changes in these rules and regulations, or their interpretation, could increase the cost of doing business and adversely affect results of operations. Grainger’s inability to adequately protect its intellectual property or successfully defend against infringement claims by others may have an adverse impact on operations.
None of these incidents have been deemed to be material to Grainger and Grainger has neither incurred any material net expenses nor been materially penalized or subject to any material settlement amounts with respect to such incidents in the last three years.
Grainger has experienced certain cybersecurity incidents, and in each instance, Grainger provided notifications where required by applicable law and adopted remedial measures. None of these incidents have been deemed to be material to Grainger and Grainger has neither incurred any material net expenses nor been materially penalized or subject to any material settlement amounts with respect to such incidents.
The growth of Grainger’s eCommerce platforms exposes Grainger to additional risks which could adversely affect Grainger’s reputation, financial condition and operating results.
MonotaRO's listed securities may be subject to the same volatility, price and securities litigation risks to which Grainger's common stock is subject. Operational Risks The growth of Grainger’s eCommerce platforms exposes Grainger to additional risks which could adversely affect Grainger’s reputation, financial condition and operating results.
Although Grainger maintains insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber and information security risks, depending on the nature, location and extent of any event, such insurance coverage may be insufficient to cover all losses. Grainger has experienced certain cybersecurity incidents and in each instance Grainger provided notifications and adopted remedial measures.
Such a breach could also cause Grainger to make changes to its information systems and administrative processes to address security issues. Although Grainger maintains insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cybersecurity risks, depending on the nature, location and extent of any event, such insurance coverage may be insufficient to cover all losses.
Each year, cyber-attackers make numerous attempts to access the information stored in Grainger's information systems.
Each year, cybersecurity threat actors make numerous attempts to access the information stored in Grainger's information systems or Grainger's third-party business partners.
Grainger’s ability to pass on such increases in costs in a timely manner depends on market conditions. The inability to pass along cost increases could result in lower gross margins. In addition, higher prices could reduce demand for these products, resulting in lower sales volumes. Fluctuations in foreign currency could have an effect on reported results of operations.
In addition, higher prices could reduce demand for these products, resulting in lower sales volumes. Fluctuations in foreign currency could have an effect on reported results of operations.
Grainger’s continued success is substantially dependent on positive perceptions of Grainger’s reputation. One of the reasons customers choose to do business with Grainger and team members choose Grainger as a place of employment is the reputation that Grainger has built over many years.
One of the reasons customers choose to do business with Grainger and team members choose Grainger as a place of employment is the reputation that Grainger has built over many years. Grainger devotes time and resources to initiatives that align with its corporate values and are designed to strengthen its business and protect and preserve its reputation.
The level of demand for Grainger's products and services is influenced in multiple ways by the price and availability of raw materials and commodities, including fuel. Fluctuations in the price of fuel or increased demand for freight services, including as a result of a pandemic, could affect transportation costs.
The level of demand for Grainger's products and services is influenced in multiple ways by the price and availability of raw materials and commodities, including fuel. For example, climate-related regulations on transportation emissions could increase fuel costs, 13 thereby impacting the cost of product distribution.
As its customer base and product mix change over time, Grainger must identify new products, product lines and services that respond to industry trends and customer needs. The inability to introduce new products and services and effectively integrate them into Grainger’s existing assortment could have a negative impact on future sales growth and Grainger’s competitive position.
The inability to introduce new products and services and effectively integrate them into Grainger’s existing assortment could have a negative impact on future sales growth and Grainger’s competitive position. The inclusion of Grainger-branded products in the product assortment could subject Grainger to increased claims and litigation activity.
Changes in customer base and product mix result primarily from business acquisitions and divestitures, changes in customer demand, customer acquisitions, selling and marketing activities, competition and the increased use of eCommerce by Grainger and its competitors.
Changes in customer base and product mix result primarily from business acquisitions and divestitures, changes in customer demand, customer acquisitions, selling and marketing activities, competition and the increased use of eCommerce by Grainger and its competitors. 14 In addition, Grainger has entered, and may in the future continue to enter, into contracts with group purchasing organizations (GPOs) that aggregate the buying power of their member customers in negotiating selling prices.
MonotaRO's listed securities may be subject to the same volatility, price and securities litigation risks to which Grainger's common stock is subject. Operational Risks Interruptions in the proper functioning of information systems could disrupt operations and cause unanticipated increases in costs and/or decreases in revenues. The functioning of Grainger’s information systems is critical to the operation of its business.
Technology Risks Interruptions in the proper functioning of information systems could disrupt operations and cause unanticipated increases in costs and/or decreases in revenues. 17 The functioning of Grainger’s information systems is critical to the operation of its business. Grainger continues to invest in software, hardware and network infrastructures to effectively manage its information systems.
The recent global geopolitical and trade environment has resulted in raw material inflation and potential for increased escalation of domestic and international tariffs and retaliatory trade policies. Further changes in U.S. trade policy (including new or additional increases in duties or tariffs) and retaliatory actions by U.S. trade partners could result in a worsening of economic conditions.
Certain policies, including carbon pricing, emissions trading systems, and regulations limiting industrial emissions, may further contribute to cost fluctuations for fuel, energy, and raw materials. Further changes in U.S. trade policy (including new or additional increases in duties or tariffs) and retaliatory actions by U.S. trade partners could result in a worsening of economic conditions.
The success of Grainger's team member hiring and retention also depends on Grainger's ability to build and maintain a diverse and inclusive workplace culture that enables its team members to thrive. Generally, higher wages and benefit costs, competition for diverse talent, and the risk of an increase in team member turnover, could adversely affect Grainger's results of operations.
Generally, higher wages and benefit costs, competition for talent, and the risk of an increase in team member turnover, could adversely affect Grainger's results of operations. Moreover, changes in immigration policies may impair our ability to recruit and hire technical and professional talent globally.
There continues to be a lack of consistent climate change legislation and standards, which creates economic and regulatory uncertainty. New laws, regulations and enforcement could strain Grainger’s suppliers and result in increased compliance-related costs, which could result in higher product costs that are passed to Grainger.
New environmental laws, regulations, and enforcement could strain Grainger's suppliers and result in increased compliance-related costs, which could result in higher product costs that are passed to Grainger. For instance, California's new climate disclosure requirements and SEC-mandated climate risk reporting could increase compliance burdens and legal exposure.
Additionally, Grainger faces many risks and uncertainties beyond the Company's control, including theft, credit card fraud, and other fraudulent behavior. 14 Grainger has also increased, and expects to continue to increase, its investments in developing, managing and implementing artificial intelligence (AI), machine learning and large language model technologies.
Additionally, Grainger faces many risks and uncertainties beyond the Company's control, including theft, credit card fraud, and other fraudulent behavior.
This includes the ease of use of Grainger’s high-touch operations, eCommerce platforms and delivery of products. There are several large competitors in the industry, although most of the market is served by small local and regional competitors.
This includes the ease of use of Grainger’s high-touch operations, eCommerce platforms and delivery of products. There are several large competitors in the industry, as well as small local and regional competitors. Grainger faces competition from manufacturers (including some of its own suppliers) that sell directly to customers, wholesale distributors, catalog houses, retail enterprises and online businesses.
Grainger has been subject to unauthorized access in the past, which it deemed immaterial to its business and operations individually and in the aggregate and may be subject to other incidents in the future. There can be no assurance that any future incidents will not be material to Grainger's business, operations or financial condition.
There can be no assurance that any future incidents will not be material to Grainger’s business, operations or financial condition. The proliferation of AI may impact our industry and the markets in which we compete, and the development and use of AI presents competitive, reputational and liability risks.
In addition, Grainger has entered, and may in the future continue to enter, into contracts with group purchasing organizations (GPOs) that aggregate the buying power of their member customers in negotiating selling prices. If Grainger is unable to enter into, or sustain, contractual arrangements on a satisfactory commercial basis with GPOs, Grainger's results of operations could be adversely affected.
If Grainger is unable to enter into, or sustain, contractual arrangements on a satisfactory commercial basis with GPOs, Grainger's results of operations could be adversely affected. As its customer base and product mix change over time, Grainger must identify new products, product lines and services that respond to industry trends and customer needs.
