WW Grainger GWW · USD

SEGMENT INFORMATIONThe Company routinely evaluates whether its operating and reportable segments continue to reflect the way the chief operating decision maker (CODM) evaluates the business. The determination is based on: (1) how the Company’s CODM evaluates the performance of the business, including resource allocation decisions, and (2) whether discrete financial information for each reporting segment is available. The Company considers D.G. Macpherson, its Chief Executive Officer and Chairman of the Board, its CODM.The CODM evaluates performance based on the results of the Company’s two reportable segments, High-Touch Solutions N.A. (HTSNA) and Endless Assortment (EA). These reportable segments align with Grainger's go-to-market strategies and bifurcated business models of high-touch solutions and endless assortment that generate sales primarily through the distribution of MRO products. The remaining businesses are classified as Other to reconcile to consolidated results. These businesses individually and in the aggregate do not meet the criteria of a reportable segment.The accounting policies of the Company’s reportable segments are the same as those described in the summary of significant accounting policies. For further discussion on Grainger’s accounting policies, see Note 1.All expenses directly attributable to each reportable segment are included in the operating results for each segment. Operating segment performance is evaluated by Grainger's CODM based on operating earnings as disclosed on the Company's Consolidated Statement of Earnings as the key determinant of the economic return and resource allocation among the segments. The CODM is not regularly provided and does not evaluate the segments using total asset or capital expenditure information and it is therefore not disclosed.The following is a summary of segment results for the twelve months ended December 31, 2025, 2024 and 2023 (in millions of dollars):2025High-Touch Solutions N.A.Endless AssortmentTotalNet sales(1) $13,993 $3,625 $17,618 Reconciliation of net salesOther net sales324 Total company net sales $17,942 Less:Cost of goods sold8,161 2,540 Other segment items(2)3,478 740 Segment operating earnings$2,354 $345 $2,699 Reconciliation of operating earningsOther operating earnings(204) Total company operating earnings$2,495 2024High-Touch Solutions N.A.

REVENUE Grainger serves a large number of customers in diverse industries, which are subject to different economic and market-specific factors. The Company's revenue is primarily comprised of MRO product sales and related activities.The Company's presentation of revenue by reportable segment and customer industry most reasonably depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic and market-specific factors. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. The following tables present the Company's percentage of revenue by reportable segment and by customer industry: Twelve Months Ended December 31,202520242023Customer Industry(1)High-Touch Solutions N.A.Endless AssortmentTotal Company (2)High-Touch Solutions N.A.Endless AssortmentTotal Company (2)High-Touch Solutions N.A.Endless AssortmentTotal Company (2)Manufacturing30 %30 %30 %31 %29 %31 %30 %30 %30 %Government19 %3 %15 %19 %3 %16 %19 %3 %16 %Wholesale7 %18 %9 %7 %18 %9 %7 %16 %9 %Commercial Services7 %12 %8 %7 %12 %8 %7 %12 %8 %Contractors6 %12 %7 %5 %12 %6 %5 %12 %6 %Healthcare7 %2 %6 %7 %2 %6 %7 %2 %6 %Transportation4 %2 %5 %4 %2 %4 %4 %2 %4 %Retail4 %4 %4 %4 %4 %4 %4 %4 %4 %Utilities3 %2 %3 %3 %2 %3 %3 %2 %3 %Warehousing3 %— %2 %3 %— %2 %4 %— %3 %Other(3)10 %15 %11 %10 %16 %11 %10 %17 %11 %Total net sales100 %100 %100 %100 %100 %100 %100 %100 %100 %Percent of total company revenue78 %20 %100 %80 %18 %100 %81 %18 %100 %(1)Customer industry results for the twelve months ended December 31, 2025, 2024 and 2023 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted.(2)Total Company includes Other, which includes the Cromwell business. The Cromwell business was sold in December 2025. For further details on the sale, see Note 2. Other accounted for approximately 2%, 2% and 1% of Total Company revenue for the twelve months ended December 31, 2025, 2024 and 2023, respectively.

DEBTTotal debt, including long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):As of December 31, 20252024Carrying ValueFair Value Carrying ValueFair Value4.60% senior notes due 2045 $1,000 $904 $1,000 $894 4.45% senior notes due 2034500 496 500 477 3.75% senior notes due 2046 400 338 400 332 4.20% senior notes due 2047 400 317 400 312 Japanese Yen term loans83 83 — — Debt issuance costs – net of amortization and other(21)(21)(21)(21)Long-term debt2,362 2,117 2,279 1,994 1.85% senior notes due 2025— — 500 498 Commercial paper and other126 126 (1)(1)Current maturities126 126 499 497 Total debt$2,488 $2,243 $2,778 $2,491 Revolving Credit FacilityIn October 2023, the Company entered into a five-year unsecured revolving credit facility agreement (2023 Credit Facility). Grainger may obtain loans in various currencies on a revolving basis in an aggregate amount not exceeding $1.25 billion, which may be increased up to $1.875 billion at the request of the Company, subject to obtaining additional commitments and other customary conditions. The primary purpose of the 2023 Credit Facility is to support the Company's commercial paper program and for general corporate purposes. As of December 31, 2025, there was $125 million of commercial paper outstanding and recorded as short-term debt with a weighted-average interest rate of 3.84%. There were no borrowings outstanding as of December 31, 2024.Senior NotesIn the years 2015-2024, Grainger issued $2.8 billion in unsecured long-term debt (Senior Notes) primarily to provide flexibility in funding general working capital needs, share repurchases and long-term cash requirements. The Senior Notes require no principal payments until maturity and interest is paid semi-annually. On February 18, 2025, Grainger repaid in full the principal amount of $500 million for the 1.85% Senior Notes that matured in February 2025. The related interest rate swaps with a notional value of $450 million that hedged a portion of the interest rate risk related to this debt expired on February 15, 2025.The Company incurred debt issuance costs related to the Senior Notes representing underwriting fees and other expenses. These costs were recorded as a contra-liability in Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net.

