W.W. Grainger, Inc. Standard IR Presentation. As of July 18, 2018

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1 W.W. Grainger, Inc. Standard IR Presentation As of July 18, 2018

2 Safe Harbor Statement And Non-GAAP Financial Measures Safe Harbor Statement All statements in this communication, other than those relating to historical facts, are forward-looking statements. These 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. These 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 our expectations include, among others: higher product costs or other expenses; a major loss of customers; loss or disruption of source of supply; increased competitive pricing pressures; failure to develop or implement new technologies or business strategies; the implementation, timing and results of our strategic pricing initiatives and other responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, advertising, privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; disruption of information technology or data security systems; general industry or market conditions; general global economic conditions; currency exchange rate fluctuations; market volatility; commodity price volatility; labor shortages; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; natural and other catastrophes; unanticipated weather conditions; loss of key members of management; our ability to operate, integrate and leverage acquired businesses; changes in credit ratings; changes in effective tax rates and other factors which 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. Forwardlooking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forwardlooking statement, whether as a result of new information, future events or otherwise, except as required by law. Non-GAAP Measures Additional information relating to certain non-gaap financial measures referred to in this communication is available in the appendix of this communication. 2

3 Who We Are Leading distributor of MRO products for business Founded in 1927; more than 90 years of service 2017 revenues of $10.4 billion More than 3 million active customers, average customer invoice ~$300 ecommerce leadership Grainger is ranked 10th largest ecommerce retailer in North America by Internet Retailer First commerce-enabled website in the industry (1996) Online-only businesses for small customers (MonotaRO 2000; Zoro 2010) 69% of orders originated through digital channels in the U.S. (Grainger.com, KeepStock and EDI/ePro) Strong balance sheet and cash flow generation 3

Competitive Business Models Where We Compete High-Touch Multichannel Stocked assortment of high quality industrial MRO products High-touch model tailored to complex customer needs Strong technical

4 Competitive Business Models Where We Compete High-Touch Multichannel Stocked assortment of high quality industrial MRO products High-touch model tailored to complex customer needs Strong technical knowledge in categories Endless Assortment (Single Channel Online) Very broad assortment across all B2B categories Competitive prices and simplified customer experience Category Specialists Portfolio of category-specific products Deep technical and application knowledge Big Box Retailer Convenient and widespread store locations Caters to need-it-now purchases 4

Our Portfolio and Imperatives For the year ended 12/31/2017 1 Organic growth excludes acquisitions, divestitures and foreign exchange. Organic revenue growth is not on daily basis.

5 Our Portfolio and Imperatives For the year ended 12/31/ Organic growth excludes acquisitions, divestitures and foreign exchange. Organic revenue growth is not on daily basis. 2 Reference slides for GAAP vs. non-gaap reconciliations. 3 International includes Cromwell, Fabory, Mexico, China and Latin America. 4 U.S. segment operating margin. 5 ROIC shown is for MonotaRO, which serves as a proxy for the overall single channel business. 6 Total company also includes Specialty Brands, eliminations and unallocated expenses. 7 Results for 2017 have been restated due to adoption of Accounting Standards Update (ASU) , Compensation Retirement Benefits (Topic 715). 5 5

6 Q Results Total Company $2.86B Revenue $359M Adj. Op. Earnings 9% YoY $2.62B $2.86B Q2'17 Q2'18 23% YoY $291M $359M U.S. Large daily volume growth on sales of $6.2 billion 1% FY'16 8% 9% 7% 5% 3% 4% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 $4.37 Adj. EPS Q2'17 Q2'18 59% YoY $4.37 $2.74 Q2'17 Q2'18 U.S. Medium daily volume growth on sales of $0.9 billion 26% 30% 29% 3% 18% -11% -7% FY'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Reference slides for GAAP vs. non-gaap reconciliations. Note: U.S. Large revenue of $6.2 billion and U.S. Medium revenue of $0.9 billion for the year-ended 12/31/2017. Total product COGS dollars (excludes freight, rebates and other adjustments) used as a proxy for volume. 6 6