Additionally collective bargaining or unionization of team members could decrease Grainger's operational flexibility and lead to work stoppages or slowdowns. The performance of Grainger’s stock price could impact Grainger’s use of equity-based compensation to attract and retain executives and other key team members.
If Grainger does not manage changing workforce dynamics effectively, it could materially adversely affect Grainger's culture, reputation, and operational flexibility. Additionally, collective bargaining or unionization of team members could decrease Grainger's operational flexibility and lead to work stoppages or slowdowns.
Removed
Grainger faces competition in all markets it serves from manufacturers (including some of its own suppliers) that sell directly to certain segments of the market, wholesale distributors, catalog houses, retail enterprises and online businesses. To remain competitive, Grainger must be willing and able to respond to market pressures.
Added
Additionally, climate-related policies, carbon pricing mechanisms, and regulations aimed at reducing emissions may increase energy and raw material costs, which could put additional pressure on Grainger’s margins. Inflation may also reduce demand for products, resulting in lower sales volumes.
Removed
While the use of these technologies can present significant benefits to Grainger, it also creates risks and challenges.
Added
Any of these factors could cause customers to idle or close facilities, delay purchases, reduce production levels, or experience reductions in the demand for their own products or services.
Removed
Grainger continues to invest in software, hardware and network infrastructures to effectively manage its information systems.
Added
Fluctuations in the price of fuel or increased demand for freight services could affect transportation costs. Grainger’s ability to pass on such increases in costs in a timely manner depends on market conditions. The inability to pass along cost increases could result in lower gross margins.
Removed
There can be no assurance that any future incidents will not be material to Grainger’s business, operations or financial condition. Cybersecurity incidents, including breaches of information systems security, could damage Grainger’s reputation, disrupt operations, increase costs and/or decrease revenues.
Added
Grainger may not be able to pass rising product costs to customers if those customers have ready product or supplier alternatives in the marketplace. These pressures could have a material effect on Grainger’s sales and profitability.
Removed
Such a breach could also cause Grainger to make changes to its information systems and administrative processes to address security issues.
Added
The performance of Grainger’s stock price could impact Grainger’s use of equity-based compensation to attract and retain executives and other key team members. The success of Grainger's team member hiring and retention also depends on Grainger's ability to build and maintain a workplace culture that enables all team members to have the opportunity for a fulfilling and meaningful career.
Removed
Grainger devotes time and resources to environmental, social and governance (ESG) efforts that are consistent with its corporate values and are designed to strengthen its business and protect and preserve its reputation, including programs driving environmental sustainability, ethics and corporate responsibility, strong communities, diversity, equity and inclusion, and gender equality.
Added
These efforts include maintaining high standards of product quality and safety, ethical business practices, strong customer relationships, operational reliability, and a commitment to providing a positive workplace environment.
Removed
The Organization for Economic Cooperation and Development (OECD) Pillar Two guidelines address the increasing digitization of the global economy, re-allocating taxing rights among countries. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework expected during 2024.
Added
Reputational value is based in large part on perceptions of subjective qualities.
Removed
Grainger continues to evaluate the Pillar Two Framework and its potential impact on future periods.
Added
Grainger’s disclosures related to environmental and social matters expose it to risks that could adversely affect its reputation and performance. Grainger has established and publicly announced environmental and social programs, including its efforts to address climate change, human rights, and an inclusive workplace.
Removed
Based on information to date, Grainger does not expect either the Pillar One or Two proposals to materially impact the Company’s global income tax liability or effective tax rate. 19 Grainger may be adversely impacted by the effects of climate change and may incur increased costs and experience other impacts due to new or more stringent environmental laws and regulations designed to address climate change.
Added
These statements reflect its current plans and are not guarantees that Grainger will be able to achieve them.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThere can be no assurance that any future unauthorized access to or breach of these information systems will not be material to Grainger’s business, operations or financial condition. See Part I, Item 1A: Risk Factors of this Form 10-K.
Biggest changeHowever, Grainger, or third-party service providers engaged by Grainger, may be subject to cybersecurity incidents, or other unauthorized access of information systems in the future. There can be no assurance that any future cybersecurity incident or unauthorized access to or breach of these information systems will not be material to Grainger’s business, strategy, results of operations or financial condition.
As part of its ERM oversight, the Board oversees and regularly reviews the Company’s programs and processes for cybersecurity risks, including the Company’s framework for preventing, detecting, and addressing cybersecurity incidents and identifying emerging risks both broadly and within related industries. The Company’s CTO routinely provides cybersecurity updates to the Audit Committee and information to the Board.
As part of its ERM oversight, the Board oversees and regularly reviews the Company’s programs and processes for cybersecurity risks, including the Company’s framework for preventing, detecting, and addressing cybersecurity incidents and identifying emerging risks both broadly and within related industries. The Company’s CISO routinely provides material cybersecurity updates to the Audit Committee and information to the Board. 23
The team also works to assess and manage cybersecurity risks by: (i) reviewing cyber risks with senior management, including the Senior Vice President and Chief Technology Officer (CTO); (ii) incorporating cybersecurity in its enterprise risk processes; (iii) establishing regular reviews of cybersecurity risks and mitigation efforts, including with the Audit Committee and the Board; and (iv) using third parties as needed for reviews and testing.
The team also works to assess and manage cybersecurity risks by: (i) reviewing risks from cybersecurity threats with senior management; (ii) incorporating cybersecurity in its enterprise risk processes; (iii) establishing regular reviews of cybersecurity risks and mitigation efforts, including with the Audit Committee and the Board; and (iv) using third parties as needed for reviews and testing.
Grainger has been subject to unauthorized access of systems on which certain supplier, customer, and team member information was stored, which have been deemed immaterial to our business and operations individually and in the aggregate. Grainger, or third-party service providers engaged by Grainger, may be subject to other unauthorized access of information systems in the future.
Grainger has been subject to unauthorized access of systems on which certain supplier, customer, and team member information was stored, which have been deemed immaterial to our business and operations individually and in the aggregate.
Governance The Audit Committee assists the Board in its oversight of the Company’s Enterprise Risk Management (ERM) program and processes, including with respect to cybersecurity.
See Part I, Item 1A: Risk Factors of this Form 10-K. Governance The Audit Committee assists the Board in its oversight of the Company’s Enterprise Risk Management (ERM) program and processes, including with respect to cybersecurity.
Grainger regularly identifies its enterprise risks. Grainger’s cybersecurity team reviews and updates its information security strategy and plans to align cybersecurity prioritization with the identified top enterprise risks. Grainger has developed a cybersecurity risk intake process to facilitate the identification of cybersecurity risks, including those related to third-party vendors. Identified risks are tracked by management, and incorporated into mitigation plans.
Grainger has developed a cybersecurity risk intake process to facilitate the identification of cybersecurity risks, including those related to third-party vendors. Identified risks are tracked by management, and incorporated into mitigation plans.
Item 1C: Cybersecurity Risk Management and Strategy Grainger has a cybersecurity team that works to prevent, detect, and respond to cybersecurity threats. The team has implemented processes designed to assess, identify and manage material risks and vulnerabilities to the Company’s security posture, including prioritizing and remediating such risks.
Grainger’s CISO has over 20 years of cybersecurity experience and maintains industry recognized security certifications. The cybersecurity team has implemented processes designed to assess, identify and manage material risks from cybersecurity threats and vulnerabilities to the Company’s security posture, including prioritizing and remediating such risks.
Removed
The management team engaged in the cybersecurity risk management process, including the CTO, has risk management backgrounds, certifications, and/or cyber experience in prior professional roles and at Grainger. The team maintains expertise on cyber risk management through third-party consultants, external trainings, and affiliations with relevant organizations.
Added
Item 1C: Cybersecurity Risk Management and Strategy Grainger has a dedicated cybersecurity team that works to prevent, detect, and respond to cybersecurity threats. The cybersecurity team is led by the Vice President and Chief Information Security Officer (CISO), who is responsible for assessing and managing material risks from cybersecurity threats.
Removed
Both the Board and the Audit Committee regularly review the Company’s risk assessment and management processes and policies and receive regular updates from the Company’s management team members who are responsible for the effectiveness of the Company’s ERM program.
