10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

 Commission file number 1-5684

W.W. Grainger, Inc.

(Exact name of registrant as specified in its charter)

Illinois			36-1150280
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
100 Grainger Parkway
	Lake Forest,	Illinois	60045-5201
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (847) 535-1000             

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock	GWW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒  Accelerated Filer ☐   Non-accelerated Filer ☐   Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐  No ☒ 

There were 50,529,263 shares of the Company’s Common Stock outstanding as of October 21, 2022.

1

	TABLE OF CONTENTS
		Page
	PART I - FINANCIAL INFORMATION
Item 1:	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Earnings      for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Comprehensive Earnings      for the Three and Nine Months Ended September 30, 2022 and 2021	4
	Condensed Consolidated Balance Sheets     as of September 30, 2022 and December 31, 2021	5
	Condensed Consolidated Statements of Cash Flows     for the Nine Months Ended September 30, 2022 and 2021	6
	Condensed Consolidated Statements of Shareholders' Equity     for the Three and Nine Months Ended September 30, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4:	Controls and Procedures	29
	PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	30
Item 1A:	Risk Factors	30
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5:	Other Information	34
Item 6:	Exhibits	35
Signatures		36

2

PART I – FINANCIAL INFORMATION

Item 1: Financial Statements

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In millions of dollars and shares, except for per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net sales	$	3,942	$	3,372	$	11,426	$	9,663
Cost of goods sold	2,423		2,122		7,083		6,196
Gross profit	1,519		1,250		4,343		3,467
Selling, general and administrative expenses	916		812		2,672		2,337
Operating earnings	603		438		1,671		1,130
Other (income) expense:
Interest expense – net	25		22		70		65
Other – net	(9)		(6)		(20)		(19)
Total other expense – net	16		16		50		46
Earnings before income taxes	587		422		1,621		1,084
Income tax provision	145		107		405		271
Net earnings	442		315		1,216		813
Less net earnings attributable to noncontrolling interest	16		18		53		53
Net earnings attributable to W.W. Grainger, Inc.	$	426	$	297	$	1,163	$	760
Earnings per share:
Basic	$	8.31	$	5.68	$	22.64	$	14.48
Diluted	$	8.27	$	5.65	$	22.52	$	14.40
Weighted average number of shares outstanding:
Basic	50.8		51.8		51.0		52.1
Diluted	51.1		52.1		51.3		52.4

The accompanying notes are an integral part of these financial statements.

3

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions of dollars)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net earnings	$	442	$	315	$	1,216	813
Other comprehensive earnings (losses):
Foreign currency translation adjustments – net of reclassification to earnings	(71)		(17)		(180)		(43)
Postretirement benefit plan losses and other – net of tax benefit of $2, $1, $4, and $3, respectively	(3)		(4)		(10)		(9)
Total other comprehensive earnings (losses)	(74)		(21)		(190)		(52)
Comprehensive earnings – net of tax	368		294		1,026		761
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	16		18		53		53
Foreign currency translation adjustments	(14)		(1)		(61)		(19)
Total comprehensive earnings (losses) attributable to noncontrolling interest	2		17		(8)		34
Comprehensive earnings attributable to W.W. Grainger, Inc.	$	366	$	277	$	1,034	$	727

The accompanying notes are an integral part of these financial statements.

4

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except for share and per share amounts)

	As of
Assets	(Unaudited) September 30, 2022		December 31, 2021
Current assets
Cash and cash equivalents	$	315	$	241
Accounts receivable (less allowances for credit losses of $36 and $30, respectively)	2,158		1,754
Inventories – net	2,071		1,870
Prepaid expenses and other current assets	142		146
Total current assets	4,686		4,011
Property, buildings and equipment – net	1,409		1,424
Goodwill	363		384
Intangibles – net	222		238
Operating lease right-of-use	360		393
Other assets	161		142
Total assets	$	7,201	$	6,592
Liabilities and shareholders' equity
Current liabilities
Current maturities	$	16	$	—
Trade accounts payable	1,038		816
Accrued compensation and benefits	307		319
Operating lease liability	67		66
Accrued expenses	332		290
Income taxes payable	25		37
Total current liabilities	1,785		1,528
Long-term debt	2,294		2,362
Long-term operating lease liability	305		334
Deferred income taxes and tax uncertainties	135		121
Other non-current liabilities	120		87
Shareholders' equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding	—		—
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued	55		55
Additional contributed capital	1,299		1,270
Retained earnings	10,402		9,500
Accumulated other comprehensive losses	(225)		(96)
Treasury stock, at cost – 59,028,249 and 58,439,014 shares, respectively	(9,223)		(8,855)
Total W.W. Grainger, Inc. shareholders’ equity	2,308		1,874
Noncontrolling interest	254		286
Total shareholders' equity	2,562		2,160
Total liabilities and shareholders' equity	$	7,201	$	6,592

 The accompanying notes are an integral part of these financial statements.

5

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)

	Nine Months Ended
	September 30,
	2022		2021
Cash flows from operating activities:
Net earnings	$	1,216	$	813
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	13		12
Deferred income taxes and tax uncertainties	20		(7)
Depreciation and amortization	159		137
Net losses (gains) from sale or redemption of assets	1		(3)
Stock-based compensation	38		33
Change in operating assets and liabilities:
Accounts receivable	(487)		(298)
Inventories	(253)		(64)
Prepaid expenses and other assets	(39)		(1)
Trade accounts payable	261		167
Accrued liabilities	51		(13)
Income taxes – net	8		(42)
Other non-current liabilities	(15)		(10)
Net cash provided by operating activities	973		724
Cash flows from investing activities:
Additions to property, buildings, equipment and intangibles	(208)		(197)
Proceeds from sale or redemption of assets	7		17
Other – net	(11)		—
Net cash used in investing activities	(212)		(180)
Cash flows from financing activities:
Borrowings under lines of credit	1		—
Payments of long-term debt	—		(8)
Proceeds from stock options exercised	21		31
Payments for employee taxes withheld from stock awards	(22)		(29)
Purchases of treasury stock	(383)		(525)
Cash dividends paid	(285)		(261)
Other – net	—		2
Net cash used in financing activities	(668)		(790)
Exchange rate effect on cash and cash equivalents	(19)		(11)
Net change in cash and cash equivalents	74		(257)
Cash and cash equivalents at beginning of year	241		585
Cash and cash equivalents at end of period	$	315	$	328

The accompanying notes are an integral part of these financial statements.

6

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)

	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2021	$	55	$	1,239	$	8,779	$	(61)	$	(8,184)	$	265	$	2,093
Stock-based compensation	—		9		—		—		5		—		14
Purchases of treasury stock	—		—		—		—		(175)		—		(175)
Net earnings	—		—		238		—		—		17		255
Other comprehensive earnings (losses)	—		—		—		(20)		—		(18)		(38)
Reclassification due to the adoption of ASU 2019-12	—		—		12		—		—		—		12
Cash dividends paid ($1.53 per share)	—		—		(81)		—		—		—		(81)
Balance at March 31, 2021	$	55	$	1,248	$	8,948	$	(81)	$	(8,354)	$	264	$	2,080
Stock-based compensation	—		(1)		—		—		12		1		12
Purchases of treasury stock	—		—		—		—		(107)		(1)		(108)
Net earnings	—		—		225		—		—		18		243
Other comprehensive earnings (losses)	—		—		—		7		—		—		7
Capital contribution	—		—		—		—		—		2		2
Cash dividends paid ($1.62 per share)	—		—		(84)		—		—		(11)		(95)
Balance at June 30, 2021	$	55	$	1,247	$	9,089	$	(74)	$	(8,449)	$	273	$	2,141
Stock-based compensation	$	—	$	8	$	—	$	—	$	1	$	—	$	9
Purchases of treasury stock	—		—		—		—		(242)		—		(242)
Net earnings	—		—		297		—		—		18		315
Other comprehensive earnings (losses)	—		—		—		(20)		—		(1)		(21)
Cash dividends paid ($1.62 per share)	—		—		(85)		—		—		—		(85)
Balance at September 30, 2021	$	55	$	1,255	$	9,301	$	(94)	$	(8,690)	$	290	$	2,117

The accompanying notes are an integral part of these financial statements.

7

W.W. Grainger, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions of dollars, except for per share amounts)

(Unaudited)

	Common Stock		Additional Contributed Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Losses)		Treasury Stock		Noncontrolling Interest		Total
Balance at January 1, 2022	$	55	$	1,270	$	9,500	$	(96)	$	(8,855)	$	286	$	2,160
Stock-based compensation	—		10		—		—		3		—		13
Purchases of treasury stock	—		—		—		—		(75)		—		(75)
Net earnings	—		—		366		—		—		19		385
Other comprehensive earnings (losses)	—		—		—		(13)		—		(16)		(29)
Cash dividends paid ($1.62 per share)	—		—		(84)		—		—		—		(84)
Balance at March 31, 2022	$	55	$	1,280	$	9,782	$	(109)	$	(8,927)	$	289	$	2,370
Stock-based compensation	—		7		—		—		2		1		10
Purchases of treasury stock	—		—		—		—		(117)		(1)		(118)
Net earnings	—		—		371		—		—		18		389
Other comprehensive earnings (losses)	—		—		—		(56)		—		(31)		(87)
Cash dividends paid ($1.72 per share)	—		—		(87)		—		—		(12)		(99)
Balance at June 30, 2022	$	55	$	1,287	$	10,066	$	(165)	$	(9,042)	$	264	$	2,465
Stock-based compensation	—		12		—		—		3		—		15
Purchases of treasury stock	—		—		—		—		(184)		—		(184)
Net earnings	—		—		426		—		—		16		442
Other comprehensive earnings (losses)	—		—		—		(60)		—		(14)		(74)
Cash dividends paid ($1.72 per share)	—		—		(90)		—		—		(12)		(102)
Balance at September 30, 2022	$	55	$	1,299	$	10,402	$	(225)	$	(9,223)	$	254	$	2,562

The accompanying notes are an integral part of these financial statements.

8

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.

Basis of Presentation

The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The Condensed Consolidated Balance Sheet at December 31, 2021, has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 23, 2022 (2021 Form 10-K).

There were no material changes to the Company’s significant accounting policies from those disclosed in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2021 Form 10-K.

New Accounting Standards

Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied prospectively to contract modifications made and hedging relationships entered or evaluated on or before December 31, 2022. In October 2022, the FASB amended Topic 848, updating the sunset date from December 31, 2022 to December 31, 2024. The Company adopted this ASU on July 1, 2022 on a prospective basis and it did not have a material impact on the Consolidated Financial Statements. For further discussion on the credit agreement modifications made to the revolving credit facility, see Note 5.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update provides increased transparency of government assistance, including the disclosure of the types of assistance an entity receives, an entity's method of accounting for government assistance and the effect of the assistance on an entity's financial statements. The guidance is effective for annual periods beginning after December 15, 2021 and should be applied prospectively or retrospectively. Early adoption is permitted. The Company adopted this ASU on January 1, 2022 on a prospective basis and it did not have a material impact on the Consolidated Financial Statements and related disclosures.

9

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2 - REVENUE

Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Total service revenue accounted for approximately 1% of the Company's revenue for both the three and nine months ended September 30, 2022 and 2021.

Grainger serves a large number of customers in diverse industries, which are subject to different economic and market-specific factors. The Company's presentation of revenue by segment and 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. In addition, the segments have unique underlying risks associated with customer purchasing behaviors. In the High-Touch Solutions N.A. segment, more than two-thirds of revenue is derived from customer contracts whereas in the Endless Assortment segment, a majority of revenue is derived from non-contractual purchases.

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:

	Three Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	8	%	14	%	9	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	2	%	14	%	18	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	32	%	30	%	32	%	29	%	30	%	29	%
Retail/Wholesale	8	%	15	%	9	%	9	%	10	%	10	%
Transportation	6	%	3	%	6	%	5	%	3	%	5	%
Other (1)	13	%	19	%	14	%	14	%	22	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	79	%	19	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the three months ended September 30, 2022 and 2021.

10

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	Nine Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	9	%	15	%	10	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	3	%	14	%	19	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	31	%	30	%	31	%	30	%	29	%	29	%
Retail/Wholesale	9	%	15	%	10	%	9	%	10	%	10	%
Transportation	6	%	3	%	5	%	5	%	3	%	5	%
Other (1)	12	%	17	%	14	%	12	%	23	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	78	%	20	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the nine months ended September 30, 2022 and 2021.

Total accrued sales incentives were approximately $96 million and $73 million as of September 30, 2022 and December 31, 2021, and are reported as part of Accrued expenses.

The Company had no material unsatisfied performance obligations, contract assets or liabilities as of September 30, 2022 and December 31, 2021.

NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT

Property, buildings and equipment consisted of the following (in millions of dollars):

	As of
	September 30, 2022		December 31, 2021
Land	$	329	$	329
Building, structures and improvements	1,403		1,431
Furniture, fixtures, machinery and equipment	1,630		1,567
Property, buildings and equipment	$	3,362	$	3,327
Less accumulated depreciation and amortization	1,953		1,903
Property, buildings and equipment – net	$	1,409	$	1,424

11

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS

The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators during the three and nine months ended September 30, 2022. As such, quantitative assessments were not required.     