U.S. Multichannel Value Proposition Advantaged MRO Solutions Broad assortment of

experience Consultative Sales And Services Model Help customers manage inventory and

services Order origination to best suit customer needs Flawless Order to Cash Process High

7 U.S. Multichannel Value Proposition Advantaged MRO Solutions Broad assortment of high-quality products Deep product expertise and customer knowledge Best-in-class digital experience Consultative Sales And Services Model Help customers manage inventory and reduce costs Solve most pressing customer problems Offer technical support and other services Order origination to best suit customer needs Flawless Order to Cash Process High percentage of orders stocked, shipped complete and delivered quickly No-hassle invoicing and returns processes 7

8 Value Proposition Resonates With Medium As Well Competitively Advantaged Customer Offer In-stock, high quality products Grainger s usually got it. They have a huge inventory. If they don't have it [at one store] they usually have it across town, or they can have it delivered to you next day. Fair prices Sometimes the power tools might be a few more dollars, but Grainger is one of the few people that still warranty. Even a crescent wrench, if it breaks they honor the warranty on it. Consultative Sales And Services Model Technical Support I was looking for a boiler hot water pump and had very limited information about the old one. The Grainger rep was extremely helpful in finding the replacement pump and getting it to me quickly. Technical Support My experience with Grainger trying to find the right product has always been good. The quick access to the technical department and help finding parts is essential because we don't always have the time or the answers to our problems. Flawless Order To Cash Process Complete orders, delivered quickly Easy to place my order, billing and delivery addresses already set-up and basically next-day delivery! The people on the phone are friendly, efficient and helpful! Complete orders, delivered quickly Very little delay in receiving products. Orders are sent in a timely fashion and are accurate. 8

9 Building Upon Our Digital Advantage Digital Marketing and More Relevant Prices Large: market share ~8% Majority of business already competitively priced Increased share gains as customers buy more infrequently purchased items Medium: market share ~2% Majority growth coming from existing/lapsed business Meaningful portion coming from new customer acquisition Growth spread across all midsize business regardless of size or end market Midsize GP rates higher than U.S. segment average Overall return on marketing investment increasing Building Digital Capabilities Launched Gamut in 2017 Response to curated search experience positive One leader now responsible for both Gamut and Grainger.com: Improving existing Grainger.com experience and seeing good progress Likely to expose Gamut search to Grainger.com customers in the next 12 months Exploring next steps for our digital offer 9

10 Canada Business Model Reset 10

11 Single Channel Online Model: Continued Growth And Profitability ~$800M sales in 2017 (27% sales growth vs in local currency) Acquiring 500K customers a year Low cost model: ~13% OE Product assortment: 13 million skus (300,000 stocked) ~$500M revenue in 2017 (~19% sales growth vs. 2016) Acquiring 900K customers a year Low cost model: continued operating earnings improvement Product offering: 1.8 million skus (650,000 stocked) Continued customer acquisition engines Developing sticky relationships through both businesses Expect MonotaRO and Zoro combined operating margin of ~11% by 2019 and ROIC 1 of ~50% Note: 2019 guidance as of 1/24/2018. Reference slides for GAAP vs. non-gaap reconciliation. 1. ROIC shown is for MonotaRO, which serves as a proxy for the overall single channel business. 11

12 Expense Leverage and Productivity Improving U.S. Expense to COGS (%) Cost Takeout/Productivity 50% 40% 51% 50% 49% 47% 45% 43% 42% 39% Expectations for 2018 and 2019 unchanged U.S.: $90 - $120 million 30% Canada: $50 - $70 million 20% All other: $10 - $20 million 10% 0% Continue to expect $150 $210 million of cost takeout through 2019, net of digital investments Note: Guidance as of 7/18/2018. Reference slides for GAAP vs. non-gaap reconciliation. U.S. expense to COGS expectations for 2018 and 2019 exclude revenue recognition accounting standard for comparability purposes. 12