Added
Grainger regularly identifies its enterprise risks. Grainger’s cybersecurity team reviews and updates its information security strategy and aligns plans based on cybersecurity prioritization with the identified top enterprise risks. Grainger engages with third parties in order to enhance, implement, assess and monitor its cybersecurity processes, controls, and posture.
Removed
The CTO leads an information security team that works to facilitate the protection of the Company’s information and computing assets. 21
Added
As of the date of this filing, Grainger does not believe that any risks from cybersecurity threats, including as a result of past cybersecurity incidents, have had, or are reasonably likely to have, a material adverse effect on Grainger, including its business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table includes Grainger's material facilities: Location Facility and Use (9) Size in Square Feet (in thousands) Segment U.S. (1) DCs 11,635 High-Touch Solutions N.A. U.S. (2) Branch locations 6,324 High-Touch Solutions N.A. Japan (3) DCs 3,370 Endless Assortment U.S. (4) Other facilities 3,878 High-Touch Solutions N.A.
Biggest changeThe following table includes Grainger's material facilities: Location Facility and Use (9) Size in Square Feet (in thousands) Segment U.S. (1) DCs 11,642 High-Touch Solutions N.A. U.S. (2) Branch locations 6,327 High-Touch Solutions N.A. Japan (3) DCs 3,380 Endless Assortment U.S. (4) Other facilities 3,847 High-Touch Solutions N.A.
These facilities are primarily owned. (3) Consists of four DCs that range in size from approximately 160,000 to 2.1 million square feet. These facilities are both owned and leased. Other facilities include office space that range in size from approximately 1,500 to 90,000 square feet. These facilities are primarily leased.
These facilities are primarily owned. (3) Consists of four DCs that range in size from approximately 160,000 to 2.1 million square feet. These facilities are both owned and leased. Other facilities include office space that range in size from approximately 1,000 to 90,000 square feet. These facilities are primarily leased.
(1) Consists of 21 DCs that range in size from approximately 60,000 to 1.5 million square feet, including six leased facilities that primarily manage bulk products. The remaining DCs are primarily owned. (2) Consists of 245 branches, 62 onsite and four will-call express locations. These facilities range in size from under 1,000 to 110,000 square feet.
(1) Consists of 21 DCs that range in size from approximately 60,000 to 1.5 million square feet, including six leased facilities that primarily manage bulk products. The remaining DCs are primarily owned. (2) Consists of 245 branches, 65 onsite and four will-call express locations. These facilities range in size from under 1,000 to 110,000 square feet.
Item 2: Properties As of December 31, 2023, Grainger’s owned and leased facilities totaled approximately 30.4 million square feet. Grainger owns and leases facilities primarily in the U.S., Japan, Canada (5) , Mexico (6) , Puerto Rico (7) and the U.K.
Item 2: Properties As of December 31, 2024, Grainger’s owned and leased facilities totaled approximately 30.3 million square feet. Grainger owns and leases facilities primarily in the U.S., Japan, Canada (5) , Mexico (6) , Puerto Rico (7) and the U.K.
(6) In Mexico, Grainger has 16 branch locations, two DCs and one other location which total 655,000 square feet. (7) In Puerto Rico, Grainger has three branch locations and one DC which total 95,000 square feet. (8) In the U.K., Grainger has 35 branch and other facility locations and one DC which total 705,000 square feet.
(6) In Mexico, Grainger has 15 branch locations, two DCs and one other location which total 650,000 square feet. (7) In Puerto Rico, Grainger has three branch locations and one DC which total 95,000 square feet. (8) In the U.K., Grainger has 33 branch and other facility locations and one DC which total 685,000 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3: Legal Proceedings For a description of legal proceedings, see the disclosure contained in Note 14 to the Consolidated Financial Statements included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K, which is incorporated herein by reference.
Biggest changeItem 3: Legal Proceedings For a description of legal proceedings, see the disclosure contained in Note 13 to the Consolidated Financial Statements included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−1 removed1 unchanged
Biggest change(B) Average price paid per share excludes commissions of $0.02 per share paid. (C) Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced April 28, 2021 (2021 Program). The 2021 Program authorized the repurchase of up to five million shares with no expiration date.
Biggest change(B) Average price paid per share excludes commissions of $0.02 per share paid. (C) Prior to April 28, 2024, purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced on April 28, 2021 (2021 Program).
It covers the period commencing December 31, 2018 and ending December 31, 2023. The graph assumes that the value for the investment in Grainger common stock and in each index was $100 on December 31, 2018, and that all dividends were reinvested. December 31, 2018 2019 2020 2021 2022 2023 W.W.
It covers the period commencing December 31, 2019 and ending December 31, 2024. The graph assumes that the value for the investment in Grainger common stock and in each index was $100 on December 31, 2019, and that all dividends were reinvested. December 31, 2019 2020 2021 2022 2023 2024 W.W.
Retirement Savings Plan for the benefit of the team members who participate in the plan. 23 Company Performance The fo llowing stock price performance graph compares the cumulative total return on an investment in Grainger common stock with the cumulative total return of an investment in each of the Dow Jones US Industrial Suppliers Total Stock Market Index and the S&P 500 Stock Index.
Retirement Savings Plan for the benefit of the team members who participate in the plan. 25 Company Performance The following stock price performance graph compares the cumulative total return on an investment in Grainger common stock with the cumulative total return of an investment in each of the Dow Jones US Industrial Suppliers Total Stock Market Index, which includes Grainger, and the S&P 500 Stock Index.
Dividends Grainger expects that its practice of paying quarterly dividends on its common stock will continue, although the payment of future dividends is at the discretion of Grainger’s Board of Directors and will depend upon Grainger’s earnings, capital requirements, financial condition and other factors.
Dividends Grainger expects that its practice of paying quarterly dividends on its common stock will continue, although the payment of future dividends is at the discretion of Grainger’s Board of Directors and will depend upon Grainger’s earnings, capital requirements, financial condition and other factors. Holders As of February 14, 2025, there were 496 shareholders of record of Grainger’s common stock.
(D) The difference of 21 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc.
In authorizing the 2024 Program, the Board of Directors terminated the 2021 Program. (D) The difference of 206 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information relating to Grainger's repurchase of common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased (A) (D) Average Price Paid Per Share (B) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (C) Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs Oct. 1 – Oct. 31 154,423 $708.93 154,423 1,833,521 shares Nov. 1 – Nov. 30 150,765 $787.67 150,765 1,682,756 shares Dec. 1 – Dec. 31 130,851 $819.69 130,830 1,551,926 shares Total 436,039 436,018 (A) There were no shares withheld to satisfy tax withholding obligations.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information relating to Grainger's repurchase of common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased (A) (D) Average Price Paid Per Share (B) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (C) Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs Oct. 1 – Oct. 31 11,339 $1,023.97 11,332 4,570,888 shares Nov. 1 – Nov. 30 148,340 $1,190.32 148,340 4,422,548 shares Dec. 1 – Dec. 31 241,646 $1,132.63 241,447 4,181,101 shares Total 401,325 401,119 (A) There were no shares withheld to satisfy tax withholding obligations.
Grainger, Inc. $ 100 $ 122 $ 150 $ 193 $ 210 $ 317 Dow Jones US Industrial Suppliers Total Stock Market Index 100 133 166 226 200 296 S&P 500 Stock Index 100 131 156 200 164 207
Grainger, Inc. $ 100 $ 123 $ 158 $ 172 $ 259 $ 332 Dow Jones US Industrial Suppliers Total Stock Market Index 100 125 170 151 223 260 S&P 500 Stock Index 100 118 152 125 158 197
Removed
Holders The approximate number of shareholders of record of Grainger’s common stock as of February 14, 2024, was 510 with approximately 593,729 additional shareholders holding stock through nominees.
Added
A substantially greater number of holders of Grainger common stock are "street name" or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.