INCOME TAXES Earnings before income taxes by geographical area consisted of the following (in millions of dollars):For the Years Ended December 31,202520242023U.S.$2,065 $2,265 $2,211 Foreign365 319 289 Total$2,430 $2,584 $2,500 Income tax expense consisted of the following (in millions of dollars):For the Years Ended December 31,202520242023Current income tax expense:U.S. Federal$403 $404 $431 U.S. State86 84 100 Foreign116 89 81 Total current605 577 612 Deferred income tax (benefit) expense 17 18 (15)Total income tax expense$622 $595 $597 Income taxes paid consisted of the following (in millions of dollars):For the Years Ended December 31,202520242023U.S. Federal taxes paid$412 $428 $439 State and local taxes paid87 88 102 Foreign taxes paidJapan85 68 57 Foreign other26 22 17 Total income taxes paid$610 $606 $615 The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2025 and 2024 were as follows (in millions of dollars):As of December 31,20252024Deferred tax assets:Accrued expenses$161 $172 U.S. and foreign loss carryforwards173 82 Accrued employment-related benefits33 42 Tax credit carryforward18 20 Other38 23 Deferred tax assets423 339 Less valuation allowance(192)(100)Deferred tax assets – net of valuation allowance$231 $239 Deferred tax liabilities:Property, buildings, equipment and other capital assets$(234)$(216)Intangibles(55)(55)Inventory(12)(16)Other(13)(14)Deferred tax liabilities(314)(301)Net deferred tax liability$(83)$(62)The net deferred tax asset (liability) is classified as follows:Noncurrent assets$14 $15 Noncurrent liabilities (foreign)(97)(77)Net deferred tax liability$(83)$(62)As of December 31, 2025 and 2024, the Company had $692 million and $328 million, respectively, of gross loss carryforwards related to foreign operations and U.S. transactions. Some of the loss carryforwards may expire at various dates through 2040. The Company has recorded a valuation allowance, which represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and deferred tax assets that may not be realized. The Company's valuation allowance changed as follows (in millions of dollars):For the Years Ended December 31,20252024Balance at beginning of period$(100)$(93)Increases primarily related to foreign NOLs(3)(8)Releases primarily related to foreign NOLs46 — Foreign exchange rate changes— 1 Decrease related to U.S.

LEASESThe Company leases certain properties, buildings and equipment (including branches, warehouses, DCs and office space) under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists mainly of operating leases that expire at various dates through 2037. Information related to operating leases is as follows (in millions of dollars):As of December 31,20252024Right-of-use assetsOperating lease right-of-use$345 $371 Operating lease liabilitiesOperating lease liability73 78 Long-term operating lease liability301 327 Total operating lease liabilities$374 $405 As of December 31,20252024Weighted average remaining lease term6 years6 yearsWeighted average incremental borrowing rate2.82 %2.57 %Cash paid for operating leases$104 $96 Right-of-use assets obtained in exchange for operating lease obligations$69 $48 Rent expense was $106 million, $103 million and $102 million for 2025, 2024 and 2023, respectively. These amounts are net of sublease income of $3 million for 2025, and $2 million for 2024 and 2023.The remaining maturity of existing lease liabilities as of December 31, 2025 are as follows (in millions of dollars):YearOperating Leases2026$86 202779 202871 202959 203048 Thereafter69 Total lease payments412 Less interest38 Present value of lease liabilities$374 As of December 31, 2025 and 2024, the Company's finance leases and service contracts with lease arrangements were not material. Finance leases are reported in Property, buildings and equipment – net, and as a short and long-term finance lease liability in Accrued expenses and Other non-current liabilities.

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 risks from cybersecurity threats, including processes designed to identify and manage material 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. 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) performing pre-emptive measures to assess system vulnerabilities, including using third parties as needed for reviews and testing.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. 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 based on assessed priority and potential impact.Grainger maintains processes designed to evaluate the severity and potential business impact of cybersecurity events, including whether such events may be material. Significant cybersecurity matters are communicated to appropriate members of senior management and as warranted, to the Audit Committee and the Board in connection with their oversight of cybersecurity risk.

Portions of the registrant's definitive proxy statement to be filed in connection with the annual meeting of shareholders to be held on April 29, 2026, are incorporated by reference into Part III of this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (Form 10-K) where indicated. The registrant's definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

CAPITAL STOCKThe Company had no shares of preferred stock outstanding as of December 31, 2025 and 2024.