The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars):

	High-Touch Solutions N.A.		Endless Assortment		Other		Total
Balance at January 1, 2021	$	321	$	70	$	—	$	391
Translation	—		(7)		—		(7)
Balance at December 31, 2021	321		63		—		384
Translation	(10)		(11)		—		(21)
Balance at September 30, 2022	$	311	$	52	$	—	$	363

    

The cumulative goodwill impairments as of September 30, 2022, were $137 million and consisted of $32 million within High-Touch Solutions N.A. and $105 million in Other.

There were no impairments to goodwill for the three and nine months ended September 30, 2022 or the year ended December 31, 2021.

The balances in Intangible assets – net are as follows (in millions of dollars):

		As of
		September 30, 2022						December 31, 2021
	Weighted average life	Gross carrying amount		Accumulated amortization/impairment		Net carrying amount		Gross carrying amount		Accumulated amortization/impairment		Net carrying amount
Customer lists and relationships	11.7 years	$	215	$	177	$	38	$	221	$	176	$	45
Trademarks, trade names and other	14.3 years	33		24		9		36		24		12
Non-amortized trade names and other	Indefinite	20		—		20		25		—		25
Capitalized software	4.2 years	554		399		155		525		369		156
Total intangible assets	7.0 years	$	822	$	600	$	222	$	807	$	569	$	238

12

W.W. Grainger, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5 - DEBT

Total debt, including long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):

	As of
	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	899	$	1,000	$	1,284
1.85% senior notes due 2025	500		468		500		509
4.20% senior notes due 2047	400		335		400		492
3.75% senior notes due 2046	400		314		400		459
Japanese yen term loan	62		62		78		78
Other	(31)		(31)		7		7
Subtotal	2,331		2,047		2,385		2,829
Less current maturities	(16)		(16)		—		—
Debt issuance costs and discounts – net of amortization	(21)		(21)		(23)		(23)
Long-term debt	$	2,294	$	2,010	$	2,362	$	2,806

Revolving Credit Facility

In August 2022, the Company entered into a First Amendment (the Amendment) to its existing five-year unsecured credit agreement originally entered into in February 2020. The Amendment changes the benchmark rate for borrowings denominated in U.S. and foreign currencies from LIBOR to certain alternative benchmark rates. This includes benchmark rates based on the Euro Interbank Offered Rate (EURIBOR) for borrowings denominated in Euros, the Canadian Dollar Offer Rate (CDOR) for borrowings denominated in Canadian dollars, the Sterling Overnight Index Average (SONIA) for borrowings denominated in sterling and Secured Overnight Financing Rate (SOFR) for borrowings denominated in U.S. dollars. The Amendment also updates certain other provisions regarding successor interest rates to LIBOR.

Senior Notes

In the years 2015-2020, Grainger issued $2.3 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.

The Company incurred debt issuance costs related to its Senior Notes of approximately $29 million, representing underwriting fees and other expenses, that were recorded as a contra-liability within Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net.

The Company uses interest rate swaps to manage the risks associated with its 1.85% Senior Notes. These swaps were designated for hedge accounting treatment as fair value hedges. The resulting carrying value adjustments as of September 30, 2022 and December 31, 2021, are presented within Other in the table above. For further discussion on the Company's hedge accounting policies and derivative instruments, see Note 6.

Term Loan

In August 2020, MonotaRO entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center (DC) network. As of September 30, 2022 and December 31, 2021, the carrying amount of the term loan, including current maturities due within one year, was $62 million and $78 million, respectively. The term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024 and bears an average interest of 0.05%.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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.

For further information on the Company’s debt instruments, see Note 6 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2021 Form 10-K.

NOTE 6 - DERIVATIVE INSTRUMENTS

The Company maintains various agreements with bank counterparties that permit the Company to enter into “over-the-counter” derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates on its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes.

Cash Flow Hedges

The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of Accumulated other comprehensive earnings (losses) (AOCE) and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of September 30, 2022 and December 31, 2021 was approximately $34 million.

The effect of the Company’s cash flow hedges on the Condensed Consolidated Statements of Earnings in Other – net and AOCE for the three and nine months ended September 30, 2022 and 2021 was not material.

Fair Value Hedges

The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swaps, along with the gain or loss on the hedged item, is recorded in earnings under the same line item, Interest expense – net. The notional amount of the Company’s outstanding fair value hedges as of September 30, 2022 and December 31, 2021 was $500 million.

The effect of the Company's fair value hedges on the Condensed Consolidated Statements of Earnings in Interest expense – net for the three and nine months ended September 30, 2022 and 2021, respectively, is as follows (in millions of dollars):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Gain or (loss):
Interest rate swaps:
Hedged item	$	11	$	3	$	36	$	12
Derivatives designated as hedging instrument	$	(11)	$	(3)	$	(36)	$	(12)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The fair value and carrying amounts of outstanding derivative instruments on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively, were as follows (in millions of dollars):

		As of
		September 30, 2022		December 31, 2021
	Balance Sheet Classification	Fair Value and Carrying Amounts
Cross-currency swap	Prepaid expenses and other current assets	$	1	$	—
	Other non-current liabilities	$	—	$	2
Interest rate swaps	Other assets	$	—	$	1
	Other non-current liabilities	$	35	$	—

The carrying amount of the liability hedged by the interest rate swaps recorded in Long-term debt, including the cumulative amount of fair value hedging adjustments, as of September 30, 2022 and December 31, 2021 totaled $465 million and $501 million, respectively.

Fair Value

The estimated fair values of the Company's derivative instruments were based on quoted market forward rates, which are classified as Level 2 inputs within the fair value hierarchy and reflect the present value of the amount that the Company would pay for contracts involving the same notional amounts and maturity dates. No adjustments were required during the current period to reflect the counterparty’s credit risk or the Company’s own nonperformance risk.

NOTE 7 - DIVIDEND

On October 26, 2022, the Company’s Board of Directors declared a quarterly dividend of $1.72 per share, payable December 1, 2022, to shareholders of record on November 14, 2022.     

NOTE 8 - SEGMENT INFORMATION

Grainger's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The remaining international businesses, which include the Cromwell business, 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.

Corporate costs are allocated to each reportable segment based on benefits received. Additionally, intersegment sales transactions, which are sales between Grainger businesses in separate reportable segments, are eliminated within the segment to present only the impact of sales to external customers. Service fees for intersegment sales from the High-Touch Solutions N.A. segment to the Endless Assortment segment are included in each segment's Selling, general and administrative expenses (SG&A) and are eliminated in consolidation.

Following is a summary of segment results (in millions of dollars):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,180	$	550	$	2,663	$	387	$	9,111	$	1,506	$	7,558	$	975
Endless Assortment	701		58		646		59		2,117		175		1,913		172
Other	61		(5)		63		(8)		198		(10)		192		(17)
Total Company	$	3,942	$	603	$	3,372	$	438	$	11,426	$	1,671	$	9,663	$	1,130

The Company is a broad line distributor of MRO products and services. Products are regularly added and removed from the Company's product assortment. Accordingly, it would be impractical to provide sales information by product

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

category due to the way the business is managed, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked.

Assets for reportable segments are not disclosed. This information is not regularly reviewed by the Company's Chief Operating Decision Maker.

NOTE 9 - CONTINGENCIES AND LEGAL MATTERS

From time to time the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties.

As previously disclosed, beginning in the fourth quarter of 2019, Grainger, KMCO, LLC (KMCO) and other defendants have been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO chemical refinery located in Crosby, Harris County, Texas on April 2, 2019. The complaints in which Grainger has been named, which to date encompass approximately 186 plaintiffs, seek recovery of compensatory and other damages and relief in relation to personal injury, including one death and various other alleged injuries. On May 8, 2020, KMCO filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas for relief under Chapter 7 of Title 11 of the United States Bankruptcy Court in the case KMCO, LLC, No. 20-60028. As a result of the Chapter 7 proceedings, the claims against KMCO in the Harris County lawsuits were stayed. Effective January 1, 2021, the Bankruptcy Court lifted the stay with respect to KMCO. In the product liability related cases, the Harris County District Court has decided to conduct bellwether trials involving a subset of plaintiffs the Court believes are representative of the parties' claims and defenses. The first such trial is scheduled for mid-January 2023 and will include six plaintiffs. Additional trials may follow after the resolution of this initial trial.

On December 16, 2020, KMCO, the trustee of its estate and ORG Chemical Holdings, LLC, KMCO’s parent company (ORG), filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, which seeks unspecified damages (the KMCO Case). On April 1, 2021, 24 individual plaintiffs filed a petition in intervention seeking to be added as plaintiffs in the KMCO Case and seeking unspecified damages. On March 24, 2021, Indian Harbor Insurance Company, together with other insurance companies and underwriters, filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, seeking reimbursement of insurance payments made to or on behalf of KMCO and ORG, the insured parties under their respective policies, and other damages.

Grainger is investigating each of the various claims against the Company relating to the KMCO chemical refinery incident and intends to contest these matters vigorously.

Also, as a government contractor selling to federal, state and local governmental entities, the Company may be subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration, pricing and product compliance.

From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products manufactured by third parties purportedly distributed by the Company. While several lawsuits have been dismissed in the past based on the lack of product identification, if a specific product distributed by the Company is identified in any pending or future lawsuits, the Company will seek to exercise indemnification remedies against the product manufacturer to the extent available. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope, coverage and the costs of defense, of lawsuits involving claims of exposure to asbestos. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in these lawsuits.

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(Unaudited)

While the Company is unable to predict the outcome of any of these proceedings and other matters, it believes that their ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial condition or results of operations.

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CONDITION AND RESULTS OF OPERATIONS

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of W.W. Grainger, Inc. (Grainger or Company) as it is viewed by the Company. The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2021 included in the Company's 2021 Form 10-K and the Condensed Consolidated Financial Statements and accompanying notes included in Part I, Item 1: Financial Statements of this Form 10-Q.

Percentage figures included in this section have not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in the Company's Condensed Consolidated Financial Statements or in the associated text.

General

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and the U.K. 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.

Strategic Priorities and Recent Events

The Company continues to adhere to its purpose to keep the world working while using its core principles as the framework for expanding Grainger’s leadership position and ensuring Grainger is the go-to-partner for building and running safe, sustainable and productive operations.

For a discussion of the Company’s strategic priorities for 2022, see Part 1, Item 1: Business and Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations (Overview) in the Company’s 2021 Form 10-K.

Inflation Reduction Act of 2022

In August 2022, the Inflation Reduction Act of 2022 (IRA) was signed into United States (U.S.) law. Under the IRA, there is a new 15% corporate minimum tax and a new 1% excise tax on stock repurchases, effective after December 31, 2022. In addition, the IRA contains provisions relating to climate change, energy and health care. Based on Grainger's current analysis of the provisions, the Company does not anticipate a material impact to the Consolidated Financial Statements.

Russia’s Invasion of Ukraine

In February 2022, Russia invaded Ukraine. In response to the conflict, the U.S. and other countries have implemented economic and other sanctions. While Grainger has limited direct exposure in Russia and Ukraine, the Company continues to monitor any broader impact on the global economy, including with respect to inflation, supply chains and fuel prices. The full impact of the conflict on the Company’s business and financial results remains uncertain and will depend on the severity and duration of the conflict and its impact on global and regional economic conditions. The Company does not currently expect significant disruption to its overall business resulting from the conflict.

Inflationary Cost Environment and Macroeconomic Pressures

In combination with the economic recovery of the ongoing COVID-19 pandemic, the global economy continues to experience volatile disruptions including to the commodity, labor and transportation markets. These disruptions have contributed to an inflationary environment which has affected, and may continue to affect, the price and availability of certain products and services necessary for the Company's operations. Such disruptions have impacted, and may continue to impact, the Company's business, financial condition and results of operations. As a result of continued inflation, the Company has implemented strategies designed to mitigate certain adverse effects of higher costs during 2022 while also remaining market price competitive.

The Company continues to monitor economic conditions in the U.S. and globally, and the impact of macroeconomic pressures, including rising interest rates, fluctuating currency exchange rates and recession fears, on the

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CONDITION AND RESULTS OF OPERATIONS

Company’s business, customers, suppliers and other third parties. Historically, the Company’s broad and diverse customer base and the nondiscretionary nature of the Company’s products to its customers has helped it perform well in the industrial MRO market in recessionary periods. The full extent and impact of these conditions are uncertain and cannot be predicted at this time.

For further discussion of the Company's risks and uncertainties, see Part II, Item 1A: Risk Factors of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022 (First Quarter Form 10-Q) and Part I, Item 1A: Risk Factors in the Company’s 2021 Form 10-K.

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Results of Operations –Three Months Ended September 30, 2022

The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings (in millions of dollars):

	Three Months Ended September 30,
					Percent Increase/(Decrease) from Prior Year		As a Percent of Net Sales
	2022		2021				2022		2021
Net sales (1)	$	3,942	$	3,372	16.9	%	100.0	%	100.0	%
Cost of goods sold	2,423		2,122		14.2		61.5		62.9
Gross profit	1,519		1,250		21.5		38.5		37.1
SG&A	916		812		12.8		23.2		24.1
Operating earnings	603		438		37.6		15.3		13.0
Other expense – net	16		16		6.8		0.4		0.5
Income tax provision	145		107		34.4		3.7		3.2
Net earnings	442		315		40.3		11.2		9.3
Noncontrolling interest	16		18		(11.4)		0.4		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	426	$	297	43.4		10.8		8.8
Diluted earnings per share:	$	8.27	$	5.65	46.4	%
(1) For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q.

