Q2 2026 WW Grainger Inc Earnings Call Transcript
Key Points
- Strong sales growth of 10.3% reported and 13.7% daily organic constant currency, with broad-based acceleration across most end markets.
- Operating margin expanded 120 basis points year-over-year to 16.1%, driven by gross margin flow-through and leverage in Endless Assortment.
- Diluted EPS grew over 20% to $12.01, benefiting from IEEPA tariff refunds and strong operational execution.
- Endless Assortment segment delivered robust growth, with Zoro U.S. up 18.4% and MonotaRO up 24% in local currency, supported by improved customer retention and enterprise growth.
- Company raised full-year guidance for sales, operating margin, and EPS, reflecting strong momentum and confidence in the back half.
- New Northwest distribution center in Oregon began operations, enhancing capacity and service capabilities.
- Canada business showed significant improvement, with sales growth and operating margins reaching near-decade highs.
- July sales trended up over 13% daily organic constant currency, indicating continued strong demand into Q3.
- Gross margin in High-Touch was impacted by higher volume of lower-margin products and project-based spend, leading to less favorable mix than expected.
- SG&A deleveraged slightly in High-Touch due to increased marketing investment and higher incentive-based compensation from strong top-line results.
- Ongoing inflationary pressures from rising freight and product costs due to the Middle East conflict, requiring additional pricing actions in September.
- MonotaRO experienced customer pre-buying of petroleum-related products ahead of anticipated shortages, which has subsided and is expected to moderate growth in the back half.
- Private label cost headwinds and unfavorable freight costs partially offset gross margin benefits in the quarter.
- CFO Dee Merriweather announced her departure, creating leadership transition uncertainty despite interim appointment.
- Third-quarter operating margins are expected to decline sequentially due to the lap of tariff refunds, with margins in the mid-15% range.
Greetings, and welcome to the W.W. Grainger second-quarter 2026 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce Kyle Bland, Vice President, Investor Relations. Thank you. You may begin.
Good morning. Welcome to Grainger's second-quarter 2026 earnings call. With me are D.G. Macpherson, Chairman and CEO; and Dee Merriweather, Senior Vice President and CFO.
As a reminder, some of our comments today may include forward-looking statements that are subject to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially is included in the company's most recent Form 8-K and other periodic reports filed with the SEC.
This morning's call includes non-GAAP financial measures, which reflect certain adjustments in previous periods as noted in the presentation. There were no adjusting items in the second-quarter 2026 period. We have
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