Added
On April 24, 2024, Grainger's Board of Directors authorized a program for the Company to repurchase an aggregate amount of up to five million shares in the open market, through privately negotiated transactions and block transactions, pursuant to a trading plan or otherwise (2024 Program) with no expiration date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGrainger's reported and adjusted effective tax rates were 23.9% and 23.8% for the year ended December 31, 2023, respectively. 30 For the Year Ended December 31, 2022 Reported Business Divestiture (1) Adjusted % Change Adjusted % of Net Sales Adjusted (2) High-Touch Solutions N.A. $ 2,968 $ — $ 2,968 15.4% 24.3% Endless Assortment 594 — 594 19.4 21.3 Other (3) 72 21 93 (11.4) 35.4 Selling, general and administrative expenses $ 3,634 $ 21 $ 3,655 15.2 24.0 High-Touch Solutions N.A. $ 1,983 $ — $ 1,983 48.7 16.3 Endless Assortment 223 — 223 (3.8) 8.0 Other (3) 9 (21) (12) (37.3) (4.6) Operating earnings $ 2,215 $ (21) $ 2,194 41.9 14.4 Total other expense – net (69) — (69) 10.6 (0.4) Income tax provision (4) (533) — (533) 43.8 (3.5) Net earnings $ 1,613 $ (21) $ 1,592 43.0 10.5 Noncontrolling interest (66) — (66) (7.1) (0.5) Net earnings attributable to W.W.
Biggest changeGrainger, Inc. and adjusted diluted earnings per share for the twelve months ended December 31, 2024 and 2023 (in millions of dollars): 31 Twelve Months Ended December 31, 2024 Reported Adjustment (1) Adjusted % Change Reported (2) % Change Adjusted (2) Selling, general and administrative expenses High-Touch Solutions N.A. $ 3,356 $ (15) $ 3,341 Endless Assortment 663 — 663 Other (3) 102 (1) 101 Selling, general and administrative expenses $ 4,121 $ (16) $ 4,105 4.8% 5.1% Earnings High-Touch Solutions N.A. $ 2,385 $ 15 $ 2,400 Endless Assortment 260 — 260 Other (3) (8) 1 (7) Operating earnings $ 2,637 $ 16 $ 2,653 2.8% 2.4% Total other expense – net (53) — (53) Income tax provision (4) (595) (4) (599) Net earnings $ 1,989 $ 12 $ 2,001 Noncontrolling interest (80) — (80) Net earnings attributable to W.W.
Strategic Priorities The Company’s continued strategic aspiration for 2024 is to relentlessly expand Grainger’s leadership position by being the go-to partner for people who build and run safe, sustainable, and productive operations. To achieve this, each Grainger business has a set of strategic growth drivers to drive top-line revenue and MRO market outgrowth.
Strategic Priorities The Company’s continued strategic aspiration for 2025 is to relentlessly expand Grainger’s leadership position by being the go-to partner for people who build and run safe, sustainable, and productive operations. To achieve this, each Grainger business has a set of strategic growth drivers to drive top-line revenue and MRO market outgrowth.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in MD&A of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in MD&A of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022 .
The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023 .
For further information on the Company's contingencies and legal matters, see Note 14 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. 35
For further information on the Company's contingencies and legal matters, see Note 13 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. 35
For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable GAAP measures, see above "Non-GAAP Measures ." For further segment information, see Note 13 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. High-Touch Solutions N.A.
For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable GAAP measures, see "Non-GAAP Measures ." For further segment information, see Note 12 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. High-Touch Solutions N.A.
For further information regarding the Company's debt instruments and available financing sources, see Note 5 of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Total debt as a percent of total capitalization was 40.1% and 45.9%, as of December 31, 2023 and 2022, respectively.
For further information regarding the Company's debt instruments and available financing sources, see Note 5 of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Total debt as a percent of total capitalization was 42.9% and 40.1%, as of December 31, 2024 and 2023, respectively.
The Company continues to monitor economic conditions in the U.S. and globally, and the impact of macroeconomic pressures, including repercussions from changes in interest rates, currency exchange fluctuations, inflation and a potential recession on the Company’s business, customers, suppliers and other third parties.
The Company continues to monitor economic conditions in the U.S. and globally, and the impact of macroeconomic pressures, including repercussions from changes in interest rates, currency exchange fluctuations, changing inflationary environment, and a potential recession on the Company’s business, customers, suppliers and other third parties.
For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors of this Form 10-K. 25 Results of Operations In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business.
For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors of this Form 10-K. 27 Results of Operations In this section, Grainger utilizes non-GAAP (as defined below) measures where it believes it will assist users of its financial statements in understanding its business.
Goodwill and Other Intangible Assets The Company evaluates goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values.
Goodwill The Company evaluates goodwill for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values.
In the High-Touch Solutions North America (High-Touch Solutions N.A.) segment, businesses are focused on three areas: advantaged MRO solutions, differentiated sales and services, and unparalleled customer service. In the Endless Assortment segment, businesses are focused on product assortment expansion and innovative customer acquisition and retention capabilities.
The High-Touch Solutions North America (High-Touch Solutions N.A.) segment is focused on three areas: advantaged MRO solutions, differentiated sales and services, and unparalleled customer service. In the Endless Assortment segment, the business is focused on product assortment expansion and innovative customer acquisition and retention capabilities.
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.
Grainger uses its high-touch solutions and endless assortment businesses to serve customers worldwide, who rely on Grainger for products and services that enable them to run safe, sustainable and productive operations.
Share repurchases are executed at prices the Company determines appropriate subject to various factors, including market conditions and the Company's financial performance and may be affected through accelerated share repurchase programs, open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Share repurchases for 2024 are expected to be in the r ange of $900 and $1,100 million.
Share repurchases are executed at prices the Company determines appropriate subject to various factors, including market conditions and the Company's financial performance and may be affected through accelerated share repurchase programs, open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Share repurchases for 2025 are expected to be in the range of $1,150 and $1,250 million.
For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures ." The following table is included as an aid to understanding the changes in Grainger's Consolidated Statements of Earnings for the twelve months ended December 31, 2023 and 2022 (in millions of dollars).
For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable U.S. generally accepted accounting principles (GAAP) measures, see "Non-GAAP Measures ." The following table is included as an aid to understanding the changes in Grainger's Consolidated Statements of Earnings for the twelve months ended December 31, 2024 and 2023 (in millions of dollars).
The following table summarizes the Company's credit ratings as of December 31, 2023: Corporate Senior Unsecured Short-term Moody's A2 A2 P1 S&P A+ A+ A1 Uses of Liquidity Internally generated cash flows are the primary source of Grainger's working capital and growth initiatives, including 33 capital expenditures.
Both credit rating agencies currently rate the Company's corporate credit at investment grade. 33 The following table summarizes the Company's credit ratings as of December 31, 2024: Corporate Senior Unsecured Short-term Moody's A2 A2 P1 S&P A+ A+ A1 Uses of Liquidity Internally generated cash flows are the primary source of Grainger's working capital and growth initiatives, including capital expenditures.
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 affected the Company's operations and may continue to affect the Company's business, financial condition and results of operations.
Recent Events Macroeconomic Conditions The global economy continues to experience volatility and uncertainty including to the commodity, labor and transportation markets, arising from a combination of geopolitical conditions and events, and various economic and financial factors. These conditions have affected the Company's operations and may continue to affect the Company's business, financial condition and results of operations.
Dividends For the years ended December 31, 2023 and 2022, Grainger declared and paid $392 million a nd $370 million, respectively, in dividends to holders of the Company's common stock. Commitments and Other Contractual Obligations The Company's material cash requirements include the following commitments and other contractual obligations.
Dividends For the years ended December 31, 2024 and 2023, Grainger declared and paid $421 million and $392 m illion, respectively, in dividends to holders of the Company's common stock. Commitments and Other Contractual Obligations The Company's material cash requirements include the following commitments and other contractual obligations.
The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily organic constant currency net sales from the prior period for the twelve months end ed December 31, 2023 (in millions of dollars ): For the Years Ended December 31, 2023 % Change (1) 2022 % Change (1) Net sales $ 16,478 8.2 % $ 15,228 16.9 % Daily net sales (2) $ 65.2 8.6 % $ 59.5 16.5 % Daily, organic constant currency net sales (2) $ 65.8 9.5 % $ 61.0 19.3 % (1) Calculated on the basis of prior year reported net sales for the years ended December 31, 2023 and 2022.