The following table is included as an aid to understanding the changes in Grainger's total net sales and daily sales from the prior period to the most recent period (in millions of dollars):

	Three Months Ended September 30,
	2022			2021
Net sales	$	3,942		$	3,372
$ Change from prior-year period	570			354
% Change from prior-year period	16.9		%	11.7		%
Daily sales (1)	$	61.6		$	52.7
$ Change from prior-year period	8.9			5.5
% Change from prior-year period	16.9		%	11.7		%
Daily sales impact of currency fluctuations	(3.4)		%	0.1		%
(1) Daily sales are defined as the total net sales for the period divided by the number of U.S. selling days in the period. There were 64 sales days in both the three months ended September 30, 2022 and 2021.

Net sales of $3,942 million for the three months ended September 30, 2022 increased $570 million, or 16.9%, compared to the same period in 2021. The increase in net sales was due to growth in the High-Touch Solutions N.A. and Endless Assortment segments. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $1,519 million for the three months ended September 30, 2022 increased $269 million, or 21%, compared to the same period in 2021. Gross profit margin of 38.5% increased 1.4 percentage points. The increase

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was driven by favorability in the High-Touch Solutions N.A. and Endless Assortment segments. For further discussion on the Company's gross profit, see the Segment Analysis section below.

SG&A of $916 million for the three months ended September 30, 2022 increased $104 million, or 13%, compared to the same period in 2021. The increase was primarily due to higher payroll, marketing and variable compensation expenses.

Operating earnings of $603 million for the three months ended September 30, 2022 increased $165 million, or 38%, compared to the same period in 2021.

Income taxes of $145 million for the three months ended September 30, 2022 increased $38 million, or 34%, compared to the same period in 2021. The increase was primarily driven by higher taxable operating earnings for the third quarter of 2022. Grainger's effective tax rates were 24.7% and 25.5% for the three months ended September 30, 2022 and 2021, respectively. The decrease in the effective tax rate was primarily due to the mix of the Company's foreign earnings and increased stock compensation tax benefit.

Net earnings of $426 million attributable to W.W. Grainger, Inc. for the three months ended September 30, 2022 increased $129 million, or 43%, compared to the same period in 2021.

Diluted earnings per share was $8.27 for the three months ended September 30, 2022, an increase of 46% compared to $5.65 for the same period in 2021.

Segment Analysis

For further segment information, see Note 8 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.

High-Touch Solutions N.A.

The following table shows reported segment results (in millions of dollars):

	Three Months Ended September 30,
	2022		2021		Percent Increase
Net sales	$	3,180	$	2,663	19.4	%
Gross profit	$	1,291	$	1,048	23.2	%
SG&A	$	741	$	661	12.1	%
Operating earnings	$	550	$	387	42.1	%

Net sales of $3,180 million for the three months ended September 30, 2022 increased $517 million, or 19.4%, compared to the same period in 2021. The increase was due to price, which includes customer mix, of 12.1% driven by price realization and volume, which includes product mix, of 7.5% due to sales growth in all geographies, partially offset by unfavorable foreign exchange of 0.2%.

Gross profit of $1,291 million for the three months ended September 30, 2022 increased $243 million, or 23%, compared to the same period in 2021. Gross profit margin of 40.6% increased 1.2 percentage points. The increase was driven by improved product mix and favorable price cost spread due to timing.

SG&A of $741 million for the three months ended September 30, 2022 increased $80 million, or 12%, compared to the same period in 2021. The increase was primarily due to higher payroll, marketing and variable compensation expenses. SG&A leverage improved by 1.5 percentage points.

Operating earnings of $550 million for the three months ended September 30, 2022 increased $163 million, or 42%, compared to the same period in 2021.

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Endless Assortment

The following table shows reported segment results (in millions of dollars):

	Three Months Ended September 30,
	2022		2021		Percent Increase/ (Decrease)
Net sales	$	701	$	646	8.6	%
Gross profit	$	209	$	183	13.6	%
SG&A	$	152	$	124	21.4	%
Operating earnings	$	58	$	59	(3.0)	%

Net sales of $701 million for the three months ended September 30, 2022 increased $55 million, or 8.6%, compared to the same period in 2021. The increase was due to sales growth of 23.7%, driven by strong new customer acquisition and repeat business, as well as enterprise customer growth at MonotaRO, partially offset by unfavorable foreign exchange of 15.1% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $209 million for the three months ended September 30, 2022 increased $26 million, or 14%, compared to the same period in 2021. Gross profit margin of 29.8% increased 1.3 percentage points compared to the same period in 2021. The increase was driven by freight efficiencies at MonotaRO and business unit mix.

SG&A of $152 million for the three months ended September 30, 2022 increased $28 million, or 21%, compared to the same period in 2021. The increase was primarily driven by higher payroll and benefits, marketing and occupancy expenses. SG&A leverage decreased by 2.2 percentage points.

Operating earnings of $58 million for the three months ended September 30, 2022 decreased $1 million, or 3%, compared to the same period in 2021.

Other

Net sales of $61 million for the three months ended September 30, 2022 decreased $2 million, or 3.0%, compared to the same period in 2021.

Operating losses of $5 million for the three months ended September 30, 2022 improved $3 million, or 48%, compared to the same period in 2021.

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Results of Operations – Nine Months Ended September 30, 2022

The following table is included as an aid to understanding the changes in Grainger's total net sales and daily sales from the prior period to the most recent period (in millions of dollars):

	Nine Months Ended September 30,
					Percent Increase from Prior Year		As a Percent of Net Sales
	2022		2021				2022		2021
Net sales (1)	$	11,426	$	9,663	18.2	%	100.0	%	100.0	%
Cost of goods sold	7,083		6,196		14.3		62.0		64.1
Gross profit	4,343		3,467		25.3		38.0		35.9
SG&A	2,672		2,337		14.3		23.4		24.2
Operating earnings	1,671		1,130		47.9		14.6		11.7
Other expense – net	50		46		11.3		0.4		0.5
Income tax provision	405		271		49.3		3.5		2.8
Net earnings	1,216		813		49.5		10.7		8.4
Noncontrolling interest	53		53		0.2		0.5		0.5
Net earnings attributable to W.W. Grainger, Inc.	$	1,163	$	760	52.9		10.2		7.9
Diluted earnings per share:	$	22.52	$	14.40	56.4	%
(1) For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q.

The following table is included as an aid to understanding the changes in Grainger's total net sales and daily sales from the prior period to the most recent period (in millions of dollars):

	Nine Months Ended September 30,
	2022			2021
Net sales	$	11,426		$	9,663
$ Change from prior-year period	1,763			807
% Change from prior-year period	18.2		%	9.1		%
Daily sales (1)	$	59.5		$	50.6
$ Change from prior-year period	8.9			4.5
% Change from prior-year period	17.6		%	9.7		%
Daily sales impact of currency fluctuations	(2.5)		%	0.7		%
(1) Daily sales are defined as the total net sales for the period divided by the number U.S. selling days in the period. There were 192 and 191 sales days in the nine months ended September 30, 2022 and 2021, respectively.

Net sales of $11,426 million for the nine months ended September 30, 2022 increased $1,763 million, or 18.2%, and on a daily basis, net sales increased 17.6% compared to the same period in 2021. The increase in net sales was due to growth in the High-Touch Solutions N.A. and Endless Assortment segments. For further discussion on the Company's net sales, see the Segment Analysis section below.

Gross profit of $4,343 million for the nine months ended September 30, 2022 increased $876 million, or 25%, compared to the same period in 2021. Gross profit margin of 38.0% increased 2.1 percentage points. The increase

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was driven by favorability in the High-Touch Solutions N.A. and Endless Assortment segments. For further discussion on the Company's gross profit, see the Segment Analysis section below.

SG&A of $2,672 million for the nine months ended September 30, 2022 increased $335 million, or 14%, compared to the same period in 2021. The increase was primarily due to higher marketing, payroll and variable compensation expenses.

Operating earnings of $1,671 million for the nine months ended September 30, 2022 increased $541 million, or 48%, compared to the same period in 2021.

Income taxes of $405 million for the nine months ended September 30, 2022 increased $134 million or 49%, compared to the same period in 2021. The increase was primarily driven by higher taxable operating earnings for the nine months ended September 30, 2022. Grainger's effective tax rates were 25.0% for both the nine months ended September 30, 2022 and 2021.

Net earnings of $1,163 million attributable to W.W. Grainger, Inc. for the nine months ended September 30, 2022 increased $403 million, or 53%, compared to the same period in 2021.

Diluted earnings per share was $22.52 for the nine months ended September 30, 2022, an increase of 56% compared to $14.40 for the same period in 2021.

Segment Analysis

For further segment information, see Note 8 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.

High-Touch Solutions N.A.

The following table shows reported segment results (in millions of dollars):

	Nine Months Ended September 30,
	2022		2021		Percent Increase
Net sales	$	9,111	$	7,558	20.5	%
Gross profit	$	3,666	$	2,865	28.0	%
SG&A	$	2,160	$	1,890	14.3	%
Operating earnings	$	1,506	$	975	54.5	%

Net sales of $9,111 million for the nine months ended September 30, 2022 increased $1,553 million, or 20.5%, compared to the same period in 2021. On a daily basis, net sales increased 19.9% due to price, which includes customer mix, of 10.4% driven by price realization and volume, which includes product mix, of 9.7% due to sales growth in all geographies, partially offset by unfavorable foreign exchange of 0.2%.

Gross profit of $3,666 million for the nine months ended September 30, 2022 increased $801 million, or 28%, compared to the same period in 2021. Gross profit margin of 40.2% increased 2.3 percentage points. The increase was due to lapping pandemic-related inventory adjustments in the first half of 2021 and improved product mix in 2022.

SG&A of $2,160 million for the nine months ended September 30, 2022 increased $270 million, or 14%, compared to the same period in 2021. The increase was primarily due to higher marketing, payroll and variable compensation expenses. SG&A leverage improved by 1.3 percentage points.

Operating earnings of $1,506 million for the nine months ended September 30, 2022 increased $531 million, or 54%, compared to the same period in 2021.

24

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Endless Assortment

The following table shows reported segment results (in millions of dollars):

	Nine Months Ended September 30,
	2022		2021		Percent Increase
Net sales	$	2,117	$	1,913	10.7	%
Gross profit	$	615	$	540	13.9	%
SG&A	$	441	$	368	19.5	%
Operating earnings	$	175	$	172	1.6	%

Net sales of $2,117 million for the nine months ended September 30, 2022 increased $204 million, or 10.7%, compared to the same period in 2021. On a daily basis, net sales increased 10.1%. The increase was due to sales growth of 20.8%, driven by strong new customer acquisition and repeat business, as well as enterprise customer growth at MonotaRO, partially offset by unfavorable foreign exchange of 10.7% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.

Gross profit of $615 million for the nine months ended September 30, 2022 increased $75 million, or 14%, compared to the same period in 2021. Gross profit margin of 29.1% increased 0.9 percentage point compared to the same period in 2021. The increase was driven by freight efficiencies at MonotaRO and Zoro.

SG&A of $441 million for the nine months ended September 30, 2022 increased $73 million, or 20%, compared to the same period in 2021. The increase was due to higher payroll and benefits, marketing and occupancy expenses. SG&A leverage decreased by 1.5 percentage points.

Operating earnings of $175 million for the nine months ended September 30, 2022 increased $3 million, or 2%, compared to the same period in 2021.

Other

Net sales of $198 million for the nine months ended September 30, 2022 increased $6 million, or 3.1%, compared to the same period in 2021.

Operating losses of $10 million for the nine months ended September 30, 2022 improved $7 million, or 44%, compared to the same period in 2021.

25

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Financial Condition

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. The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.

Cash, Cash Equivalents and Liquidity

As of September 30, 2022 and December 31, 2021, Grainger's cash and cash equivalents were $315 million and $241 million, respectively. As of September 30, 2022, the Company had approximately $1.6 billion in available liquidity.

Cash Flows

Net cash provided by operating activities was $973 million and $724 million for the nine months ended September 30, 2022 and 2021, respectively. The increase in cash provided by operating activities was primarily due to higher net earnings, partially offset by working capital changes and increased tax payments compared to the same period in 2021.

Net cash used in investing activities was $212 million and $180 million for the nine months ended September 30, 2022 and 2021, respectively. The change in net cash used in investing activities was driven by increased U.S. supply chain investment compared to the prior year period.

Net cash used in financing activities was $668 million and $790 million for the nine months ended September 30, 2022 and 2021, respectively. The decrease in net cash used in financing activities was due to lower volume of treasury stock repurchases.

Working Capital

Internally generated funds are the primary source of working capital and funds used for growth initiatives and capital expenditures. Working capital as of September 30, 2022 was $2,726 million, an increase of $271 million when compared to $2,455 million as of December 31, 2021. The increase was primarily driven by increased accounts receivable and inventory due to continued sales growth, partially offset by higher accounts payable. As of September 30, 2022 and December 31, 2021, the ratio of current assets to current liabilities was 2.6 and 2.7, respectively.

