GRAINGER REPORTS RESULTS FOR THE FIRST QUARTER 2024

CHICAGO, April 25, 2024

First Quarter Highlights

• Delivered sales of $4.2 billion, up 3.5%, or 4.9% on a daily, organic constant currency basis
• Achieved operating margin of 15.8%, down 80 basis points
• Increased diluted EPS by $0.01 to $9.62
• Generated $661 million in operating cash flow and returned $360 million to Grainger shareholders through dividends and share repurchases
• Announced dividend increase of 10%
• Refreshed repurchase authorization for up to 5 million shares of common stock
• Reaffirming FY 2024 guidance

CHICAGO, April 25, 2024 /PRNewswire/ -- Grainger (NYSE: GWW) today reported results for the first quarter of 2024 with sales of $4.2 billion, up 3.5%, or 4.9% on a daily, organic constant currency basis, and diluted EPS of $9.62, up 0.1% compared to the first quarter of 2023. 

"Our 2024 performance so far shows that the team is focusing on what matters and living our purpose—We Keep the World Working®. We've produced solid results amidst a slow, but steady demand environment," said D.G. Macpherson, Chairman and CEO. "Looking to the remainder of the year, we are well-positioned to achieve our guidance outlook as we work to provide a flawless experience and deliver tangible value for our customers."

2024 First Quarter Financial Summary

($ in millions, except per share amounts)	Q1 2024 (1) ARIVA.DE Börsen-Geflüster Kurse W.W. Grainger 952,16 $ -0,13%	Q1 2023 (1)	Q1'24 vs. Q1'23
			Fav. / (Unfav.)
Net Salesc	$4,235	$4,091	3.5 %
Gross Profit	$1,668	$1,634	2.1 %
Operating Earnings	$669	$680	(1.6) %
Net Earnings Attributable to W.W. Grainger, Inc.	$478	$488	(2.0) %
Diluted Earnings Per Share	$9.62	$9.61	0.1 %
Gross Profit Margin	39.4 %	39.9 %	(50) bps
Operating Margin	15.8 %	16.6 %	(80) bps
Effective Tax Rate	24.2 %	23.3 %	(90) bps

Revenue
Sales in the quarter, on a reported and daily basis, increased 3.5% compared to the first quarter of 2023. Normalizing for the impact of foreign currency exchange and the Company's 2023 divestiture of its subsidiary, E & R Industrial Sales, Inc., sales on a daily, organic constant currency basis increased 4.9% compared to the first quarter of 2023.

In the High-Touch Solutions - N.A. segment, daily sales were up 3.4% compared to the first quarter of 2023, with growth in all geographies. In the Endless Assortment segment, daily sales were up 3.7%, or 10.0% on a daily, constant currency basis, compared to the first quarter of 2023. Revenue growth for the segment was driven by core customers at Zoro and enterprise customers at MonotaRO, partially offset by the continued decrease in non-core customers at Zoro.

Gross Profit Margin
Gross profit margin for the first quarter of 2024 was 39.4%, a 50-basis point decline from the first quarter of 2023. The decrease was driven by declines in both segments.

In the High-Touch Solutions - N.A. segment, gross profit margin decreased by 60 basis points over the first quarter of 2023 due primarily to negative price / cost spread partially offset by sustained freight and supply chain efficiencies.  In the Endless Assortment segment, gross profit margin declined by 30 basis points from the first quarter of 2023 as continued freight efficiencies at MonotaRO were offset by unfavorable product mix at Zoro.

Earnings
Operating earnings for the first quarter of 2024 were $669 million, down 1.6% compared to the first quarter of 2023. Operating margin in the quarter was 15.8%, an 80-basis point decrease from the first quarter of 2023 as continued investment in demand generating activities in the High-Touch Solutions - N.A. segment was partially offset by operating efficiencies at MonotaRO.

Diluted earnings per share of $9.62 in the first quarter of 2024, increased 0.1% compared to the first quarter of 2023. The decline in operating earnings was offset by a lower share count in the current year period.

Tax Rate
The first quarter 2024 effective tax rate was 24.2%, compared to 23.3% in the first quarter of 2023. The increase in the effective tax rate was primarily due to decreased stock compensation tax benefit.

Cash Flow
During the first quarter of 2024, the Company generated $661 million of cash flow from operating activities, as solid net earnings were further aided by the favorable timing of working capital. The Company invested $119 million in capital expenditures, resulting in free cash flow of $542 million. During the quarter, the Company returned $360 million to Grainger shareholders through dividends and share repurchases.

Guidance
The company is reaffirming the following guidance ranges as previously announced on February 2, 2024.

Webcast
The Company will conduct a live conference call and webcast at 11:00 a.m. ET on Thursday, April 25, 2024, to discuss the first quarter results. The webcast will be hosted by D.G. Macpherson, Chairman and CEO, and Deidra Merriwether, Senior Vice President and CFO, and can be accessed at invest.grainger.com. For those unable to participate in the live event, a webcast replay will be available for 90 days at invest.grainger.com.

About Grainger
W.W. Grainger, Inc., is a leading broad line distributor with operations primarily in North America, Japan and the United Kingdom. At Grainger, We Keep the World Working® by serving more than 4.5 million customers worldwide with products delivered through innovative technology and deep customer relationships. With 2023 sales of $16.5 billion, the Company operates two business models. In the High-Touch Solutions segment, Grainger offers approximately 2 million maintenance, repair and operating (MRO) products and services, including technical support and inventory management. In the Endless Assortment segment, Zoro.com offers customers access to more than 13 million products, and MonotaRO.com offers more than 22 million products. For more information, visit www.grainger.com.

Visit invest.grainger.com to view information about the Company, including a supplement regarding 2024 first quarter results. Additional Company information can be found on the Grainger Investor Relations website which includes the Company Snapshot and ESG report.

Safe Harbor Statement

All statements in this communication, other than those relating to historical facts, are "forward-looking statements." Forward-looking statements can generally be identified by their use of terms such as "believe," "could," "future," "guidance," "may," "predict," "prospects," "will," or "would," and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; the impact of macroeconomic pressures and geopolitical trends, changes and events; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to Grainger's eCommerce platforms; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the Internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; foreign currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; outbreaks of pandemic disease or viral contagions; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key employees; loss of key members of management or key employees; loss of operational flexibility and potential for work stoppages or slowdowns if employees unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments; and other factors that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

W.W. Grainger, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In millions of dollars, except for share and per share amounts) (Unaudited)
	Three Months Ended March 31,
	2024		2023
Net sales	$                           4,235		$                       4,091
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