The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily organic constant currency net sales from the prior period for the twelve months end ed December 31, 2024 (in millions of dollars ): For the Years Ended December 31, 2024 % Change (1) 2023 % Change (1) Net sales $ 17,168 4.2 % $ 16,478 8.2 % Daily net sales (2) $ 66.5 3.4 % $ 65.2 8.6 % Daily, organic constant currency net sales (2) $ 67.4 4.7 % $ 65.8 9.5 % (1) Calculated on the basis of prior year reported net sales for the years ended December 31, 2024 and 2023.
Grainger, Inc. $ 1,829 $ 1,547 18.2 11.1 % 10.2 % Diluted earnings per share: $ 36.23 $ 30.06 20.5 % (1) For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K.
Grainger, Inc. $ 1,909 $ 1,829 4.4 11.1 % 11.1 % Diluted earnings per share: $ 38.71 $ 36.23 6.8 % (1) For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K.
Debt As of December 31, 2023, the Company had outstanding debt obligations with varying maturities for an aggregate principal amount of $2,337 million, with $34 million pa ya ble within 12 months. Total future interest payments associated with the Company's outstanding debt obligations was $1,729 million, with $87 million payable within 12 months.
Debt As of December 31, 2024, the Company had outstanding debt obligations with varying maturities for an aggregate principal amount of $2,803 million, with $502 million pa ya ble within 12 months. Total future interest payments associated with the Company's outstanding debt obligations was $1,855 million, with $101 million payable within 12 months.
Grainger, Inc. and diluted earnings per share determined in accordance with GAAP to the Company's non-GAAP measures adjusted SG&A, adjusted operating earnings, adjusted net earnings attributable to W.W.
The following tables provide a reconciliation of reported SG&A expenses, operating earnings, net earnings attributable to W.W. Grainger, Inc. and diluted earnings per share determined in accordance with GAAP to the Company's non-GAAP measures adjusted SG&A, adjusted operating earnings, adjusted net earnings attributable to W.W.
As of December 31, 2023 , the Company had fixed operating lease payment obligations o f $492 million, with $87 million payab le within 12 months. 34 Critical Accounting Estimates The preparation of Grainger’s 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 require the Company’s management to make assumptions and estimates that affect the reported amounts.
As of December 31, 2024, the Company had fixed operating lease payment obligations of $437 million, with $91 million payable within 1 2 months. 34 Critical Accounting Estimates The preparation of Grainger’s 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 require the Company’s management to make assumptions and estimates that affect the reported amounts.
There were 254 and 255 sales days in the full year 2023 and 2022, respectively.
There were 256 and 254 sales days in the full year 2024 and 2023, respectively.
Adjusted diluted earnings per share was $36.67 for the year ended December 31, 2023, an increase of 24% compared to $29.66 for the same period in 2022. 27 Non-GAAP Measures Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business.
Adjusted diluted earnings per share was $38.96 for the year ended December 31, 2024, an increase of 6% compared to $36.67 for the same period in 2023. Segment Analysis In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business.
For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures." Net sales of $16,478 million for the year ended December 31, 2023 increased $1,250 million, or 8%, and on a daily, organic constant currency basis, net sales increased 10% compared to the same period in 2022.
For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measure, see below "Non-GAAP Measures." Net sales of $17,168 million for the year ended December 31, 2024 increased $690 million, or 4%, and on a daily, organic constant currency basis, net sales increased 5% compared to the same period in 2023.
Purchase Obligations Grainger had purchase obligations of approximately $1,453 million as of December 31, 2023 , which includes approximately $1,175 million payable within 12 months. Grainger's purchase obligations primarily include commitments to purchase inventory, uncompleted additions to property, buildings and equipment and other goods and services.
Purchase Obligations Grainger had purchase o bligations of approximately $1,687 million as of December 31, 2024, which includes approximately $1,021 million payable within 12 months. Grainge r's purchase obligations primarily include commitments to purchase inventory, uncompleted additions to property, buildings and equipment and other goods and services.
(2) Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. Daily, organic constant currency net sales excludes the results of E & R Industrial Sales, Inc. in the comparable prior year period post date of divestiture and excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations.
(2) Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. Daily, organic constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year foreign currency exchange rate fluctuations and the prior year period results of E&R divested in the fourth quarter of 2023.
For further discussion on the Company's gross profit, see the Segment Analysis section below. 26 Selling, general, and administrative (SG&A) expenses of $3,931 million for the year ended December 31, 2023 increased $297 million, or 8%.
For further discussion on the Company's gross profit, see the Segment Analysis section below. Selling, general, and administrative (SG&A) expenses of $4,121 million for the year ended December 31, 2024 increased $190 million, or 5%.
The following table shows reported segment results (in millions of dollars): For the Years Ended December 31, 2023 2022 % Change Net sales $ 13,267 $ 12,182 8.9 % Gross profit 5,546 4,951 12.0 Selling, general and administrative expenses 3,212 2,968 8.2 Operating earnings $ 2,334 $ 1,983 17.7 % Net sales of $13,267 million for the year ended December 31, 2023 increased $1,085 million, or 9% compared to the same period in 2022.
The following table shows reported segment results (in millions of dollars): For the Years Ended December 31, 2024 2023 % Change Net sales $ 13,720 $ 13,267 3.4 % Gross profit 5,741 5,546 3.5 Selling, general and administrative expenses 3,356 3,212 4.5 Operating earnings $ 2,385 $ 2,334 2.2 % Net sales of $13,720 million for the year ended December 31, 2024 increased $453 million, or 3% compared to the same period in 2023.
Grainger, Inc. and adjusted diluted earnings per share for the twelve months ended December 31, 2023 and 2022 (in millions of dollars): For the Year Ended December 31, 2023 Reported Business Divestiture (1) Adjusted % Change Adjusted % of Net Sales Adjusted (2) High-Touch Solutions N.A. $ 3,212 $ (26) $ 3,186 7.3% 24.0% Endless Assortment 631 — 631 6.2 21.6 Other (3) 88 — 88 (3.8) 30.0 Selling, general and administrative expenses $ 3,931 $ (26) $ 3,905 6.8 23.7 High-Touch Solutions N.A. $ 2,334 $ 26 $ 2,360 19.0 17.8 Endless Assortment 233 — 233 4.3 8.0 Other (3) (2) — (2) (81.2) (0.8) Operating earnings $ 2,565 $ 26 $ 2,591 18.1 15.7 Total other expense – net (65) — (65) (5.5) (0.4) Income tax provision (4) (597) (4) (601) 12.9 (3.6) Net earnings $ 1,903 $ 22 $ 1,925 20.9 11.7 Noncontrolling interest (74) — (74) 12.5 (0.5) Net earnings attributable to W.W.
Grainger, Inc. $ 1,909 $ 12 $ 1,921 4.4% 3.8% Diluted earnings per share $ 38.71 $ 0.25 $ 38.96 6.8% 6.2% Twelve Months Ended December 31, 2023 Reported Adjustment (1) Adjusted % Change Reported (2) % Change Adjusted (2) Selling, general and administrative expenses High-Touch Solutions N.A. $ 3,212 $ (26) $ 3,186 Endless Assortment 631 — 631 Other (3) 88 — 88 Selling, general and administrative expenses $ 3,931 $ (26) $ 3,905 8.2% 6.8% Earnings High-Touch Solutions N.A. $ 2,334 $ 26 $ 2,360 Endless Assortment 233 — 233 Other (3) (2) — (2) Operating earnings $ 2,565 $ 26 $ 2,591 15.8% 18.1% Total other expense – net (65) — (65) Income tax provision (5) (597) (4) (601) Net earnings $ 1,903 $ 22 $ 1,925 Noncontrolling interest (74) — (74) Net earnings attributable to W.W.
The Company does not expect these business exits to have a material effect on its future results of operations. 28 The following table provides a reconciliation of reported net sales growth from the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, organic constant currency net sales for the twelve months end ed December 31, 2023 (in millions of dollars): For the Years Ended December 31, High-Touch Solutions N.A.