Debt

Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. In addition to internally generated funds, Grainger has various sources of financing available, including bank borrowings under lines of credit.

Total debt, which is defined as total interest-bearing debt and lease liabilities as a percent of total capitalization, was 51.4% and 56.2% as of September 30, 2022 and December 31, 2021, respectively.

Grainger receives ratings from two independent credit rating 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.

The following table summarizes the Company's credit ratings at September 30, 2022:

	Corporate	Senior Unsecured	Short-term
Moody's	A3	A3	P2
S&P	A+	A+	A1

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W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Commitments and Other Contractual Obligations

There were no material changes to the Company’s commitments and other contractual obligations from those disclosed in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2021 Form 10-K.

Critical Accounting Estimates

The preparation of Grainger’s Condensed 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. The Company considers an accounting policy to be a critical estimate if: (i) it involves assumptions that are uncertain when judgment was applied, and (ii) changes in the estimate assumptions, or selection of a different estimate methodology, could have a significant impact on Grainger’s consolidated financial position and results. While the Company believes the assumptions and estimates used are reasonable, the Company’s management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances.

Note 1 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q and in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements of the Company's 2021 Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements.

There were no material changes to the Company's critical accounting estimates from those disclosed in Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2021 Form 10-K.

27

W.W. Grainger, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

From time to time in this Quarterly Report on Form 10-Q as well as in other written reports, communications and verbal statements, the Company makes forward-looking statements that are not historical in nature but concern forecasts of future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions.

The Company cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond the Company’s control, which could cause the Company’s results to differ materially from those that are presented.

Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: the unknown duration and health, economic, operational and financial impacts of the global outbreak of the coronavirus disease 2019 and its variants (COVID-19), as well as the impact of actions taken or contemplated by government authorities to mitigate the spread of COVID-19 (such as vaccine mandates, mask mandates, social distancing or other requirements) and to promote economic stability and recovery, on the Company’s businesses, its employees, customers and suppliers, including disruption to the Company’s operations resulting from employee illnesses, the development, availability and usage of effective treatment or vaccines, changes in customers’ product needs, the acquisition of excess inventory leading to additional inventory carrying costs and inventory obsolescence, raw material, inventory and labor shortages, continued strain on global supply chains, and diminished transportation availability and efficiency, disruption caused by business responses to the COVID-19 pandemic, including remote working arrangements, which may create increased vulnerability to cybersecurity incidents, including breaches of information systems security, adaptions to the Company’s controls and procedures required by remote working arrangements, which could impact the design or operating effectiveness of such controls or procedures, and global or regional economic downturns or recessions, which could result in a decline in demand for the Company’s products; inflation, higher product costs or other expenses, including operational expenses; the impact of Russia's invasion of Ukraine on the global economy; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; 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; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in the Company’s gross profit margin; the Company’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, advertising and marketing, 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; disruption or breaches of information technology or data security systems involving the Company or third parties on which the Company depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of the Company’s common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; geopolitical events, including war or acts of terrorism; other pandemic diseases or viral contagions; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; competition for, or failure to attract, retain, train, motivate and develop key employees; loss of key members of management or key employees; changes in effective tax rates; changes in credit ratings or outlook; the Company’s incurrence of indebtedness and other factors identified under Part I, Item 1A: Risk Factors in the Company's 2021 Form 10-K, as updated from time to time in the Company’s Quarterly Reports on Form 10-Q.

Caution should be taken not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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W.W. Grainger, Inc. and Subsidiaries

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Grainger’s primary market risk exposures include changes in foreign currency exchange and interest rates.

There were no material changes to the Company’s market risk from those described in Part II, Item 7A: Quantitative and Qualitative Disclosures About Market Risk in the Company's 2021 Form 10-K.

Item 4: Controls and Procedures

Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Grainger's disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Grainger’s disclosure controls and procedures were effective as of the end of the period covered by this report in (i) ensuring that information required to be disclosed by Grainger in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in Grainger's internal control over financial reporting for the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, Grainger’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1: Legal Proceedings

For a description of the Company’s legal proceedings, see Note 9 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1: Financial Information of this Form 10-Q.

Item 1A: Risk Factors

The Company’s business, results of operations, and financial condition are subject to various risks and uncertainties, including those described in Part I, Item 1A: Risk Factors in the Company’s 2021 Form 10-K and in Part II, Item 1A: Risk Factors in the Company’s First Quarter Form 10-Q. The following risk factors are being provided to supplement and update the risk factors set forth in the Company’s 2021 Form 10-K and First Quarter Form 10-Q.

Industry and Market Risks

Grainger’s business and operations have been and may continue to be adversely affected by the global outbreak of the Coronavirus and its variants, including the Delta variant, the Omicron variant and any other variants that may emerge (COVID-19 pandemic) and may be adversely affected by other global outbreaks of pandemic disease.

Any global outbreaks of pandemic disease, such as the COVID-19 pandemic, could have a material adverse effect on Grainger’s business, results of operations and financial condition, including liquidity, capital and financing resources.

The COVID-19 pandemic has disrupted and adversely affected Grainger’s business, including its business with customers and suppliers. Among other things, Grainger experienced customer disruptions, including their ability or willingness to purchase products, delays in making purchasing decisions, and shifts in the types and quantities of products purchased. These may recur during and beyond the COVID-19 pandemic. Grainger has also experienced and may continue to experience supply chain disruptions, supplier inability to manufacture or deliver products to Grainger or meet the unprecedented demand for pandemic-related products, rapid shifts in the type, quantity or quality of products sold, and higher product costs as a result of inflation.

Additional effects from the COVID-19 pandemic on Grainger's business include adverse impacts on transportation, including shipping delays and port disruptions, increased shipping costs, constraints on the availability of products, inflation, and labor shortages, which have impacted Grainger’s ability to hire employees to fill all open positions. The potential for further disruptions from the COVID-19 pandemic, including closures of customer and supplier facilities remains. Furthermore, Grainger's ability to collect its accounts receivable or receive product ordered from suppliers, as customers and suppliers face higher liquidity and solvency risks and seek terms that are less favorable to Grainger, may adversely affect the Company’s business. These developments, alone or in combination, could materially adversely affect Grainger’s future sales and results of operations.

The effects of the COVID-19 pandemic on Grainger also include restrictions on Grainger’s employees’ ability to visit customers and many of Grainger’s employees’ ability to work in offices or at facilities, as well as disruptions or temporary closures of the Company’s facilities, including distribution centers, branches, and support buildings. Some actions that Grainger has taken in response to the COVID-19 pandemic, including enabling remote 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 from customers, suppliers, financial institutions, regulators, payment card association, employees and others. In addition, Grainger’s remote working arrangements have required the Company to make adaptions to its controls and procedures that could impact their design or operating effectiveness. The COVID-19 pandemic has also resulted in increased variable compensation, wage rates and employee healthcare costs, which adversely affect net earnings, and Grainger expects these trends to continue.

Furthermore, as a result of surges in demand and disruptions in supply chains, including in Asia and other locations, from time to time, the COVID-19 pandemic has resulted in shortages of certain PPE, cleaning supplies and other products. These shortages have impacted and in the future may continue to impact Grainger's ability to obtain or deliver inventory to customers on a timely basis or at all. While Grainger attempts to maintain sufficient inventory levels to meet quickly shifting customer demand patterns and supplier lead time requirements, which may become

30

extended due to the pandemic demand increase, the Company cannot be certain it will be able to accurately predict demand or lead times, which might cause it to be unable to service customer demand or expose it to risks of product shortages. In the past, this uncertainty caused Grainger to acquire excess inventory, which led to additional inventory carrying costs and inventory obsolescence, and similar results may occur in the future.

From time to time, product shortages have also required the Company to procure products from new suppliers or through brokers with whom it has a limited or no prior relationship. Despite due diligence and product compliance protocols, the products from these sources may not be delivered on a timely basis or at all, or their quality may not be as represented, all of which could cause Grainger to incur costs, including the expense of procuring alternate products or recalling or replacing products in addition to reputational and other adverse impacts to Grainger’s business.

Moreover, global outbreaks such as the COVID-19 pandemic have resulted in a widespread health crisis that has adversely affected and could continue to adversely affect the economies of many countries, resulting in a global or regional economic downturn or recession and supply chain challenges. Any such recession could result in a significant decline in access to products, demand for the Company’s products or limit Grainger’s ability to access capital markets, any of which could materially adversely affect the Company’s business, results of operations and financial condition.

The duration and ultimate impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be predicted at this time. Such factors and developments may include the geographic spread, severity and duration of the COVID-19 pandemic, including whether there are periods of increased COVID-19 cases, the further spread of the Delta variant, Omicron variant or the emergence of other new or more contagious variants that may render vaccines ineffective or less effective, disruption to Grainger’s operations resulting from employee illnesses or any inability to attract, retain or motivate employees, the development, availability and administration of effective treatment or vaccines and the willingness of individuals to receive a vaccine or otherwise comply with various mandates, the extent and duration of the impact on the U.S. or global economy, including the pace and extent of recovery when the pandemic subsides, and the actions that have been or may be taken by various governmental authorities in response to the outbreak.

Complying with government mandates could disrupt the workforce and operations and impose additional compliance and other costs. Requirements, including health and safety measures such as vaccine and mask mandates, social distancing requirements, travel bans, import and export restrictions, pricing mandates, including disaster or emergency declaration pricing statutes, and mandatory directives that certain products be allocated or provided to certain customers, could also disrupt the Company’s business and impose costs. If the Company is unable to respond to and manage the impact of these mandates, requirements or events, the Company’s business and results of operations may continue to be adversely affected.

Inflation could cause Grainger's operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings.

Market variables, such as inflation of product costs, labor rates and fuel, freight and energy costs, as well as geopolitical events could potentially cause the Company to be unable to manage its operating and administrative expenses in a way that would enable it to leverage its revenue growth into higher net earnings. For example, Russia’s invasion of Ukraine and other geopolitical conflicts, as well as the related international response, has and may continue to exacerbate inflationary pressures, including causing increases in fuel and other energy costs. In addition, Grainger's inability to pass on such 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.

Grainger’s logistics or supply chain network could be disrupted by the occurrence of: one or more natural or human induced disasters, including earthquakes, storms, hurricanes, floods, fires, droughts, tornados and other extreme weather; pandemic diseases or viral contagions such as the COVID-19 pandemic; 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 in transport networks, including from transport provider or third party work stoppages related to labor strikes or lockouts; and the imposition of measures that create barriers to or increase the costs associated with international trade. For example, the outbreak of the COVID-19 pandemic has disrupted and may continue to disrupt the operations of the Company and its suppliers and customers, including as a result of disruption of supply

31

chains or closures of suppliers' facilities in China. Customer demand for certain products has also fluctuated as the pandemic has progressed, which has challenged Grainger's ability to anticipate and/or procure product to maintain inventory levels to meet that demand. These factors have resulted in higher out-of-stock inventory positions in certain products as well as delays in delivering those products to the Company's distribution centers, branches or customers, and similar results may occur in the future. Even when Grainger is able to find alternate sources for certain products, they may cost more or require the Company to incur higher transportation costs, which could adversely impact the Company's profitability and financial condition. Any of these circumstances could impair Grainger's ability to meet customer demand for products and result in lost sales, increased supply chain costs, penalties or damage to Grainger's reputation. Grainger’s ability to provide same-day shipping and next-day delivery is an integral component of Grainger’s business strategy and any such disruption could adversely impact results of operations and financial performance.

Furthermore, in connection with Russia’s invasion of Ukraine, the U.S. and other countries have responded by imposing major, and potentially prolonged, economic sanctions and other responses. Although Grainger's business has limited direct exposure in Russia and Ukraine, further escalation of geopolitical tensions could have a broader impact that expands into other markets where we do business, which could adversely affect its business and/or its supply chain, customers or suppliers in the broader region. It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on the global economy.

Weakness in the economy, market trends and other conditions affecting the profitability and financial stability of Grainger’s customers could negatively impact Grainger’s sales growth and results of operations.

Economic, political and industry trends affect Grainger’s business environment. Grainger serves several industries and markets in which the demand for its products and services is sensitive to the production activity, capital spending and demand for products and services of Grainger’s customers. Many of these customers operate in markets that are subject to cyclical fluctuations resulting from market uncertainty, trade and tariff policies, costs of goods sold, currency exchange rates, interest rate fluctuations, economic downturns, recessions, foreign competition, offshoring of production, oil and natural gas prices, geopolitical developments, labor shortages, inflation, natural or human induced disasters, extreme weather, outbreaks of pandemic disease such as the COVID-19 pandemic, inflation, deflation, and a variety of other factors beyond Grainger’s control. 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.

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 selling prices and terms of sale. Accordingly, a significant or prolonged slowdown in economic activity in Canada, China, Japan, Mexico, the U.K., the U.S. or any other major world economy, or a segment of any such economy, could negatively impact Grainger’s sales growth and results of operations.

Unexpected product shortages, tariffs, product cost increases and risks associated with Grainger’s suppliers could negatively impact customer relationships or result in an adverse impact on results of operations.

