W.w. Grainger, Inc. · NYSE:GWW

W.w. Grainger — Q4 2023 Earnings Presentation

36 slides from W.w. Grainger's earnings presentation, Feb 2, 2024

1. Slide 1: Q4 2023 Earnings Call

   NYSE: GWW Q4 2023 Earnings Call February 2, 2024

2. Slide 2: Safe Harbor Statement and Non-GAAP Financial Measures

   Safe Harbor Statement and Non-GAAP Financial Measures All statements in this communication, other than those relating to historical facts, are “forward-looking statements.” Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expe

3. Slide 3: Opening Remarks

   Opening Remarks D.G. Macpherson Chairman and CEO © 2024 W.W. Grainger, Inc. 3

4. Slide 4: Driving our strategy forward through focused execution

   Driving our strategy forward through focused execution 2023 HIGHLIGHTS ✓ Strengthened operational advantage in both segments – Further improved and continue to leverage our proprietary technology and data assets – Drove share gain through continued investment in our strategic growth engines in HTS –

5. Slide 5: Technology and data advantage fueling HTS growth engines

   Technology and data advantage fueling HTS growth engines Large scale creates significant Simplified through home-grown Driving growth and delivering customer value complexity technology and data solutions Completed category reviews on ~80% Merchandising of revenue to-date and continue to see sales u

6. Slide 6: Continuing to propel the proven Endless Assortment flywheel

   Continuing to propel the proven Endless Assortment flywheel to deliver long-term value 2023 HIGHLIGHTS ✓ Increased registered users by 14% within the segment ✓ Grew enterprise customer revenue at MonotaRO by 35% ✓ Expanded MonotaRO operating margins by over 100 basis points ✓ Improved repeat purchas

7. Slide 7: Improving service levels and customer satisfaction while investing for the future

   Improving service levels and customer satisfaction while investing for the future Supply chain service nearing pre-pandemic levels Incoming Capacity ✓ Added three new (1) (3) bulk warehouses Service Level ✓ Broke ground on Pacific N.W. DC ✓ Announced new Houston-area DC 2019 2020 2021 2022 2023 ✓ Op

8. Slide 8: The Grainger Edge powering an award-winning culture

   The Grainger Edge® powering an award-winning culture (1)(2) External recognition Our “We Keep the Purpose World Working®” Our Principles Start with the Customer Win as One Team Embrace Curiosity Invest in our Success Act with Intent Compete with Urgency Do the Right Thing (1) ©2023 Fortune Media IP

9. Slide 9: Delivered strong full-year 2023 results

   Delivered strong full-year 2023 results Executed well across the business ((1) Sales Adjusted EPS • Delivered daily sales growth of 8.6% (9.5% in daily, organic constant currency) +8.2% +430bps +23.6% • Outgrew U.S. MRO market by ~525 bps in HTS-U.S. • Expanded operating margins by 130bps to 15.7% $

10. Slide 10: Q4 2023 Results

    Q4 2023 Results Dee Merriwether SVP and CFO © 2024 W.W. Grainger, Inc. 10

11. Slide 11: Q4 2023 Results: Total Company

    Q4 2023 Results: Total Company Summary Results (Adjusted) Commentary vs. Prior Year ($ in millions) % vs. PY Q4 2023 Q4 2022 Sales increased 5.1% (reported and daily) Fav/(Unfav) • 5.5% sales growth on a daily, organic constant currency Sales $ 3,997 $ 3,802 5.1% basis Daily Sales 63.5 60.3 5.1% • G

12. Slide 12: Q4 2023 Results: High-Touch Solutions - N.A.

    Q4 2023 Results: High-Touch Solutions - N.A. Summary Results (Adjusted) Commentary vs. Prior Year ($ in millions) % vs. PY Q4 2023 Q4 2022 Fav/(Unfav) Sales increased 4.7% (reported and daily) • Increase consistent on a daily, organic constant Sales $ 3,215 $ 3,071 4.7% currency basis Daily Sales 51

