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What Changed
Risk factors · Feb 20, 2025 → Feb 19, 2026
58 added · 64 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
This guidance is effective for interim periods within annual periods beginning after December 15, 2027 on either a prospective or a retrospective basis, with early adoption permitted.
This guidance is effective for annual periods beginning after December 15, 2027 on either a prospective or a retrospective basis, with early adoption permitted.
This guidance is effective for annual periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods.
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, 2025 and 2024 (in millions of dollars except per share amounts): For the Years Ended December 31, % of Net Sales 2025 2024 % Change 2025 2024 Net sales (1) $ 17,942 $ 17,168 4.5 % 100.0 % 100.0 % Cost of goods sold 10,933 10,410 5.0 60.9 60.6 Gross profit 7,009 6,758 3.7 39.1 39.4 Selling, general and administrative expenses 4,514 4,121 9.5 25.2 24.0 Operating earnings 2,495 2,637 (5.4) 13.9 15.4 Other expense – net 65 53 22.6 0.3 0.3 Income tax provision 622 595 4.5 3.5 3.5 Net earnings 1,808 1,989 (9.1) 10.1 11.6 Less noncontrolling interest 102 80 27.5 0.6 0.5 Net earnings attributable to W.W.
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 excludes the results of Cromwell and Zoro U.K. in the comparable prior year period post date of divestiture and closure, respectively, for the year ended December 31, 2025.
Exiting Market in the United Kingdom In 2025, Grainger performed an assessment of its businesses in the United Kingdom (U.K.) and made the decision to exit the U.K. market in order to concentrate efforts where it can deliver the greatest long-term impact.
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% (1) Reflects the loss on sale of the Cromwell business and closure of Zoro U.K. announced in the third quarter of 2025 and completed in the fourth quarter of 2025.
The twelve months ended December 31, 2024 reflect a tax benefit related to the restructuring costs incurred in the second quarter of 2024. 33 Liquidity and Capital Resources Grainger believes its current balances of cash and cash equivalents, marketable securities and availability under its revolving credit facility, which supports the Company's commercial paper program, will be sufficient to meet its liquidity needs for the next twelve months.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which introduces a practical expedient for all entities, allowing entities to assume that current conditions as of the balance sheet date remain unchanged when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under FASB Accounting Standards Codification (ASC) Topic 606.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which modernizes the accounting for internal-use software by removing reference to prescriptive development stages and allows software development costs to be capitalized once management authorized and committed funding for the project and it is probable that the project will be completed.
The Japanese Yen term loans mature in 2035, payable in equal monthly principal installments from September 2028 through June 2035, and bear a weighted average interest rate of 1.27 %. 53 Fair Value The estimated fair value of the Company’s senior notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.
State 86 84 100 Foreign 116 89 81 Total current 605 577 612 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, 2025 2024 2023 U.S.
No longer disclosed
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).
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 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.
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.
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.
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.
Under this method, the resulting carrying value adjustments as of December 31, 2024 and 2023, are presented in Other in the table above and the estimated fair value of the interest rate swaps, based on Level 2 inputs within the fair value hierarchy, are reported on the Consolidated Balance Sheets in Other non-current liabilities. 52 The gain or loss on the interest rate swaps as well as the offsetting gain or loss on the 1.85 % Senior Notes, are recognized in the Consolidated Statements of Earnings in Interest expense – net and the effect for the twelve months ended December 31, 2024 and 2023 was not material.
Tax Uncertainties The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. 60 The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2024 2023 2022 Balance at beginning of year $ 42 $ 41 $ 38 Additions for tax positions related to the current year 3 6 4 Additions for tax positions of prior years — 1 2 Reductions for tax positions of prior years ( 1 ) ( 1 ) — Reductions due to statute lapse ( 22 ) ( 3 ) ( 2 ) Settlements, audit payments, refunds – net ( 1 ) ( 2 ) ( 1 ) Balance at end of year $ 21 $ 42 $ 41 The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties.
The increase was due to sales growth of 12%, driven by customer acquisition for the segment and enterprise customer growth at MonotaRO.
New Accounting Standards Accounting Pronouncements Recently Adopted In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
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.
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.