Grainger’s competitive strengths include product selection and availability. Products are purchased from more than 4,900 suppliers located in various countries around the world, not one of which accounted for more than 5% of total purchases.

Disruptions in procuring sources of supply could occur due to factors beyond Grainger’s control. These factors could include economic downturns, recessions, outbreaks of pandemic disease such as the COVID-19 pandemic (which from time to time has resulted in some shortages of PPE, cleaning supplies and other products), natural or human induced disasters, extreme weather, geopolitical unrest, tariffs, new tariffs or tariff increases, 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, 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.

Further, Grainger sources products from Asia and other areas of the world. This increases the risk of supply disruption due to the additional lead time required and distances involved.

32

If Grainger was unable to promptly replace sources of supply that become disrupted, there could be adverse effects on inventory levels, results of operations, customer relationships and Grainger’s reputation. In addition, Grainger has strategic relationships with a number of vendors. In the event Grainger was unable to maintain those relations, there might be a loss of competitive pricing advantages which could, in turn, adversely affect results of operations.

Volatility in commodity prices may adversely affect gross margins.

Some of Grainger’s products contain significant amounts of commodity-priced materials, such as steel, copper, petroleum derivatives, rare earth minerals, or other materials or inputs required to manufacture PPE and other pandemic-related products and are subject to price changes based on fluctuations in the commodities market. 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. 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 outbreaks of pandemic disease such as the COVID-19 pandemic, 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. 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 exposure to fluctuations in foreign currency rates results primarily from the translation exposure associated with the preparation of the Consolidated Financial Statements (Financial Statements), as well as from transaction exposure associated with transactions in currencies other than an entity’s functional currency. While the 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. 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 Canadian dollar, euro, pound sterling, Mexican peso, renminbi and yen, 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. Grainger also has foreign currency exposure to the extent receipts and expenditures are not denominated in a subsidiary’s functional currency and that could have an impact on sales, costs and cash flows. These fluctuations in foreign currency exchange rates has affected and may continue to affect Grainger’s results of operations and impact reported net sales and net earnings.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities – Third Quarter 2022

Period	Total Number of Shares Purchased (A) (B)	Average Price Paid per Share (C)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (D)	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
July 1 – July 31	96,618	$466.25	96,562	3,396,880
Aug. 1 – Aug. 31	119,010	$568.63	119,010	3,277,870
Sept. 1 – Sept. 30	133,187	$533.03	133,187	3,144,683
Total	348,815		348,759

(A)There were no shares withheld to satisfy tax withholding obligations.

(B)The difference of 56 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. Retirement Savings Plan for the benefit of the employees who participate in the plan.

(C)Average price paid per share excludes commissions of $0.01 per share paid.

(D)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 5 million shares with no expiration date.

33

Item 5: Other Information

On October 26, 2022, the Company formalized a written Compensation Continuation - Severance Policy Guidance

(Policy Guidance) for U.S. team members only. The Policy Guidance memorializes prior Company practice related to severance. Pursuant to the Policy Guidance, the Company may, at its discretion, provide certain payments and benefits to regular full-time and part-time team members, including the Company's named executive officers, who cease employment with the Company as a result of position elimination, termination related to a divestment, termination due to a shift in business circumstances, a material change in duties, a material change in compensation, mutual agreement between the Company and team member, or as otherwise determined by the Company, subject to the team member being actively working at the time their role is impacted or within six months of an approved medical leave, and their execution of a Release of Claims Agreement. The term of payment of compensation and related benefits coverage (Compensation Coverage Period) is based on the team member’s length of service with the Company and job classification and level. In general, named executive officers are eligible to receive payments and benefits for a minimum of 12 months. During the Compensation Coverage Period, eligible team members will also continue to receive benefits to which they subscribed at the time they ceased employment. Team members, including the named executive officers, are generally eligible to receive a pro-rata payment under the Company’s Management Incentive Plan for the year in which they separate and any long-term incentives continue to vest during the Compensation Coverage Period.

The foregoing summary of the Policy Guidance does not purport to be complete and is qualified in its entirety by reference to the full text of the Policy Guidance, a copy of which is filed as Exhibit 10.1 hereto.

34

W.W. Grainger, Inc. and Subsidiaries

Item 6: Exhibits

EXHIBIT NO.	DESCRIPTION
10.1	Severance Policy Guidance.*
10.2	First Amendment to Credit Agreement, dated as of August 29, 2022, by and among W.W. Grainger, Inc., the lenders party thereto and JPMorgan Chase, N.A., as Administrative Agent, incorporated by reference to Exhibit 10.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated August 30, 2022.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
(*) Management contract or compensatory plan or arrangement

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			W.W. GRAINGER, INC.
Date:	October 28, 2022	By:	/s/ Deidra C. Merriwether
			Deidra C. Merriwether
			Senior Vice President
			and Chief Financial Officer
			(Principal Financial Officer)
Date:	October 28, 2022	By:	/s/ Laurie R. Thomson
			Laurie R. Thomson
			Vice President and Controller
			(Principal Accounting Officer)

36

EX-10.1

Exhibit 10.1

Compensation Continuation – Severance Policy Guidance

I.    PURPOSE 

The purpose of this policy guidance (this “Policy Guidance”) is to provide a clear and consistent approach for the management of W.W. Grainger, Inc.’s and its subsidiaries (collectively, “Grainger” or “Company”) compensation continuation and severance practices. This Policy Guidance describes what Grainger team members may expect in terms of pay and benefit continuation, and sets forth a participant’s obligations should a team member experience a Qualifying Termination of Employment Event (QTEE) (as defined below) resulting in their departure from Grainger’s employ. 

Compensation payments and related benefit eligibility are intended as both a recognition for past service, as well as to serve as a transitionary bridge and form of support between current and future employment roles or other direction. 

II.    SCOPE 

This Policy Guidance applies to Grainger’s Regular U.S. Full-time Team Members and Part-time Team Members who cease employment with Grainger a result of a Qualifying Termination of Employment Event (“QTEE”), which include situations involving termination of employment with the Company if:

a.    A team members’ job has been eliminated and team member has made a good faith effort to secure another position with the Company and there is no possibility that another position may be secured with the Company;

b.    Team member is not employed by or offered employment with an acquiring entity or company following the divestiture or disposition of a subsidiary or business unit;

c.    Team member employment is terminated as a result of a shift in business circumstance that requires different skills that the team member does not possess;

d.    There is a material change to the team member’s work arrangement, including a material change in duties, scope of responsibility or change to the location of the role beyond a 50-mile radius of the current location of the role;

e.    Team member’s total direct target compensation is reduced by more than 20% (note that a change in mix of base and target incentives will not automatically trigger severance);

f.    Team member employment is terminated by mutual agreement between team member and the Company; or

g.    As otherwise determined by the Company.

Team members are not eligible for a Compensation Continuation Benefit (as defined below) under this Policy Guidance if employment is terminated for any reason other than a “QTEE” as previously described. While not intended to be all inclusive, examples of non-eligible reasons include:

a.    Performance based termination;

b.    A temporary or seasonal layoff;

c.    Voluntary resignation, including retirement;

d.    Team member is employed or are offered employment by a firm that has acquired your subsidiary or business unit from the Company;

e.    Team member is terminated for cause, which means, among other things:

•Being excessively absent or late in violation of the Company’s attendance expectations and guidelines;

•Violating Company policies, rules or workplace expectations;

•Falsifying employment application or other business records;

1

•Insubordination and misconduct;

•Breach of fiduciary duty, theft, fraud, dishonesty, embezzlement, violation of securities laws, violation of non-compete, non-solicitation or confidentiality agreements;

•Unethical or criminal conduct, threats or acts of violence;

•Involves the impermissible or illegal use, possession, or distribution of drugs;

•Impacting a current team member’s role more than six (6) months after their last day of actual work; or

f.    For any other reason deemed by the Company to serve as disqualifying a team member from being eligible.

III.    POLICY GUIDANCE

i.    Eligibility

Eligibility requires that the team member be actively working on the date of the QTEE or within six (6) months of that date if on an approved medical leave.

ii.    QTEE Compensation Continuation Benefit for Regular U.S. Full-Time Team Member

This Policy Guidance provides eligible team members with a compensation continuation benefit (the “Compensation Continuation Benefit”). The Compensation Continuation Benefit is based upon two factors: (1) length of service with the Company and (2) job classification and level.  Team members will receive the greater of: (a) two-weeks of pay for each full year of completed service or (b) the minimum benefit for job classification and level as set forth below: 

Job Classification and Level	Minimum Benefit
Levels 28 to 31	12 months of pay
Level 27	6 months of pay
Level 25 to 26	4 months of pay
Level below 25 and Exempt Classification	2 months of pay
Non-Exempt Classification	1 month of pay

There is no cap to the number of weeks of compensation a team member may receive based on years of service.  Eligibility based on years of service is determined by a team member’s most recent length of continuous and uninterrupted service through the QTEE date.

iii.    QTEE Program Participation

During the period of the Compensation Continuation Benefit, team members are considered “active” and may receive the following benefits so long as they were both actively working and a subscriber to the benefit at the time that they ceased active employment or are considered otherwise eligible.

Health, Dental, and Life Insurance coverage: Continues at active team member’s rates during the period of the Compensation Continuation Benefit.  Health insurance may be converted under COBRA at the end of the Compensation Continuation Benefit period or to Retiree Health should the team member otherwise qualify for retiree coverage. 

Retirement Savings Plan: Team members will continue receiving a fully vested 401(k)

2

contribution to their 401(k) account for the duration of their Compensation Continuation Benefit. For those team members who are not fully vested in their Retirement Savings Plan/Profit Sharing account balance, they will continue to vest for the duration of their Compensation Continuation Benefit. 

Management Incentive Plan (MIP): MIP-eligible team members will receive a pro-rata MIP payment pursuant to the provisions of the applicable MIP for the year in which they separate.  No payment shall be made for any period thereafter. 

Long Term Incentive Plan (LTIP): All LTIP awards continue to vest during the duration of the Compensation Continuation Benefit based upon the provisions of the applicable LTIP Plan. 

Educational Assistance: Grainger will honor educational assistance arrangements for any team member actively enrolled in an approved class as of their Separation Date so long as they otherwise meet all criteria under the applicable program.

1984 Frozen Separation Severance Benefit: Additional one (1) week of pay for each two (2) fully completed years of service prior to December 31, 1984, calculated at the team member’s regular rate as of their Separation Date and payable in conjunction with the team member’s final Compensation Continuation Benefit payment. 

Cash Inducement Awards or Relocation Grants Upon Hire: Any repayment obligations associated with cash inducement awards or relocation grants to join Grainger at a team member’s time of hire may be waived.

Employee Assistance Program: Team members may utilize the services offered under Grainger’s Employee Assistance Program while actively receiving their Compensation Continuation Benefit.

Outplacement Assistance: Team members will be eligible to receive outplacement assistance as provided for each team member job category level.

Other Benefits: Eligibility for other benefit, including certain Retiree Benefits not included herein will be governed by applicable plan documents and policies in place at the time of QTEE.

iv.    Compensation Continuation Benefit Release Required 

As a condition of eligibility and payment, the team member must sign a Release of Claims

Agreement. 

v.    Re-Employment 

Any team member returning to active employment while receiving Compensation Continuation Benefit payments shall do so without incurring a break in service if their return occurs within one (1) year of their last day physically worked.  Compensation Continuation Benefit payments automatically cease upon the team member beginning their new Grainger assignment.  A team member returning to work from a Compensation Continuation Benefit period must be actively working for a period of one (1) year from their return date before they become eligible for any future or new Compensation Continuation Benefits. 

3

vi.    QTEE Compensation Transition Pay for Regular U.S. Part-Time Team Member

Compensation transition pay will be made available to regular Part-Time Team Members who are released from Grainger’s employ as a result of a QTEE, in accordance with the following:

a.    Eligible team members shall receive the greater of four (4) week’s pay or one (1) week of pay for each full year of completed service to Grainger.

b.    Weekly pay is calculated by using the average base weekly pay received by the team member over the most recent six (6) month period.

c.    Payment of transition pay occurs in conjunction with the team member’s final paycheck, less applicable taxes, and appears as a pay stub line item referenced as transition pay.

d.    No Release of Claims Agreement is required to receive this payment.

vii.    Other Programs and Policies

Nothing in this Policy Guidance shall effect the characterization of a team member’s separation of employment in any other policy, plan or program maintained by the Company. Reference should be made to the applicable provisions governing a team member’s equity or other award agreement for governing provisions, including the treatment of separation, termination or retirement eligibility.

IV.     PLAN ADMINISTRATION 

The publication of this Policy Guidance is intended to provide team members with general information regarding Grainger involuntary termination policies, guidelines, practices and procedures. As such, Grainger reserves the right in its sole discretion to prospectively modify, revise, or rescind or discontinue this program or any provision contained herein in full or in part. Nothing contained within this Policy Guidance is intended to change the nature of Grainger’s Employment at Will relationship with a team member.

