W.W. Grainger Q2 Earnings Call Highlights

Strong second-quarter performance: Sales increased 10.3%, while daily organic constant-currency growth reached 13.7%.

Operating margin rose to 16.1% and diluted EPS climbed more than 20% to $12.01, helped partly by tariff refunds.

Outlook raised: Grainger now expects full-year daily organic constant-currency sales growth of 11.5% to 13%, operating margin of 15.8% to 16.2% and EPS of $45.50 to $47.25.

Management also anticipates roughly 4% pricing contribution for the year.

CFO transition announced: CFO Dee Merriwether will depart on Sept. 4, with Laurie Thomson serving as interim CFO while Grainger searches for a permanent replacement.

The company said the transition is not expected to disrupt operations.

W.W. Grainger NYSE: GWW reported second-quarter 2026 sales growth and higher profitability, citing broad-based demand improvement, operational execution and tariff refunds, while raising its full-year outlook.

Chairman and CEO D.G. Macpherson said sales remained strong in both the company’s High-Touch Solutions and Endless Assortment segments despite what he described as an uncertain external environment.

He said most end markets accelerated during the quarter, with particular strength in manufacturing, government, contractors and retail customers.

“More and more customers are asking us to help them run their operations more efficiently and solve specific challenges,” Macpherson said, pointing to inventory-management and safety-related services as contributors to customer growth.

Grainger reported total sales growth of 10.3% for the quarter, or 13.7% on a daily organic constant-currency basis.

Operating margin was 16.1%, up 120 basis points from the prior-year quarter, while diluted earnings per share rose more than 20% to $12.01.

Operating cash flow totaled $444 million, enabling the company to return $341 million to shareholders through dividends and share repurchases.

Senior Vice President and CFO Dee Merriwether said gross margin reached 39.5%, an increase of 100 basis points from a year earlier.

Results included a 90-basis-point benefit from refunds of tariffs paid under the International Emergency Economic Powers Act, or IEEPA, on products directly imported by Grainger.

Merriwether said the company recognized the majority of those refunds during the second quarter as a reduction in cost of goods sold.

Grainger expects the remaining benefit over the second half of the year to be immaterial.

The company said the refunds, including associated price actions, only partially offset IEEPA-related costs it absorbed in 2025.

High-Touch Solutions sales increased 11.9% on a reported basis and 11.7% on a daily constant-currency basis.

The segment’s operating margin rose 70 basis points to 17.3%.

The segment benefited from volume gains, pricing and some project-related spending.

However, Merriwether said a higher volume of lower-margin products and project sales created less favorable mix than management had expected.

Higher freight costs and private-label inventory costs also weighed on margins, while price-cost was approximately neutral during the quarter.

Macpherson said project activity, including work associated with data-center construction and related infrastructure, has supported revenue growth but has reduced gross margin.

He said such business is not dilutive to operating margin because it generally carries favorable contribution economics.

Grainger estimates that project spending added about 90 basis points to...