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Grainger reported third-quarter revenue of $5.2 billion, up 11.3% from $4.7 billion a year earlier. Revenue exceeded the consensus estimate of $5.06 billion, while adjusted diluted earnings per share of $12.54 exceeded the $11.64 consensus.
The filing said both High-Touch Solutions North America and Endless Assortment contributed to sales growth. It attributed the increase in high-touch sales primarily to volume and the increase in Endless Assortment sales to repeat business and enterprise customer growth at MonotaRO, partly offset by currency movements.
Grainger reported gross margin of 38.8%, compared with 38.6% a year earlier, and operating margin of 16.0%, compared with 11.0%. Diluted EPS rose to $12.42 from $6.12; the filing shows that prior-year adjustments included the loss on the sale of Cromwell and closure of Zoro U.K. Adjusted diluted EPS rose to $12.54 from $10.21.
Grainger reported $661 million in operating cash flow and $546 million in free cash flow for the quarter, after $115 million in capital expenditures.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $5.2 billion | $4.7 billion | 11.3% |
| Diluted EPS | $12.42 | $6.12 | 102.9% |
| Gross margin | 38.8% | 38.6% | 0.2 percentage points |
| Operating margin | 16.0% | 11.0% | 5.0 percentage points |
| Free cash flow | $331.0 million | $339.0 million | −2.36% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $12.01 | $11.28 | Beat by 6.47% |
| Revenue | $5.0 billion | $5.0 billion | Beat by 1.35% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO D.G. Macpherson said Grainger saw an improving demand environment and growth across all major end markets. Interim CFO Laurie Thomson said high-touch sales growth reflected higher volumes and pricing, with contributions from the company’s largest end markets and industries exposed to data centers.
In Endless Assortment, Thomson said Zoro U.S. growth came from business customers and improving retention, while MonotaRO continued to see enterprise-customer growth and repeat purchases. In the question-and-answer session, Macpherson said Zoro’s acceleration was “almost entirely existing customers buying more.” He said the business had focused on acquiring customers, reducing discounting and turning them into frequent buyers.
Thomson said high-touch gross margin declined from a year earlier because of freight costs and a less favorable mix of project-related spending. She said a tariff refund benefit was largely offset by an inventory write-off after a fire at the Louisville distribution center. Macpherson said nobody was hurt.
On pricing, Thomson said September increases addressed most known cost increases at the time, but diesel prices had continued to fluctuate. Macpherson said the company was still negotiating with suppliers and considering freight and product costs as it planned pricing for the start of the year.
Macpherson said Grainger was piloting acquired computer-vision and AI technology for inventory tracking and checkout. Asked about the investment, he said the company planned to integrate it into its core processes; Thomson estimated an implied fourth-quarter operating-margin drag of 10 to 15 basis points as the solution scales.
Asked about fourth-quarter gross margin, Thomson attributed much of the expected sequential improvement to supplier rebates and September pricing in the high-touch business, partly offset by freight pressure. She said preliminary October sales growth benefited from comparison with the prior-year government shutdown and expected growth to normalize during the quarter.
Guidance
Grainger raised its FY2026 sales outlook to $19.8 billion–$20.0 billion from $19.4 billion–$19.7 billion, and its adjusted diluted EPS outlook to $47.00–$48.00 from $45.50–$47.25.
Thomson said the updated outlook includes daily organic constant-currency sales growth of 13.0%–14.5%, compared with the previous 11.5%–13.0%. Grainger also raised its adjusted operating-margin range to 16.0%–16.2% from 15.8%–16.2%.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Operating margin | Q4 FY2026 | 15.5% | — | New |
| Gross margin | Q4 FY2026 | 39.6% | — | New |
| Revenue | Q4 FY2026 | $4.9 billion | — | New |
| EPS, non-GAAP | FY2026 | $47.00–$48.00 | $45.50–$47.25 | Raised |
| Operating margin, Endless Assortment Non Gaap | FY2026 | 10.9%–11.1% | — | New |
| Operating margin, High Touch Solutions Na Non Gaap | FY2026 | 17.3%–17.5% | — | New |
| Tax rate, non-GAAP | FY2026 | 24.7% | — | New |
| Share repurchases, non-GAAP | FY2026 | $975.0 million–$1.0 billion | — | New |
| Capex, Non Gaap Cash Basis | FY2026 | $575.0 million–$625.0 million | — | New |
| Operating cash flow, non-GAAP | FY2026 | $2.4 billion–$2.5 billion | — | New |
| Operating margin, non-GAAP | FY2026 | 16.0%–16.2% | — | New |
| Gross margin, non-GAAP | FY2026 | 39.4%–39.6% | — | New |
| Revenue growth, Non Gaap Sales Growth | FY2026 | 10.1%–11.6% | — | New |
| Revenue, non-GAAP | FY2026 | $19.8 billion–$20.0 billion | — | New |
| Operating margin, Adjusted; endless Assortment | FY2026 | 10.4%–10.8% | — | New |
| Operating margin, Adjusted; high Touch Solutions Na | FY2026 | 17.2%–17.6% | — | New |
| Tax rate, Adjusted | FY2026 | 25.0% | — | New |
| Share repurchases, Adjusted | FY2026 | $975.0 million–$1.1 billion | — | New |
| Capex, Adjusted; cash Basis | FY2026 | $575.0 million–$650.0 million | — | New |
| Operating cash flow, Adjusted | FY2026 | $2.3 billion–$2.4 billion | — | New |
| Operating margin, Adjusted | FY2026 | 15.8%–16.2% | — | New |
| Gross margin, Adjusted | FY2026 | 39.3%–39.6% | — | New |
| Revenue growth, Adjusted; reported Sales Growth | FY2026 | 8.40%–10.0% | — | New |
| Revenue, Adjusted; net Sales | FY2026 | $19.4 billion–$19.7 billion | — | New |
| EPS | FY2026 | $45.50–$47.25 | — | New |
| Operating margin | FY2026 | 15.8%–16.2% | — | New |