Exceptions to this Policy Guidance require approval as follows:

Job Classification and Level	Approval Required
Levels 28 to 31	General Counsel and CHRO
Level 27	CHRO and Associate General Counsel
Level 25 to 26	Human Resources VP and Associate General Counsel
Level below 25 and Exempt Classification	Human Resources VP and Associate General Counsel
Non-Exempt Classification	Human Resources VP and Associate General Counsel

V.    DEFINITIONS 

Separation Date: Last day of active work. 

Regular Full-time U.S. Team Member: 40 hours per week.

Part-time U.S. Team Member: Less than 40 hours per week.

VI. REFERENCES

1.    Release of Claims Agreement for Regular U.S. Full-time team members

4

VII.SPONSOR 

Legal and Human Resources Departments

October 26, 2022

5

EX-31.1

CERTIFICATION

Exhibit 31.1

I, D.G. Macpherson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2022

By:	/s/ D.G. Macpherson
Name:	D.G. Macpherson
Title:	Chairman and Chief Executive Officer

EX-31.2

CERTIFICATION

Exhibit 31.2

I, Deidra C. Merriwether, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2022

By:	/s/ Deidra C. Merriwether
Name:	Deidra C. Merriwether
Title:	Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of W.W. Grainger, Inc. (“Grainger”) for the quarterly period ended September 30, 2022, (the “Report”), D.G. Macpherson, as Chairman and Chief Executive Officer of Grainger, and Deidra C. Merriwether, as Senior Vice President and Chief Financial Officer of Grainger, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Grainger.

/s/ D.G. Macpherson

D.G. Macpherson

Chairman and Chief Executive Officer

October 28, 2022

/s/ Deidra C. Merriwether

Deidra C. Merriwether

Senior Vice President and Chief Financial Officer

October 28, 2022

XML

COVER - shares	9 Months Ended
	Sep. 30, 2022	Oct. 21, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-5684
Entity Registrant Name	W.W. Grainger, Inc.
Entity Incorporation, State or Country Code	IL
Entity Tax Identification Number	36-1150280
Entity Address, Address Line One	100 Grainger Parkway
Entity Address, City or Town	Lake Forest,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60045-5201
City Area Code	847
Local Phone Number	535-1000
Title of 12(b) Security	Common Stock
Trading Symbol	GWW
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		50,529,263
Entity Central Index Key	0000277135
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Net sales	$ 3,942	$ 3,372	$ 11,426	$ 9,663
Cost of goods sold	2,423	2,122	7,083	6,196
Gross profit	1,519	1,250	4,343	3,467
Selling, general and administrative expenses	916	812	2,672	2,337
Operating earnings	603	438	1,671	1,130
Other (income) expense:
Interest expense – net	25	22	70	65
Other – net	(9)	(6)	(20)	(19)
Total other expense – net	16	16	50	46
Earnings before income taxes	587	422	1,621	1,084
Income tax provision	145	107	405	271
Net earnings	442	315	1,216	813
Less net earnings attributable to noncontrolling interest	16	18	53	53
Net earnings attributable to W.W. Grainger, Inc.	$ 426	$ 297	$ 1,163	$ 760
Earnings per share:
Basic (in dollars per share)	$ 8.31	$ 5.68	$ 22.64	$ 14.48
Diluted (in dollars per share)	$ 8.27	$ 5.65	$ 22.52	$ 14.40
Weighted average number of shares outstanding:
Basic (in shares)	50.8	51.8	51.0	52.1
Diluted (in shares)	51.1	52.1	51.3	52.4

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net earnings	$ 442	$ 315	$ 1,216	$ 813
Other comprehensive earnings (losses):
Foreign currency translation adjustments – net of reclassification to earnings	(71)	(17)	(180)	(43)
Postretirement benefit plan losses and other – net of tax benefit of $2, $1, $4, and $3, respectively	(3)	(4)	(10)	(9)
Total other comprehensive earnings (losses)	(74)	(21)	(190)	(52)
Comprehensive earnings – net of tax	368	294	1,026	761
Less comprehensive earnings (losses) attributable to noncontrolling interest
Net earnings	16	18	53	53
Foreign currency translation adjustments	(14)	(1)	(61)	(19)
Total comprehensive earnings (losses) attributable to noncontrolling interest	2	17	(8)	34
Comprehensive earnings attributable to W.W. Grainger, Inc.	$ 366	$ 277	$ 1,034	$ 727

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICAL) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Postretirement benefit plan reclassification, net of tax benefit	$ 2	$ 1	$ 4	$ 3

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 315	$ 241
Accounts receivable (less allowances for credit losses of $36 and $30, respectively)	2,158	1,754
Inventories – net	2,071	1,870
Prepaid expenses and other current assets	142	146
Total current assets	4,686	4,011
Property, buildings and equipment – net	1,409	1,424
Goodwill	363	384
Intangibles – net	222	238
Operating lease right-of-use	360	393
Other assets	161	142
Total assets	7,201	6,592
Current liabilities
Current maturities	16	0
Trade accounts payable	1,038	816
Accrued compensation and benefits	307	319
Operating lease liability	67	66
Accrued expenses	332	290
Income taxes payable	25	37
Total current liabilities	1,785	1,528
Long-term debt	2,294	2,362
Long-term operating lease liability	305	334
Deferred income taxes and tax uncertainties	135	121
Other non-current liabilities	120	87
Shareholders' equity
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding	0	0
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued	55	55
Additional contributed capital	1,299	1,270
Retained earnings	10,402	9,500
Accumulated other comprehensive losses	(225)	(96)
Treasury stock, at cost – 59,028,249 and 58,439,014 shares, respectively	(9,223)	(8,855)
Total W.W. Grainger, Inc. shareholders’ equity	2,308	1,874
Noncontrolling interest	254	286
Total shareholders' equity	2,562	2,160
Total liabilities and shareholders' equity	$ 7,201	$ 6,592

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 36	$ 30
Cumulative preferred stock, par value (in dollars per share)	$ 5	$ 5
Cumulative preferred stock, shares authorized	12,000,000	12,000,000
Cumulative preferred stock, shares issued	0	0
Cumulative preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.50	$ 0.50
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	109,659,219	109,659,219
Treasury stock, shares at cost	59,028,249	58,439,014

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net earnings	$ 1,216	$ 813
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for credit losses	13	12
Deferred income taxes and tax uncertainties	20	(7)
Depreciation and amortization	159	137
Net losses (gains) from sale or redemption of assets	1	(3)
Stock-based compensation	38	33
Change in operating assets and liabilities:
Accounts receivable	(487)	(298)
Inventories	(253)	(64)
Prepaid expenses and other assets	(39)	(1)
Trade accounts payable	261	167
Accrued liabilities	51	(13)
Income taxes – net	8	(42)
Other non-current liabilities	(15)	(10)
Net cash provided by operating activities	973	724
Cash flows from investing activities:
Additions to property, buildings, equipment and intangibles	(208)	(197)
Proceeds from sale or redemption of assets	7	17
Other – net	(11)	0
Net cash used in investing activities	(212)	(180)
Cash flows from financing activities:
Borrowings under lines of credit	1	0
Payments of long-term debt	0	(8)
Proceeds from stock options exercised	21	31
Payments for employee taxes withheld from stock awards	(22)	(29)
Purchases of treasury stock	(383)	(525)
Cash dividends paid	(285)	(261)
Other – net	0	2
Net cash used in financing activities	(668)	(790)
Exchange rate effect on cash and cash equivalents	(19)	(11)
Net change in cash and cash equivalents	74	(257)
Cash and cash equivalents at beginning of year	241	585
Cash and cash equivalents at end of period	$ 315	$ 328

XML

CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Contributed Capital	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Earnings (Losses)	Treasury Stock	Noncontrolling Interest
Beginning balance at Dec. 31, 2020	$ 2,093	$ 12	$ 55	$ 1,239	$ 8,779	$ 12	$ (61)	$ (8,184)	$ 265
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	14			9				5
Purchases of treasury stock	(175)							(175)
Net earnings	255				238				17
Other comprehensive earnings (losses)	(38)						(20)		(18)
Cash dividends paid	(81)				(81)
Ending balance at Mar. 31, 2021	2,080		55	1,248	8,948		(81)	(8,354)	264
Beginning balance at Dec. 31, 2020	2,093	$ 12	55	1,239	8,779	$ 12	(61)	(8,184)	265
Increase (Decrease) in Stockholders' Equity
Net earnings	813
Other comprehensive earnings (losses)	(52)
Ending balance at Sep. 30, 2021	2,117			1,255	9,301		(94)	(8,690)	290
Beginning balance at Mar. 31, 2021	2,080		55	1,248	8,948		(81)	(8,354)	264
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	12			(1)				12	1
Purchases of treasury stock	(108)							(107)	(1)
Net earnings	243				225				18
Other comprehensive earnings (losses)	7						7
Capital contribution	2								2
Cash dividends paid	(95)				(84)				(11)
Ending balance at Jun. 30, 2021	2,141		55	1,247	9,089		(74)	(8,449)	273
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	9			8				1
Purchases of treasury stock	(242)							(242)
Net earnings	315				297				18
Other comprehensive earnings (losses)	(21)						(20)		(1)
Cash dividends paid	(85)				(85)
Ending balance at Sep. 30, 2021	2,117			1,255	9,301		(94)	(8,690)	290
Beginning balance at Dec. 31, 2021	2,160		55	1,270	9,500		(96)	(8,855)	286
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	13			10				3
Purchases of treasury stock	(75)							(75)
Net earnings	385				366				19
Other comprehensive earnings (losses)	(29)						(13)		(16)
Cash dividends paid	(84)				(84)
Ending balance at Mar. 31, 2022	2,370		55	1,280	9,782		(109)	(8,927)	289
Beginning balance at Dec. 31, 2021	2,160		55	1,270	9,500		(96)	(8,855)	286
Increase (Decrease) in Stockholders' Equity
Net earnings	1,216
Other comprehensive earnings (losses)	(190)
Ending balance at Sep. 30, 2022	2,562		55	1,299	10,402		(225)	(9,223)	254
Beginning balance at Mar. 31, 2022	2,370		55	1,280	9,782		(109)	(8,927)	289
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	10			7				2	1
Purchases of treasury stock	(118)							(117)	(1)
Net earnings	389				371				18
Other comprehensive earnings (losses)	(87)						(56)		(31)
Cash dividends paid	(99)				(87)				(12)
Ending balance at Jun. 30, 2022	2,465		55	1,287	10,066		(165)	(9,042)	264
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	15			12				3
Purchases of treasury stock	(184)							(184)
Net earnings	442				426				16
Other comprehensive earnings (losses)	(74)						(60)		(14)
Cash dividends paid	(102)				(90)				(12)
Ending balance at Sep. 30, 2022	$ 2,562		$ 55	$ 1,299	$ 10,402		$ (225)	$ (9,223)	$ 254

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CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY (PARENTHETICAL) - $ / shares	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021
Statement of Stockholders' Equity (Parentheticals) [Abstract]
Cash dividends paid per share (in dollars per share)	$ 1.72	$ 1.72	$ 1.62	$ 1.62	$ 1.62	$ 1.53

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.

Basis of Presentation

The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The Condensed Consolidated Balance Sheet at December 31, 2021, has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 23, 2022 (2021 Form 10-K).

There were no material changes to the Company’s significant accounting policies from those disclosed in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2021 Form 10-K.

New Accounting Standards

Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied prospectively to contract modifications made and hedging relationships entered or evaluated on or before December 31, 2022. In October 2022, the FASB amended Topic 848, updating the sunset date from December 31, 2022 to December 31, 2024. The Company adopted this ASU on July 1, 2022 on a prospective basis and it did not have a material impact on the Consolidated Financial Statements. For further discussion on the credit agreement modifications made to the revolving credit facility, see Note 5.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update provides increased transparency of government assistance, including the disclosure of the types of assistance an entity receives, an entity's method of accounting for government assistance and the effect of the assistance on an entity's financial statements. The guidance is effective for annual periods beginning after December 15, 2021 and should be applied prospectively or retrospectively. Early adoption is permitted. The Company adopted this ASU on January 1, 2022 on a prospective basis and it did not have a material impact on the Consolidated Financial Statements and related disclosures.

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REVENUE

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Total service revenue accounted for approximately 1% of the Company's revenue for both the three and nine months ended September 30, 2022 and 2021.

Grainger serves a large number of customers in diverse industries, which are subject to different economic and market-specific factors. The Company's presentation of revenue by segment and 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. In addition, the segments have unique underlying risks associated with customer purchasing behaviors. In the High-Touch Solutions N.A. segment, more than two-thirds of revenue is derived from customer contracts whereas in the Endless Assortment segment, a majority of revenue is derived from non-contractual purchases.

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:

	Three Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	8	%	14	%	9	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	2	%	14	%	18	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	32	%	30	%	32	%	29	%	30	%	29	%
Retail/Wholesale	8	%	15	%	9	%	9	%	10	%	10	%
Transportation	6	%	3	%	6	%	5	%	3	%	5	%
Other (1)	13	%	19	%	14	%	14	%	22	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	79	%	19	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the three months ended September 30, 2022 and 2021.

	Nine Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	9	%	15	%	10	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	3	%	14	%	19	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	31	%	30	%	31	%	30	%	29	%	29	%
Retail/Wholesale	9	%	15	%	10	%	9	%	10	%	10	%
Transportation	6	%	3	%	5	%	5	%	3	%	5	%
Other (1)	12	%	17	%	14	%	12	%	23	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	78	%	20	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the nine months ended September 30, 2022 and 2021.

