GRAINGER PROVIDES STRATEGIC UPDATE AND MULTI-YEAR FINANCIAL OUTLOOK AT INVESTOR DAY

Company expects strong performance to continue over the next three years

CHICAGO, Sept. 21, 2022 /PRNewswire/ -- Grainger (NYSE: GWW), the leading broad line distributor of maintenance, repair and operating (MRO) products serving businesses and institutions, hosts investors today at the Company's Northeast Distribution Center in Bordentown, New Jersey. Members of Grainger's executive team will present an update on the Company's strategy including new three-year financial targets through 2025.

"We have made significant progress over the last several years by starting with the customer and focusing on what matters to drive strong results," says Chairman and CEO D.G. Macpherson ahead of the Investor Day event. "With a commitment to provide a flawless experience and tangible value for our customers, we are gaining momentum and remain well-positioned to create significant shareholder value by delivering on our financial targets over the next three years."

Presenters will highlight the following expectations during the event:

• In its High-Touch Solutions N.A. segment, due to strong execution on its strategic growth engines, the Company increases its U.S. market outgrowth target to 400 to 500 basis points per year
• In its Endless Assortment segment, the Company outlines key tenets of its flywheel and expectations for annual high-teens sales growth in local currency for both Zoro and MonotaRO through 2025
• The Company provides insights into its supply chain advantage and outlines plans to invest in Distribution Center capacity, automation, and environmental, social and governance (ESG) initiatives to support future growth expectations

Assuming normal economic growth, delivering on these expectations would result in total Company full year 2025 performance targets, including:

• Net sales between $19 and $20 billion, representing 8% to 10% compounded annual growth compared to the mid-point of 2022 guidance of $15.1 billion
• Adjusted operating margin of approximately 14.5%, representing approximately 70 basis points of improvement compared to the mid-point of 2022 guidance of 13.8%
• Adjusted earnings per share of approximately $40, a 43% increase compared to the mid-point of 2022 guidance of $28
• Operating cash flow of approximately $2 billion, a 54% increase compared to the mid-point of 2022 guidance at $1.3 billion
• Expected annual capital expenditures between $500 and $600 million per year for 2023 through 2025
• Management plans to follow a balanced approach to capital allocation that combines investing to accelerate growth with continuing to return significant capital to shareholders through dividends and share repurchases

The Company also reaffirms its prior full year 2022 guidance, previously provided on July 29, 2022, including 14.5% to 16.5% total Company daily sales growth, and adjusted EPS between $27.25 to $28.75, up 37% to 45% compared to 2021.

The Investor Day event will begin at 10:00 a.m. Eastern Time and a live webcast of the event and presentation materials are accessible through invest.grainger.com. For those unable to participate today, a webcast replay of the event will be available at invest.grainger.com.

About Grainger

W.W. Grainger, Inc., with 2021 sales of $13.0 billion, is a leading broad line distributor with operations primarily in North America, Japan and the United Kingdom. Grainger achieves its purpose, We Keep the World Working®, by serving more than 4.5 million customers worldwide with a wide range of product categories that keep customer operations running and their people safe. The Company also delivers services and solutions, such as technical support and inventory management, to provide tangible value and save customers time and money. Grainger offers more than 2 million maintenance, repair and operating (MRO) products in its High-Touch Solutions assortment and more than 30 million products through its expanding Endless Assortment offering. For more information, visit www.grainger.com.

Safe Harbor Statement

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," "expect," "could," "forecast," "may," "intend," "plan," "predict," "project," "will," or "would," and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results. 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) on the Company's businesses, its employees, customers and suppliers, including disruption to the Company's operations, disruption caused by business responses to the COVID-19 pandemic, and global or regional economic downturns or recessions; 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; 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 that can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication 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.

Non-GAAP Measures

This press release includes certain non-GAAP forward-looking information. The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of future restructurings, asset impairments, and other charges. Neither these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measures is not provided.

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SOURCE W.W. Grainger, Inc.