13. Slide 13: Sales Outgrowth: High-Touch Solutions - U.S.

    Sales Outgrowth: High-Touch Solutions - U.S. Delivered annual outgrowth above target at ~525 bps Annual Trend Quarterly Trend 800 800 775 Volume 750 share gain of ~475 bps Impacted by ~525 525 550 heightened pandemic sales; FY’23 ~525bps ~450 bps 2-year avg Target is to grow ~225 400 to 500 bps 190

14. Slide 14: Q4 2023 Results: Endless Assortment

    Q4 2023 Results: Endless Assortment Summary Results Commentary vs. Prior Year ($ in millions) % vs. PY Q4 2023 Q4 2022 Sales increased 6.0% (reported and daily); up Fav/(Unfav) 8.2% on a daily, constant currency basis Sales $ 709 $ 670 6.0% • Zoro growth of 2.6% on a daily basis Daily Sales 11.3 10.

15. Slide 15: Looking Ahead

    Looking Ahead Dee Merriwether SVP and CFO © 2024 W.W. Grainger, Inc. 15

16. Slide 16: Solid revenue growth expected across both segments

    Solid revenue growth expected across both segments 3.5 - 6.5% 7.0 - 10.0% $17.2 - 17.7B ((1)(2) (1) High-Touch Solutions - N.A. Endless Assortment Total Company 2024 daily, organic constant currency sales 2024 daily, constant currency sales growth 2024 net sales growth vs. 2023 vs. 2023 Key assumpti

17. Slide 17: Anticipate operating margin will stay generally stable

    Anticipate operating margin will stay generally stable 17.4 - 17.9% 7.3 - 7.8% 15.3 - 15.8% High-Touch Solutions N.A. Endless Assortment Total Company 2024 adj. operating margin; down 40 bps 2024 adj. operating margin; down 70 bps 2024 adj. operating margin to up 10 bps vs. 2023 to down 20 bps vs. 2

18. Slide 18: Robust cash flow supporting disciplined capital allocation

    Robust cash flow supporting disciplined capital allocation $1.9 - 2.1B 2024 Capital Allocation Priorities Total Company 1 Invest in the business 2 Return excess cash to shareholders 2024 operating cash flow Organic Opportunistic Share Executing consistent, return- Dividends Investment M&A Repurchase

19. Slide 19: 2024 Full Year Guidance: Total Company

    2024 Full Year Guidance: Total Company 2024 Y/Y change 2023A Guidance Expect (updated as of Feb 2, 2024) 4.3% to 7.3% Sales ($ billions) $16.5 $17.2 – $17.7 continued (4.0% to 7.0% daily, organic constant currency sales) strong results Gross Profit Margin 39.4% 39.1% – 39.4% (30) to Flat while inves

20. Slide 20: Replacing 2025 Targets with long-term earnings framework

    Looking beyond 2024 Replacing 2025 Targets with long-term earnings framework Focused execution Attractive total return potential Strong Generally Grow SG&A top-line stable gross slower than Double-digit growth profit margins sales (1) Adj. EPS (1)(2) • Targeting 400 - 500bps of • Stability from FY 2

21. Slide 21: Closing Remarks

    Closing Remarks D.G. Macpherson Chairman and CEO © 2024 W.W. Grainger, Inc. 21

22. Slide 22: Q&A

    Q&A © 2024 W.W. Grainger, Inc. 22

23. Slide 23: Appendix

    Appendix © 2024 W.W. Grainger, Inc. 23

24. Slide 24: FY 2023 Results: Total Company

    FY 2023 Results: Total Company Summary Results (Adjusted) Commentary vs. Prior Year ($ in millions) % vs. PY FY 2023 FY 2022 Sales increased 8.2%; up 8.6% on a daily basis Fav/(Unfav) • 9.5% sales growth on a daily, organic constant currency Sales $ 16,478 $ 15,228 8.2% basis Daily Sales 64.9 59.7 8

25. Slide 25: Q4 2023 Segment Highlights: High-Touch Solutions - N.A.

    Appendix Q4 2023 Segment Highlights: High-Touch Solutions - N.A. HTS - U.S. HTS - Canada ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +4.7% Daily -50 bps +1.5% +90 bps Daily $2,865 $3,000 42.3% 41.8% $147 $149 33.4% 34.3% Q4’22 Q4’23 Q4’22 Q4’23 Q4’22 Q4’23 Q4’22 Q4’23 Daily, orga