Total accrued sales incentives were approximately $96 million and $73 million as of September 30, 2022 and December 31, 2021, and are reported as part of Accrued expenses.

The Company had no material unsatisfied performance obligations, contract assets or liabilities as of September 30, 2022 and December 31, 2021.

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PROPERTY, BUILDINGS AND EQUIPMENT

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

PROPERTY, BUILDINGS AND EQUIPMENT

PROPERTY, BUILDINGS AND EQUIPMENT

Property, buildings and equipment consisted of the following (in millions of dollars):

	As of
	September 30, 2022		December 31, 2021
Land	$	329	$	329
Building, structures and improvements	1,403		1,431
Furniture, fixtures, machinery and equipment	1,630		1,567
Property, buildings and equipment	$	3,362	$	3,327
Less accumulated depreciation and amortization	1,953		1,903
Property, buildings and equipment – net	$	1,409	$	1,424

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators during the three and nine months ended September 30, 2022. As such, quantitative assessments were not required.     

The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars):

	High-Touch Solutions N.A.		Endless Assortment		Other		Total
Balance at January 1, 2021	$	321	$	70	$	—	$	391
Translation	—		(7)		—		(7)
Balance at December 31, 2021	321		63		—		384
Translation	(10)		(11)		—		(21)
Balance at September 30, 2022	$	311	$	52	$	—	$	363

    

The cumulative goodwill impairments as of September 30, 2022, were $137 million and consisted of $32 million within High-Touch Solutions N.A. and $105 million in Other.

There were no impairments to goodwill for the three and nine months ended September 30, 2022 or the year ended December 31, 2021.

The balances in Intangible assets – net are as follows (in millions of dollars):

		As of
		September 30, 2022						December 31, 2021
	Weighted average life	Gross carrying amount		Accumulated amortization/impairment		Net carrying amount		Gross carrying amount		Accumulated amortization/impairment		Net carrying amount
Customer lists and relationships	11.7 years	$	215	$	177	$	38	$	221	$	176	$	45
Trademarks, trade names and other	14.3 years	33		24		9		36		24		12
Non-amortized trade names and other	Indefinite	20		—		20		25		—		25
Capitalized software	4.2 years	554		399		155		525		369		156
Total intangible assets	7.0 years	$	822	$	600	$	222	$	807	$	569	$	238

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DEBT

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

Total debt, including long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):

	As of
	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	899	$	1,000	$	1,284
1.85% senior notes due 2025	500		468		500		509
4.20% senior notes due 2047	400		335		400		492
3.75% senior notes due 2046	400		314		400		459
Japanese yen term loan	62		62		78		78
Other	(31)		(31)		7		7
Subtotal	2,331		2,047		2,385		2,829
Less current maturities	(16)		(16)		—		—
Debt issuance costs and discounts – net of amortization	(21)		(21)		(23)		(23)
Long-term debt	$	2,294	$	2,010	$	2,362	$	2,806

Revolving Credit Facility

In August 2022, the Company entered into a First Amendment (the Amendment) to its existing five-year unsecured credit agreement originally entered into in February 2020. The Amendment changes the benchmark rate for borrowings denominated in U.S. and foreign currencies from LIBOR to certain alternative benchmark rates. This includes benchmark rates based on the Euro Interbank Offered Rate (EURIBOR) for borrowings denominated in Euros, the Canadian Dollar Offer Rate (CDOR) for borrowings denominated in Canadian dollars, the Sterling Overnight Index Average (SONIA) for borrowings denominated in sterling and Secured Overnight Financing Rate (SOFR) for borrowings denominated in U.S. dollars. The Amendment also updates certain other provisions regarding successor interest rates to LIBOR.

Senior Notes

In the years 2015-2020, Grainger issued $2.3 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.

The Company incurred debt issuance costs related to its Senior Notes of approximately $29 million, representing underwriting fees and other expenses, that were recorded as a contra-liability within Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net.

The Company uses interest rate swaps to manage the risks associated with its 1.85% Senior Notes. These swaps were designated for hedge accounting treatment as fair value hedges. The resulting carrying value adjustments as of September 30, 2022 and December 31, 2021, are presented within Other in the table above. For further discussion on the Company's hedge accounting policies and derivative instruments, see Note 6.

Term Loan

In August 2020, MonotaRO entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center (DC) network. As of September 30, 2022 and December 31, 2021, the carrying amount of the term loan, including current maturities due within one year, was $62 million and $78 million, respectively. The term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024 and bears an average interest of 0.05%.

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.

For further information on the Company’s debt instruments, see Note 6 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2021 Form 10-K.

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DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

The Company maintains various agreements with bank counterparties that permit the Company to enter into “over-the-counter” derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates on its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes.

Cash Flow Hedges

The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of Accumulated other comprehensive earnings (losses) (AOCE) and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of September 30, 2022 and December 31, 2021 was approximately $34 million.

The effect of the Company’s cash flow hedges on the Condensed Consolidated Statements of Earnings in Other – net and AOCE for the three and nine months ended September 30, 2022 and 2021 was not material.

Fair Value Hedges

The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swaps, along with the gain or loss on the hedged item, is recorded in earnings under the same line item, Interest expense – net. The notional amount of the Company’s outstanding fair value hedges as of September 30, 2022 and December 31, 2021 was $500 million.

The effect of the Company's fair value hedges on the Condensed Consolidated Statements of Earnings in Interest expense – net for the three and nine months ended September 30, 2022 and 2021, respectively, is as follows (in millions of dollars):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Gain or (loss):
Interest rate swaps:
Hedged item	$	11	$	3	$	36	$	12
Derivatives designated as hedging instrument	$	(11)	$	(3)	$	(36)	$	(12)

The fair value and carrying amounts of outstanding derivative instruments on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively, were as follows (in millions of dollars):

		As of
		September 30, 2022		December 31, 2021
	Balance Sheet Classification	Fair Value and Carrying Amounts
Cross-currency swap	Prepaid expenses and other current assets	$	1	$	—
	Other non-current liabilities	$	—	$	2
Interest rate swaps	Other assets	$	—	$	1
	Other non-current liabilities	$	35	$	—

The carrying amount of the liability hedged by the interest rate swaps recorded in Long-term debt, including the cumulative amount of fair value hedging adjustments, as of September 30, 2022 and December 31, 2021 totaled $465 million and $501 million, respectively.

Fair Value

The estimated fair values of the Company's derivative instruments were based on quoted market forward rates, which are classified as Level 2 inputs within the fair value hierarchy and reflect the present value of the amount that the Company would pay for contracts involving the same notional amounts and maturity dates. No adjustments were required during the current period to reflect the counterparty’s credit risk or the Company’s own nonperformance risk.

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DIVIDEND	9 Months Ended
	Sep. 30, 2022
Dividends [Abstract]
DIVIDEND	DIVIDENDOn October 26, 2022, the Company’s Board of Directors declared a quarterly dividend of $1.72 per share, payable December 1, 2022, to shareholders of record on November 14, 2022.

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Grainger's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The remaining international businesses, which include the Cromwell business, 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.

Corporate costs are allocated to each reportable segment based on benefits received. Additionally, intersegment sales transactions, which are sales between Grainger businesses in separate reportable segments, are eliminated within the segment to present only the impact of sales to external customers. Service fees for intersegment sales from the High-Touch Solutions N.A. segment to the Endless Assortment segment are included in each segment's Selling, general and administrative expenses (SG&A) and are eliminated in consolidation.

Following is a summary of segment results (in millions of dollars):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,180	$	550	$	2,663	$	387	$	9,111	$	1,506	$	7,558	$	975
Endless Assortment	701		58		646		59		2,117		175		1,913		172
Other	61		(5)		63		(8)		198		(10)		192		(17)
Total Company	$	3,942	$	603	$	3,372	$	438	$	11,426	$	1,671	$	9,663	$	1,130

The Company is a broad line distributor of MRO products and services. Products are regularly added and removed from the Company's product assortment. Accordingly, it would be impractical to provide sales information by product

category due to the way the business is managed, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked.

Assets for reportable segments are not disclosed. This information is not regularly reviewed by the Company's Chief Operating Decision Maker.

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CONTINGENCIES AND LEGAL MATTERS

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES AND LEGAL MATTERS

CONTINGENCIES AND LEGAL MATTERS

From time to time the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties.

As previously disclosed, beginning in the fourth quarter of 2019, Grainger, KMCO, LLC (KMCO) and other defendants have been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO chemical refinery located in Crosby, Harris County, Texas on April 2, 2019. The complaints in which Grainger has been named, which to date encompass approximately 186 plaintiffs, seek recovery of compensatory and other damages and relief in relation to personal injury, including one death and various other alleged injuries. On May 8, 2020, KMCO filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas for relief under Chapter 7 of Title 11 of the United States Bankruptcy Court in the case KMCO, LLC, No. 20-60028. As a result of the Chapter 7 proceedings, the claims against KMCO in the Harris County lawsuits were stayed. Effective January 1, 2021, the Bankruptcy Court lifted the stay with respect to KMCO. In the product liability related cases, the Harris County District Court has decided to conduct bellwether trials involving a subset of plaintiffs the Court believes are representative of the parties' claims and defenses. The first such trial is scheduled for mid-January 2023 and will include six plaintiffs. Additional trials may follow after the resolution of this initial trial.

On December 16, 2020, KMCO, the trustee of its estate and ORG Chemical Holdings, LLC, KMCO’s parent company (ORG), filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, which seeks unspecified damages (the KMCO Case). On April 1, 2021, 24 individual plaintiffs filed a petition in intervention seeking to be added as plaintiffs in the KMCO Case and seeking unspecified damages. On March 24, 2021, Indian Harbor Insurance Company, together with other insurance companies and underwriters, filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, seeking reimbursement of insurance payments made to or on behalf of KMCO and ORG, the insured parties under their respective policies, and other damages.

Grainger is investigating each of the various claims against the Company relating to the KMCO chemical refinery incident and intends to contest these matters vigorously.

Also, as a government contractor selling to federal, state and local governmental entities, the Company may be subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration, pricing and product compliance.

From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products manufactured by third parties purportedly distributed by the Company. While several lawsuits have been dismissed in the past based on the lack of product identification, if a specific product distributed by the Company is identified in any pending or future lawsuits, the Company will seek to exercise indemnification remedies against the product manufacturer to the extent available. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope, coverage and the costs of defense, of lawsuits involving claims of exposure to asbestos. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in these lawsuits.

While the Company is unable to predict the outcome of any of these proceedings and other matters, it believes that their ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial condition or results of operations.

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REVENUE (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenues

The following tables present the Company's percentage of revenue by reportable segment and by major customer industry:

	Three Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	8	%	14	%	9	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	2	%	14	%	18	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	32	%	30	%	32	%	29	%	30	%	29	%
Retail/Wholesale	8	%	15	%	9	%	9	%	10	%	10	%
Transportation	6	%	3	%	6	%	5	%	3	%	5	%
Other (1)	13	%	19	%	14	%	14	%	22	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	79	%	19	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the three months ended September 30, 2022 and 2021.

	Nine Months Ended September 30,
	2022						2021
	High-Touch Solutions N.A.		Endless Assortment		Total Company (2)		High-Touch Solutions N.A.		Endless Assortment		Total Company (2)
Contractors	9	%	15	%	10	%	9	%	15	%	10	%
Commercial	10	%	15	%	11	%	9	%	15	%	10	%
Government	17	%	3	%	14	%	19	%	3	%	15	%
Healthcare	6	%	2	%	5	%	7	%	2	%	6	%
Manufacturing	31	%	30	%	31	%	30	%	29	%	29	%
Retail/Wholesale	9	%	15	%	10	%	9	%	10	%	10	%
Transportation	6	%	3	%	5	%	5	%	3	%	5	%
Other (1)	12	%	17	%	14	%	12	%	23	%	15	%
Total net sales	100	%	100	%	100	%	100	%	100	%	100	%
Percent of total company revenue	80	%	18	%	100	%	78	%	20	%	100	%
(1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment.
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately 2% of revenue for both the nine months ended September 30, 2022 and 2021.