The following table provides a reconciliation of reported net sales growth from the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, organic constant currency net sales for the twelve months end ed December 31, 2024 (in millions of dollars): For the Years Ended December 31, High-Touch Solutions N.A.
For the Years Ended December 31, % of Net Sales 2023 2022 % Change 2023 2022 Net sales (1) $ 16,478 $ 15,228 8.2 % 100.0 % 100.0 % Cost of goods sold 9,982 9,379 6.4 60.6 61.6 Gross profit 6,496 5,849 11.1 39.4 38.4 Selling, general and administrative expenses 3,931 3,634 8.2 23.8 23.9 Operating earnings 2,565 2,215 15.8 15.6 14.5 Other expense – net 65 69 (5.5) 0.4 0.4 Income tax provision 597 533 12.0 3.6 3.5 Net earnings 1,903 1,613 18.0 11.6 10.6 Less noncontrolling interest 74 66 12.5 0.5 0.4 Net earnings attributable to W.W.
For the Years Ended December 31, % of Net Sales 2024 2023 % Change 2024 2023 Net sales (1) $ 17,168 $ 16,478 4.2 % 100.0 % 100.0 % Cost of goods sold 10,410 9,982 4.3 60.6 60.6 Gross profit 6,758 6,496 4.0 39.4 39.4 Selling, general and administrative expenses 4,121 3,931 4.8 24.0 23.8 Operating earnings 2,637 2,565 2.8 15.4 15.6 Other expense – net 53 65 (18.5) 0.3 0.4 Income tax provision 595 597 (0.3) 3.5 3.6 Net earnings 1,989 1,903 4.5 11.6 11.6 Less noncontrolling interest 80 74 (8.1) 0.5 0.5 Net earnings attributable to W.W.
The Company had approximately $1.9 billion in available liquidity as of December 31, 2023. 32 Cash Flows The following table shows the Company's cash flow activity for the periods presented (in millions of dollars): For the Years Ended December 31, 2023 2022 Total cash provided by (used in): Operating activities $ 2,031 $ 1,333 Investing activities (422) (263) Financing activities (1,278) (972) Effect of exchange rate changes on cash and cash equivalents 4 (14) Increase in cash and cash equivalents $ 335 $ 84 Net cash provided by operating activities was $2,031 million and $1,333 million for the year ended December 31, 2023 and 2022, respectively.
Cash Flows The following table shows the Company's cash flow activity for the periods presented (in millions of dollars): For the Years Ended December 31, 2024 2023 Total cash provided by (used in): Operating activities $ 2,111 $ 2,031 Investing activities (520) (422) Financing activities (1,180) (1,278) Effect of exchange rate changes on cash and cash equivalents (35) 4 Increase in cash and cash equivalents $ 376 $ 335 Net cash provided by operating activities was $2,111 million and $2,031 million for the year ended December 31, 2024 and 2023, respectively.
Endless Assortment The following table shows reported segment results (in millions of dollars): For the Years Ended December 31, 2023 2022 % Change Net sales $ 2,916 $ 2,787 4.7 % Gross profit 864 817 5.7 Selling, general and administrative expenses 631 594 6.2 Operating earnings $ 233 $ 223 4.3 % Net sales of $2,916 million for the year ended December 31, 2023 increased $129 million, or 5%, and on a daily constant currency basis, increased 10% compared to the same period in 2022.
Operating earnings of $2,385 million for the year ended December 31, 2024 increased $51 million, or 2%, and adjusted operating earnings of $2,400 million increased $40 million, or 2% compared to the same period in 2023. 29 Endless Assortment The following table shows reported segment results (in millions of dollars): For the Years Ended December 31, 2024 2023 % Change Net sales $ 3,134 $ 2,916 7.5 % Gross profit 923 864 6.8 Selling, general and administrative expenses 663 631 5.1 Operating earnings $ 260 $ 233 11.6 % Net sales of $3,134 million for the year ended December 31, 2024 increased $218 million, or 7%, and on a daily constant currency basis, increased 12% compared to the same period in 2023.
The Company expects to continue to return excess capital to shareholders through share repurchases and dividends. Working Capital Working capital as of December 31, 2023 was $3,078 million, an increase of $214 million compared to $2,864 million as of December 31, 2022.
The Company expects to continue to return excess capital to shareholders through share repurchases and dividends. Working Capital Working capital as of December 31, 2024 was $3,282 million, an increase of $204 million compared to $3,078 million as of December 31, 2023. The increase was primarily due to sustained sales growth.
Endless Assortment Total Company (1) 2023 % Change (2) 2023 % Change (2) 2023 % Change (2) Reported net sales $ 13,267 8.9 % $ 2,916 4.7 % $ 16,478 8.2 % Daily impact (3) 0.2 0.4 — 0.4 0.3 0.4 Daily net sales 52.4 9.3 11.5 5.1 65.2 8.6 Foreign currency exchange (4) — — 0.6 5.3 0.6 0.9 Business divestiture (5) — 0.1 — — — — Daily, organic constant currency net sales $ 52.4 9.4 % $ 12.1 10.4 % $ 65.8 9.5 % 2022 % Change (2) 2022 % Change (2) 2022 % Change (2) Reported net sales $ 12,182 19.6 % $ 2,787 8.2 % $ 15,228 16.9 % Daily impact (3) (0.2) (0.5) — (0.5) (0.2) (0.4) Daily net sales 47.6 19.1 10.9 7.7 59.5 16.5 Foreign currency exchange (4) 0.1 0.2 1.3 12.4 1.5 2.8 Daily, organic constant currency net sales $ 47.7 19.3 % $ 12.2 20.1 % 61.0 19.3 % (1) Total Company includes Other.
Endless Assortment Total Company (1) 2024 % Change (2) 2024 % Change (2) 2024 % Change (2) Reported net sales $ 13,720 3.4 % $ 3,134 7.5 % $ 17,168 4.2 % Daily impact (3) (0.4) (0.8) (0.1) (0.9) (0.5) (0.8) Daily net sales 53.2 2.6 12.1 6.6 66.5 3.4 Foreign currency exchange (4) 0.1 0.1 0.6 5.0 0.6 0.9 Business divestiture (5) 0.3 0.5 — — 0.3 0.4 Daily, organic constant currency net sales $ 53.6 3.2 % $ 12.7 11.6 % $ 67.4 4.7 % 2023 % Change (2) 2023 % Change (2) 2023 % Change (2) Reported net sales $ 13,267 8.9 % $ 2,916 4.7 % $ 16,478 8.2 % Daily impact (3) 0.2 0.4 — 0.4 0.3 0.4 Daily net sales 52.4 9.3 11.5 5.1 65.2 8.6 Foreign currency exchange (4) — — 0.6 5.3 0.6 0.9 Business divestiture (5) — 0.1 — — — — Daily, organic constant currency net sales $ 52.4 9.4 % $ 12.1 10.4 % 65.8 9.5 % (1) Total Company includes Other.
Grainger’s non-GAAP financial measures should be considered in addition to, and not as a replacement for or as a superior measure to its most directly comparable GAAP measure and may not be comparable to similarly titled measures reported by other companies. Business Divestitures In the fourth quarter of 2023, Grainger divested E & R Industrial Sales, Inc.
Grainger’s non-GAAP financial measures should be considered in addition to, and not as a replacement for or as a superior measure to its most directly comparable GAAP measures and may not be comparable to similarly titled measures reported by other companies.
The estimates used to calculate the fair values of reporting units and indefinite-lived intangible assets involve the use of significant assumptions, estimates and judgments and changes from year to year based on operating results, market conditions, macroeconomic developments and other factors.
The estimates used to calculate the fair values of reporting units involve the use of significant assumptions, estimates and judgments and changes from year to year based on operating results, market conditions, macroeconomic developments and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and impairment for each reporting unit.
The increase compared to the prior year period was primarily due to higher treasury stock repurchases. Debt Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. Grainger has various sources of financing available.
Debt Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. Grainger has various sources of financing available.
Sources of Liquidity Cash and Cash Equivalents As of December 31, 2023 and 2022, Grainger had cash and cash equivalents of $660 million and $325 million, respectively. The increase in cash was primarily due to cash flows from operations and favorable year-over-year working capital, partially offset by higher capital expenditures and higher volume of share repurchases.