26. Slide 26: Q4 2023 Segment Highlights: Endless Assortment

    Q4 2023 Segment Highlights: Endless Assortment (1) MonotaRO Zoro - U.S. ($ millions) ($ millions) Sales Gross Profit Sales Gross Profit +7.9% +2.6% Daily +10 bps +380 bps Daily -170 bps 27.6% 27.7% 34.5% 32.8% Q4’22 Q4’23 Q4’22 Q4’23 $438 41.4% $258 $264 $406 37.7% Op. Margin Op. Margin +240 bps -25

27. Slide 27: Q4 2023 Sales Performance: High-Touch Solutions - U.S.

    Q4 2023 Sales Performance: High-Touch Solutions - U.S. (1) (1) Large Customers Mid-sized Customers FY’23: +9.4% FY’23: +10.5% 19% 17% 16% 14% 11% 10% 10% 7% 7% 4% Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Note: FY’22 large customer daily sales growth was 20% Note: FY’22 mid-size cu

28. Slide 28: Sales Growth By Customer End Market: HTS - U.S.

    Sales Growth By Customer End Market: HTS - U.S. Q4’23 5 Quarter Trend Commercial Services UP Low-Single Digits Contractors UP Low-Double Digits Government UP High-Single Digits Healthcare UP High-Single Digits Manufacturing UP Low-Single Digits Retail UP Mid-Single Digits Transportation UP High-Sing

29. Slide 29: Operating Metrics: Endless Assortment

    Operating Metrics: Endless Assortment Total Registered Users Total Active SKUs (Zoro U.S.) (user count in (SKU count in thousands) millions) +14% +18% 14,187 12.8 13.1 13,402 13,778 12.2 12,920 12.0 12,479 11.1 5,024 5,166 4,737 4,921 4,571 8,481 8,754 9,021 7,908 8,183 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23

30. Slide 30: 2024 Full Year Supplemental Guidance

    Appendix 2024 Full Year Supplemental Guidance Cash Flow Guidance Sales Growth Guidance 2024 Guidance (updated as of February 2, 2024) ($ millions) 2023A 2024 Guidance (updated as of February 2, 2024) Low High Operating $2,031 $1,900 – $2,100 Reported Sales 4.3% 7.3% Cash Flow Daily Impact(3) (0.8%)

31. Slide 31: Definitions & Calculations

    Definitions & Calculations Basis of presentation: The Company has a controlling ownership interest in MonotaRO, which is part of our Endless Assortment segment. MonotaRO’s results are fully consolidated, reflected in U.S. GAAP, and reported one-month in arrears. Results will differ from MonotaRO’s e

32. Slide 32: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Sales growth for the three and twelve months ended December 31, 2023 (percent change compared to the prior year period) (unaudited) Note: For more information on the Company's use of non-GAAP measures in this presentation, please see the appendix Definitions and Calc

33. Slide 33: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Income statement adjustments for the three months ended December 31, 2023 and December 31, 2022 (in millions, except for percentage data) (unaudited) Total Company results included adjusting items which impacted U.S. GAAP as follows: Q4 2023 Reported Adjusted Q4 2022

34. Slide 34: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Income statement adjustments for the twelve months ended December 31, 2023 and December 31, 2022 (in millions, except for percentage data) (unaudited) Total Company results included adjusting items which impacted U.S. GAAP as follows: FY 2023 Reported Adjusted FY 202

35. Slide 35: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Key metrics for the three and twelve months ended December 31, 2023 (in millions, except for percentage data) (unaudited) Note: For more information on the Company's use of non-GAAP measures in this presentation, please see the appendix Definitions and Calculations.

36. Slide 36: IR Contacts

    IR Contacts Kyle Bland Vice President, Investor Relations Andrew Ansay Director, Investor Relations InvestorRelations@grainger.com © 2024 W.W. Grainger, Inc. 36

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