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PROPERTY, BUILDINGS AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Buildings and Equipment

Property, buildings and equipment consisted of the following (in millions of dollars):

	As of
	September 30, 2022		December 31, 2021
Land	$	329	$	329
Building, structures and improvements	1,403		1,431
Furniture, fixtures, machinery and equipment	1,630		1,567
Property, buildings and equipment	$	3,362	$	3,327
Less accumulated depreciation and amortization	1,953		1,903
Property, buildings and equipment – net	$	1,409	$	1,424

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Balances and Changes in Carrying Amounts of Goodwill

The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars):

	High-Touch Solutions N.A.		Endless Assortment		Other		Total
Balance at January 1, 2021	$	321	$	70	$	—	$	391
Translation	—		(7)		—		(7)
Balance at December 31, 2021	321		63		—		384
Translation	(10)		(11)		—		(21)
Balance at September 30, 2022	$	311	$	52	$	—	$	363

Schedule of Balance in Intangible Assets, Net

The balances in Intangible assets – net are as follows (in millions of dollars):

		As of
		September 30, 2022						December 31, 2021
	Weighted average life	Gross carrying amount		Accumulated amortization/impairment		Net carrying amount		Gross carrying amount		Accumulated amortization/impairment		Net carrying amount
Customer lists and relationships	11.7 years	$	215	$	177	$	38	$	221	$	176	$	45
Trademarks, trade names and other	14.3 years	33		24		9		36		24		12
Non-amortized trade names and other	Indefinite	20		—		20		25		—		25
Capitalized software	4.2 years	554		399		155		525		369		156
Total intangible assets	7.0 years	$	822	$	600	$	222	$	807	$	569	$	238

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DEBT (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-Term Debt Instruments

long-term, current maturities and debt issuance costs and discounts – net, consisted of the following (in millions of dollars):

	As of
	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
4.60% senior notes due 2045	$	1,000	$	899	$	1,000	$	1,284
1.85% senior notes due 2025	500		468		500		509
4.20% senior notes due 2047	400		335		400		492
3.75% senior notes due 2046	400		314		400		459
Japanese yen term loan	62		62		78		78
Other	(31)		(31)		7		7
Subtotal	2,331		2,047		2,385		2,829
Less current maturities	(16)		(16)		—		—
Debt issuance costs and discounts – net of amortization	(21)		(21)		(23)		(23)
Long-term debt	$	2,294	$	2,010	$	2,362	$	2,806

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DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Effect of Fair Value Hedges in Interest Expense, Net

The effect of the Company's fair value hedges on the Condensed Consolidated Statements of Earnings in Interest expense – net for the three and nine months ended September 30, 2022 and 2021, respectively, is as follows (in millions of dollars):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Gain or (loss):
Interest rate swaps:
Hedged item	$	11	$	3	$	36	$	12
Derivatives designated as hedging instrument	$	(11)	$	(3)	$	(36)	$	(12)

Schedule of Fair Value and Carrying Amounts of Outstanding Derivative Instruments

The fair value and carrying amounts of outstanding derivative instruments on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively, were as follows (in millions of dollars):

		As of
		September 30, 2022		December 31, 2021
	Balance Sheet Classification	Fair Value and Carrying Amounts
Cross-currency swap	Prepaid expenses and other current assets	$	1	$	—
	Other non-current liabilities	$	—	$	2
Interest rate swaps	Other assets	$	—	$	1
	Other non-current liabilities	$	35	$	—

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Summary of Segment Results

Following is a summary of segment results (in millions of dollars):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
	Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)		Net sales		Operating earnings (losses)
High-Touch Solutions N.A.	$	3,180	$	550	$	2,663	$	387	$	9,111	$	1,506	$	7,558	$	975
Endless Assortment	701		58		646		59		2,117		175		1,913		172
Other	61		(5)		63		(8)		198		(10)		192		(17)
Total Company	$	3,942	$	603	$	3,372	$	438	$	11,426	$	1,671	$	9,663	$	1,130

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REVENUE - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Accrued sales incentives	$ 96		$ 96		$ 73
Service Revenue
Disaggregation of Revenue [Line Items]
Total company revenue (as a percent)	1.00%	1.00%	1.00%	1.00%

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REVENUE - Disaggregation of Revenues (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	100.00%	100.00%	100.00%	100.00%
Operating earnings (losses)
Disaggregation of Revenue [Line Items]
Total company revenue (as a percent)	2.00%	2.00%	2.00%	2.00%
Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	9.00%	10.00%	10.00%	10.00%
Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	11.00%	10.00%	11.00%	10.00%
Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	14.00%	15.00%	14.00%	15.00%
Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	5.00%	6.00%	5.00%	6.00%
Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	32.00%	29.00%	31.00%	29.00%
Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	9.00%	10.00%	10.00%	10.00%
Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	6.00%	5.00%	5.00%	5.00%
Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	14.00%	15.00%	14.00%	15.00%
High-Touch Solutions N.A.
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	80.00%	79.00%	80.00%	78.00%
High-Touch Solutions N.A. | Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	8.00%	9.00%	9.00%	9.00%
High-Touch Solutions N.A. | Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	10.00%	9.00%	10.00%	9.00%
High-Touch Solutions N.A. | Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	17.00%	18.00%	17.00%	19.00%
High-Touch Solutions N.A. | Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	6.00%	7.00%	6.00%	7.00%
High-Touch Solutions N.A. | Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	32.00%	29.00%	31.00%	30.00%
High-Touch Solutions N.A. | Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	8.00%	9.00%	9.00%	9.00%
High-Touch Solutions N.A. | Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	6.00%	5.00%	6.00%	5.00%
High-Touch Solutions N.A. | Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	13.00%	14.00%	12.00%	12.00%
Endless Assortment
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	100.00%	100.00%	100.00%	100.00%
Percent of total company revenue	18.00%	19.00%	18.00%	20.00%
Endless Assortment | Contractors
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	14.00%	15.00%	15.00%	15.00%
Endless Assortment | Commercial
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	15.00%	15.00%	15.00%	15.00%
Endless Assortment | Government Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	3.00%	3.00%	3.00%
Endless Assortment | Healthcare Customer
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	2.00%	2.00%	2.00%	2.00%
Endless Assortment | Manufacturing
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	30.00%	30.00%	30.00%	29.00%
Endless Assortment | Retail/Wholesale
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	15.00%	10.00%	15.00%	10.00%
Endless Assortment | Transportation
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	3.00%	3.00%	3.00%	3.00%
Endless Assortment | Other
Disaggregation of Revenue [Line Items]
Total net sales (as a percent)	19.00%	22.00%	17.00%	23.00%

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PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	$ 3,362	$ 3,327
Less accumulated depreciation and amortization	1,953	1,903
Property, buildings and equipment – net	1,409	1,424
Land
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	329	329
Building, Structures and Improvements
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	1,403	1,431
Furniture, Fixtures, Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property, buildings and equipment	$ 1,630	$ 1,567

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GOODWILL AND OTHER INTANGIBLE ASSETS - Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 384	$ 391
Translation	(21)	(7)
Goodwill, ending balance	363	384
Other
Goodwill [Roll Forward]
Goodwill, beginning balance	0	0
Translation	0	0
Goodwill, ending balance	0	0
High-Touch Solutions N.A. | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Goodwill [Roll Forward]
Goodwill, beginning balance	321	321
Translation	(10)	0
Goodwill, ending balance	311	321
Endless Assortment | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Goodwill [Roll Forward]
Goodwill, beginning balance	63	70
Translation	(11)	(7)
Goodwill, ending balance	$ 52	$ 63

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GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Impairments	$ 0	$ 0	$ 0
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Cumulative goodwill impairments		137
Other
Segment Reporting Information [Line Items]
Cumulative goodwill impairments		105
High-Touch Solutions N.A. | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Cumulative goodwill impairments		$ 32

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GOODWILL AND OTHER INTANGIBLE ASSETS - Balance in Intangible Assets, Net (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Finite-lived intangible assets, useful life	7 years
Total intangible assets, gross	$ 822	$ 807
Finite-lived intangible assets, accumulated amortization	600	569
Total intangible assets, net	$ 222	238
Customer lists and relationships
Finite-lived intangible assets, useful life	11 years 8 months 12 days
Finite-lived intangible assets, gross	$ 215	221
Finite-lived intangible assets, accumulated amortization	177	176
Finite-lived intangible assets, net	$ 38	45
Trademarks, trade names and other
Finite-lived intangible assets, useful life	14 years 3 months 18 days
Finite-lived intangible assets, gross	$ 33	36
Finite-lived intangible assets, accumulated amortization	24	24
Finite-lived intangible assets, net	9	12
Non-amortized trade names and other
Finite-lived intangible assets, gross	20	25
Finite-lived intangible assets, accumulated amortization	0	0
Indefinite-lived intangible assets, carrying amount	$ 20	25
Capitalized software
Finite-lived intangible assets, useful life	4 years 2 months 12 days
Finite-lived intangible assets, gross	$ 554	525
Finite-lived intangible assets, accumulated amortization	399	369
Finite-lived intangible assets, net	$ 155	$ 156

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DEBT - Long-Term Debt Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 29, 2020
Debt Instrument [Line Items]
Long-term debt, gross	$ 2,331	$ 2,385
Other	(31)	(7)
Debt issuance costs and discounts – net of amortization	(21)	(23)
Long-term debt	2,294	2,362
Other, fair value	(31)	(7)
Long-term debt, gross, fair value	2,047	2,829
Current maturities	(16)	0
Less current maturities	(16)	0
Debt issuance costs and discounts, fair value	(21)	(23)
Long-term debt, excluding current maturities, , fair value	2,010	2,806
Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Long-term debt, gross	62	78
Long-term debt, fair value	62	78
Senior Notes, 4.60% due 2045 | Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	1,000	1,000
Long-term debt, fair value	$ 899	1,284
Interest rate	4.60%
Unsecured Senior Notes, 1.85% | Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 500	500
Long-term debt, fair value	$ 468	509
Interest rate	1.85%		1.85%
Senior Notes, 4.20% due 2047 | Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 400	400
Long-term debt, fair value	$ 335	492
Interest rate	4.20%
Senior Notes, 3.75% due 2046 | Senior notes
Debt Instrument [Line Items]
Long-term debt, gross	$ 400	400
Long-term debt, fair value	$ 314	$ 459
Interest rate	3.75%

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DEBT - Narrative (Details) $ in Millions	1 Months Ended
	Aug. 31, 2020 JPY (¥) payment	Feb. 29, 2020	Sep. 30, 2022 USD ($)	Sep. 30, 2022 JPY (¥)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 JPY (¥)	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Long-term debt, gross			$ 2,331		$ 2,385
Senior Notes
Debt Instrument [Line Items]
Debt principal amount							$ 2,300
Debt issuance costs							$ 29
Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Long-term debt, gross			$ 62		78
5-Year Unsecured Revolving Line Of Credit | Domestic Line of Credit
Debt Instrument [Line Items]
Debt instrument, term		5 years
Unsecured Senior Notes, 1.85% | Senior Notes
Debt Instrument [Line Items]
Interest rate		1.85%	1.85%	1.85%
Long-term debt, gross			$ 500		$ 500
Term Loan Agreement, 0.05% | Yen Denominated Bank Term Loan
Debt Instrument [Line Items]
Debt principal amount | ¥	¥ 9,000,000,000
Long-term debt, gross | ¥				¥ 62,000,000		¥ 78,000,000
Number of semi-annual principal payments | payment	4
Average interest rate	0.05%

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DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 29, 2020
Derivative [Line Items]
Derivative instruments and hedges, liabilities	$ 465	$ 501
Unsecured Senior Notes, 1.85% | Senior notes
Derivative [Line Items]
Interest rate	1.85%		1.85%
Designated as Hedging Instrument | Cash Flow Hedging
Derivative [Line Items]
Derivative, notional amount	$ 34	34
Designated as Hedging Instrument | Fair Value Hedging
Derivative [Line Items]
Derivative, notional amount	$ 500	$ 500

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DERIVATIVE INSTRUMENTS - Effect of Fair Value Hedges in Interest Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	$ (25)	$ (22)	$ (70)	$ (65)
Other Contract | Fair Value Hedging | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	11	3	36	12
Interest rate swaps | Fair Value Hedging | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense), net	$ (11)	$ (3)	$ (36)	$ (12)

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DERIVATIVE INSTRUMENTS - Fair Value and Carrying Amounts of Outstanding Derivative Instruments (Details) - Designated as Hedging Instrument - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Cross-currency swap | Prepaid expenses and other current assets
Derivative [Line Items]
Fair value and carrying value of derivative assets	$ 1	$ 0
Cross-currency swap | Other non-current liabilities
Derivative [Line Items]
Fair value and carrying value of derivative liabilities	0	2
Interest rate swaps | Other non-current liabilities
Derivative [Line Items]
Fair value and carrying value of derivative liabilities	35	0
Interest rate swaps | Other assets
Derivative [Line Items]
Fair value and carrying value of derivative assets	$ 0	$ 1

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DIVIDEND (Details)	Oct. 26, 2022 $ / shares
Subsequent event
Subsequent Event [Line Items]
Dividend declared (in dollars per share)	$ 1.72

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SEGMENT INFORMATION - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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SEGMENT INFORMATION - Summary of Segment Results (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Total net sales	$ 3,942	$ 3,372	$ 11,426	$ 9,663
Segment operating earnings	603	438	1,671	1,130
Other
Segment Reporting Information [Line Items]
Total net sales	61	63	198	192
Segment operating earnings	(5)	(8)	(10)	(17)
High-Touch Solutions N.A. | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Total net sales	3,180	2,663	9,111	7,558
Segment operating earnings	550	387	1,506	975
Endless Assortment | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items
Segment Reporting Information [Line Items]
Total net sales	701	646	2,117	1,913
Segment operating earnings	$ 58	$ 59	$ 175	$ 172

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CONTINGENCIES AND LEGAL MATTERS (Details)			12 Months Ended
	Apr. 01, 2021 plantiff	Jan. 01, 2021 plantiff	Dec. 31, 2019 plantiff death
Commitments and Contingencies Disclosure [Abstract]
Number of plaintiffs | plantiff	24	6	186
Number of deaths | death			1