Sources of Liquidity Cash and Cash Equivalents As of December 31, 2024 and 2023, Grainger had cash and cash equivalents of $1,036 million and $660 million, respectively. The increase in cash was primarily due to cash flows from operations and issuance of new long-term debt, partially offset by continued capital expenditure spend and higher volume of share repurchases.
(3) Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis. There were 254 and 255 sales days in the full year 2023 and 2022, respectively. (4) Excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations on a daily basis.
There were 256 and 254 sales days in the full year 2024 and 2023, respectively. (4) Excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations on a daily basis. (5) Excludes the net sales results of the divested E&R business in the prior year period on a daily basis.
SG&A of $631 million for the year ended December 31, 2023 increased $37 million, or 6%, compared to the same period in 2022 . The increase was primarily due to higher marketing and payroll and benefit expenses to support the continued growth of the segment in 2023.
SG&A of $3,356 million for the year ended December 31, 2024 increased $144 million, or 5%, and adjusted SG&A of $3,341 million increased $155 million, or 5% compared to the same period in 2023. The increase was primarily due to higher marketing and payroll and benefit expenses.
Adjusted operating earnings of $2,591 million increased $397 million, or 18%, compared to the same period in 2022 due to higher gross profit dollars, partially offset by increased SG&A consistent with sales growth in 2023. Adjusted operating margin improved 130 basis points in 2023 .
Adjusted operating earnings of $2,653 million increased $62 million, or 2%, compared to the same period in 2023 due to higher gross profit dollars, partially offset by increased SG&A expense. Operating margin and adjusted operating margin decreased 20 basis points in 2024.
The increase was due to volume of 5% and price, which includes customer mix, of 4%. Gross profit of $5,546 million for the year ended December 31, 2023 increased $595 million, or 12%, and gross profit margin of 41.8% increased 120 basis points compared to the same period in 2022.
The increase was primarily due to volume. Gross profit of $5,741 million for the year ended December 31, 2024 increased $195 million, or 4%, and gross profit margin of 41.8% was flat compared to the same period in 2023.
Credit Ratings Grainger receives ratings from two independent credit ratings 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.
Credit Ratings Grainger receives ratings from two independent credit ratings agencies: Moody's Investor Service (Moody's) and Standard & Poor's (S&P).
Sales growth was offset by unfavorable currency exchange of 5% due to changes in the exchange rate be tween the U.S. dollar and the Japanese yen.
The increase was due to sales growth of 12%, driven by customer acquisition for the segment and enterprise customer growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 5% due to changes in the exchange rate between U.S. dollar and the Japanese yen.
Adjusted SG&A of $3,905 million increased $250 million, or 7%, compared to the sa me period in 2022 driven by higher marketing and payroll expenses. Adjusted SG&A leverage improved 30 basis points in 2023 . Operating earnings of $2,565 million for the year ended December 31, 2023 increased $350 million, or 16%.
Adjusted SG&A of $4,105 million increased $200 million, or 5%, compared to the same period in 2023 driven by higher marketing and payroll and benefit expenses. SG&A leverage and adjusted SG&A leverage decreased 20 basis points in 2024. Operating earnings of $2,637 million for the year ended December 31, 2024 increased $72 million, or 3%.
Grainger, Inc. $ 1,829 $ 22 $ 1,851 21.2 11.2 Diluted earnings per share: $ 36.23 $ 0.44 $ 36.67 23.6% (1) Reflects the loss on the divestiture of E&R in the fourth quarter of 2023. (2) Calculated on the basis of reported net sales for the year ended December 31, 2023.
Grainger, Inc. $ 1,829 $ 22 $ 1,851 18.2% 21.2% Diluted earnings per share $ 36.23 $ 0.44 $ 36.67 20.5% 23.6% (1) Reflects restructuring costs incurred in the second quarter of 2024 and the loss on divestiture of E&R in the fourth quarter of 2023. (2) Compared to the reported and adjusted results of the prior year period.
(3) Grainger's businesses reported in Other do not meet the criteria of a reportable segment. (4) Reflects a one-time tax benefit recognized upon the divestiture of E&R in the fourth quarter of 2023.
(5) Reflects a one-time tax benefit recognized upon the divestiture of E&R in the fourth quarter of 2023.
Liquidity and Capital Resources Grainger believes its current balances of cash and cash equivale nts, marketable securities and availability under its revolving credit facilities will be sufficient to meet its liquidity needs for the next twelve months.
Grainger's reported and adjusted effective tax rates were 23.9% and 23.8%, respectively, for the year ended December 31, 2023. 32 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.
Both High-Touch Solutions N.A. and the Endless Assortment segments contributed to sales growth in 2023. For further discussion on the Company's net sales, see the Segment Analysis section below.
Both High-Touch Solutions N.A. and the Endless Assortment segments contributed to sales growth in 2024.
Capital Expenditures In fiscal 2023, the Company's capital expenditures were $445 million and $256 million for the years ended December 31, 2023 and 2022, respectively. Capital project spending for 2024 is expected to be in the range o f $400 and $500 million. This includes continued supply chain capacity expansion and technology enhancements across the Company.
Capital project spending for 2025 is expected to be in the range of $450 and $550 million. This includes continued supply chain capacity expansion and technology enhancements across the Company. Share Repurchases For the years ended December 31, 2024 and 2023, Grainger repurchased shares of its common stock in the open market for $1,201 million and $850 million, respectively.
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.
The Company has implemented strategies designed to mitigate certain adverse effects from the impact of the changing inflationary environment while 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.
Adjusted SG&A leverage improved 30 basis points compared to the same period in 2022. Operating earnings of $2,334 million for the year ended December 31, 2023 increased $351 million, or 18%, and adjusted operating earnings of $2,360 million increased $377 million, or 19% compared to the same period in 2022.
The increase was primarily due to higher marketing expenses in 2024. SG&A leverage improved 40 basis points compared to the same period in 2023. Operating earnings of $260 million for the year ended December 31, 2024 increased $27 million, or 12%, compared to the same period in 2023.
Contingencies and Legal Matters The Company is subject to various claims and legal proceedings that arise in the ordinary course of business, the outcomes of which are inherently uncertain.
For further information on the Company's goodwill, see Note 4 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Contingencies and Legal Matters The Company is subject to various claims and legal proceedings that arise in the ordinary course of business, the outcomes of which are inherently uncertain.
Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results. Organic net sales results exclude the impact of changes in foreign currency exchange rates and results of certain divested businesses in the comparable prior year period post date of divestiture.
Non-GAAP Measures Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results.
Gross profit of $6,496 million for the year ended December 31, 2023 increased $647 million, or 11%, and gr oss profit margi n of 39.4% increased 100 basis points compared to the same period in 2022. Both segments contributed to margin expansion in 2023.
For further discussion on the Company's net sales, see the Segment Analysis section below. 28 Gross profit of $6,758 million for the year ended December 31, 2024 increased $262 million, or 4%, and gross profit margin of 39.4% was flat compared to the same period in 2023. Both segments contributed to gross profit dollar expansion in 2024.
Grainger's businesses reported in Other do not meet the criteria of a reportable segment. (2) Calculated on the basis of prior year reported net sales. Daily, organic constant currency net sales excludes the results of E&R in the comparable prior year period post date of divestiture for the year ended December 31, 2023.
Grainger's businesses reported in Other do not meet the criteria of a reportable segment. (2) Compared to net sales in the prior year period. (3) Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis.
S G&A lever age decreased 30 basis points compared to the same period in 2022. Operating earnings of $233 million for the year ended December 31, 2023 increased $10 million, or 4%, compared to the same period in 2022. The increase was due to higher gross profit dollars, partially offset by higher SG&A in 2023.
Gross profit of $923 million for the year ended December 31, 2024 increased $59 million, or 7%, and gross profit margin of 29.5% decreased 10 basis points compared to the same period in 2023. SG&A of $663 million for the year ended December 31, 2024 increased $32 million, or 5%, compared to the same period in 2023.
(E&R) and recorded a one-time pre-tax loss on the divestiture of $26 million in SG&A. In the fourth quarter of 2022, Grainger divested Cromwell's wholly owned software business in the U.K. and recorded a one-time pre-tax gain on the divestiture of $21 million in SG&A.
The Company does not expect these actions to have a material effect on its future results of operations. 30 Business Divestitures In the fourth quarter of 2023, Grainger divested E & R Industrial Sales, Inc. (E&R) and recorded a one-time pre-tax loss on the divestiture of $26 million in SG&A.
(3) Grainger's businesses reported in Other do not meet the criteria of a reportable segment. (4) Grainger's reported and adjusted effective tax rates were 24.8% and 25.1% for the year ended December 31, 2022, respectively. Segment Analysis In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business.
(3) Grainger's businesses reported in Other do not meet the criteria of a reportable segment. (4) Reflects a tax benefit related to the restructuring costs incurred in the second quarter of 2024. Grainger's reported and adjusted effective tax rates were 23.0% for the year ended December 31, 2024.
The increase compared to the prior year period primarily reflects increased U.S. supply chain investments including capacity, automation and sustainability initiatives, as well as technology enhancements across the Company. Net cash used in financing activities was $1,278 million and $972 million for the year ended December 31, 2023 and 2022, respectively.
The increase was primarily driven by continued growth in net earnings. Net cash used in investing activities was $520 million and $422 million for the year ended December 31, 2024 and 2023, respectively. The increase reflects the continued investment in U.S. supply chain capacity expansion throughout 2024.
Income tax expense of $597 million and $533 million represents effective tax rates of 23.9% and 24.8% for the years ended December 31, 2023 and 2022, respectively. The Company's effective tax rate was positively impacted by increased benefits related to stock compensation in 2023. Diluted earnings per share was $36.23 f or the year ended December 31, 2023.
The adjusted effective tax rates were 23.0% and 23.8%. The Company's effective tax rate was positively impacted from the expiration of a statute of limitation period in 2024. Diluted earnings per share was $38.71 for the year ended December 31, 2024, an increase of 7% compared to $36.23 for the same period in 2023.
Removed
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.
Added
The full extent and impact of these conditions are uncertain and cannot be predicted at this time.
Removed
(5) Excludes the results of E&R in the comparable prior year period post date of divestiture on a daily basis. 29 The following tables provide a reconciliation of reported SG&A expenses, operating earnings, net earnings attributable to W.W.
Added
Income tax provision of $595 million for the year ended December 31, 2024 decreased $2 million, compared to the same period in 2023. Adjusted income taxes of $599 million decreased $2 million compared to the same period in 2023. Grainger's effective tax rates were 23.0% and 23.9% for the years ended December 31, 2024 and 2023, respectively.
Removed
Grainger, Inc. $ 1,547 $ (21) $ 1,526 46.4 10.0% Diluted earnings per share: $ 30.06 $ (0.40) $ 29.66 49.3% (1) Reflects the gain on the divestiture of Cromwell's enterprise software business in the fourth quarter of 2022. (2) Calculated on the basis of reported net sales for the year ended December 31, 2022.
Added
SG&A leverage decreased 20 basis points and adjusted SG&A leverage decreased 30 basis points compared to the same period in 2023.
Removed
The increase was driven by freight and supply chain efficiencies in 2023. 31 SG&A of $3,212 million for the year ended December 31, 2023 increased $244 million, or 8%, and adjusted SG&A of $3,186 million increased $218 million, or 7% compared to the same period in 2022. The increase was primarily due to higher marketing and payroll expenses.
Added
The Company adjusts its reported net sales when there are differences in the number of U.S. selling days relative to the prior year period and also excludes the impact on reported net sales due to changes in foreign currency exchange rate fluctuations and results of certain divested businesses.
Removed
The increase was due to sales growth of 10%, driven by customer acquisition for the segment and ente rprise growth at MonotaRO, partially offset by declining sales at Zoro and non-core, consumer-like customers for the segment.
Added
Restructuring Actions In the second quarter of 2024, the Company recorded restructuring charges in SG&A of $15 million in the High-Touch Solutions N.A. segment and $1 million in Grainger's Other businesses. The charges consisted primarily of team member severance and benefit costs.
Removed
Gross profit of $864 million for the year ended December 31, 2023 increased $47 million, or 6%, and gross profit margin of 29.6% increased 30 basis points compared to the same period in 2022 . The increase was driven by freight efficiencies at MonotaRO partially offset by unfavorable product mix at Zoro in 2023.
Added
The Company does not expect this business exit to have a material effect on its future results of operations.
Removed
The increase compared to the prior year period was due to higher earnings and favorable changes in year-over-year working capital largely driven by sales growth, inventory management and timing of cash receipts and payments. Net cash used in investing activities was $422 million and $263 million for the year ended December 31, 2023 and 2022, respectively.
Added
The Company had approximately $2.3 billion in available liquidity as of December 31, 2024.
Removed
The increase was primarily due to sustained sales growth and inventory management driven by supply chain efficiencies compared to the prior year period. As of December 31, 2023 and 2022, the ratio of current assets to current liabilities was 2.8 and 2.5, respectively.
Added
Net cash used in financing activities was $1,180 million and $1,278 million for the year ended December 31, 2024 and 2023, respectively. The decrease in cash used in financing activities was due to the issuance of long-term debt, which includes $500 million in unsecured senior notes partially offset by higher treasury stock repurchases in 2024.
Removed
With Grainger's strategic plan to expand its distribution network, the Company completed land purchases in Oregon and Texas in the second and fourth quarters of 2023 for construction of approximately 500,000 and 1,200,000 square foot distribution centers (DC), respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed1 unchanged
Biggest changeFor debt and derivative instrument information, see Note 5 and Note 11 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K. Commodity Price Risks Grainger’s transportation costs are exposed to fluctuations in the price of fuel and some sourced products contain commodity-priced materials.
Biggest changeCommodity Price Risks Grainger’s transportation costs are exposed to fluctuations in the price of fuel and some sourced products contain commodity-priced materials.
A hypothetical 10% change in the relative value of the U.S. dollar would not materially impact the Company's net earnings for 2023. Interest Rate Risks Grainger is exposed to interest rate risk on its long-term debt. In February 2020, Grainger entered into certain derivative instrument agreements to hedge a portion of its fixed-rate long-term debt to manage this risk.
A hypothetical 10% change in the relative value of the U.S. dollar would not materially impact the Company's net earnings for 2024. Interest Rate Risks Grainger is exposed to interest rate risk on its long-term debt. In February 2020, Grainger entered into certain derivative instrument agreements to hedge a portion of its fixed-rate long-term debt to manage this risk.
For the fiscal year ended December 31, 2023, approximately 18% of the Company's net sales were denominated in a currency other than the Company's functional U.S. dollar currency. Consequently, the Company is exposed to the impact of exchange rate volatility primarily between the U.S. dollar and the Japanese yen, Mexican peso, Canadian dollar and the British pound sterling.
For the fiscal year ended December 31, 2024, approximately 18% of the Company's net sales were denominated in a currency other than the Company's functional U.S. dollar currency. Consequently, the Company is exposed to the impact of exchange rate volatility primarily between the U.S. dollar and the Japanese yen, Mexican peso, Canadian dollar and the British pound sterling.
The Company regularly monitors commodity trends and, as a broad line supplier, mitigates any material exposure to commodity price risk by having alternative sourcing plans in place that mitigate the risk of supplier concentration, passing commodity-related inflation to customers or suppliers and continuing to scale its distribution networks, including its transportation infrastructure. 36
The Company regularly monitors commodity trends and, as a broad line supplier, mitigates any material exposure to commodity price risk by having alternative sourcing plans in place that mitigate the risk of supplier concentration, passing commodity-related inflation to customers and continuing to scale its distribution networks, including its transportation infrastructure. 36
The annualized effect of a hypothetical 1 percentage point increase in interest rates on Grainger’s variable-rate debt obligations would not materially impact the Company's net earnings for 2023.
The annualized effect of a hypothetical 1 percentage point increase in interest rates on Grainger’s variable-rate debt obligations would not materially impact the Company's net earnings for 2024. For debt and derivative instrument information, see Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Form 10-K.

Other GWW 10-K year-over-year comparisons