13 2018 Guidance Ranges 2018E Sales ($ billions) $ $11.3 % vs. prior year 5.5% to 8.5% Op. Earnings ($ billions) $1.3 - $1.4 % vs. prior year 10% to 18% Op. Margin 11.5% % bps vs. prior year 50 to 90 EPS $ $16.05 % vs. prior year 32% to 40% 2018 revenue now expected to grow 5.5% to 8.5% on strong Q2 performance and lower expected price deflation in the U.S. in the second half After normalizing for 50 bps related to revenue recognition, GP rate expected to decline between 50 bps and 20 bps Operating margin now expected to be 11.5% to 11.9% on improved GP rate and expense productivity Note: Guidance as of 7/18/2018. Reference slides for GAAP vs. non-gaap reconciliations. Results for 2017 have been restated due to adoption of Accounting Standards Update (ASU) , Compensation Retirement Benefits (Topic 715). See supplement on IR website. 13

14 Appendix 14

15 Size (MRO potential in $ / year) U.S. Large and Medium Represents 2017 Multisite/ Contract Single-site/ Noncontract revenue U.S. Large: ~$6.2B in revenue and ~8% share of $75B market Large (>$60K) ~$4.3B ~$1.0B Largest business with healthy profitability U.S. Large Contract business ~$5.2B Medium ($10-60K) ~$0.7B ~$0.6B U.S. Large Noncontract business ~$1.0B Small (<$10K) ~$0.2B ~$0.3B U.S. Medium: ~$0.9B revenue and ~2% share of $50B market Modest-sized business with high profitability Note: Multichannel only. Does not include Zoro and Specialty Brands. All numbers are 2017 revenue. Numbers may not sum due to rounding. 15

Creating Digital Advantage For The Multichannel Model Leveraging new capabilities for an exceptional customer experience Gamut built as R&D; invested in highly curated product information and search

16 Creating Digital Advantage For The Multichannel Model Leveraging new capabilities for an exceptional customer experience Gamut built as R&D; invested in highly curated product information and search Building the best industrial distribution website by combining Gamut s capabilities with Grainger.com Will not be a separate website Not going to compete like endless assortment competitors, will curate data to provide relevant solutions 16

17 2018 U.S. Segment Price/Cost As of 4/19/ E As of 7/18/ E Total Price (1.5%) (1.0%) Price Reset (3.0%) (2.5%) Price Increases/Mix 1.5% 1.5% Impact of pricing reset expected to improve Expectation of COGS deflation of -0.5% for 2018 remains consistent COGS (0.5%) (0.5%) Total (1.0%) (0.5%) Note: As of 7/18/

18 2018 Guidance: Sales Bridge Company 2018E U.S. Segment 2018E 7/18/2018 7/18/2018 Volume 6% to 8% 6.5% to 9.5% Price (1%) to 0% (1.5%) to (0.5%) Organic (Daily) 5% to 8% 5% to 9% Other 1 0.5% (0.5%) Total 5.5% to 8.5% 4.5% to 8.5% Note: As of 7/18/ Other includes impact of sales day differences, weather/holiday timing, divestitures, FX and intercompany. 18

19 Restructuring Costs and Benefits Cost Savings ($Millions) '17 '18E '17 '18E '19E U.S Canada Colombia Other Business Units Total Restructuring costs and savings averaging a 2-year payback Note: As of 7/18/

20 Reported Segment Results (in thousands of dollars) Three Months Ended June 30, Six Months Ended June 30, Sales United States $ 2,175,106 $ 1,999,153 $ 4,282,792 $ 3,952,597 Canada 176, , , ,254 Other Businesses 622, ,560 1,210,245 1,023,967 Intersegment sales (113,915) (99,557) (225,057) (195,420) Net sales to external customers $ 2,860,212 $ 2,615,269 $ 5,626,613 $ 5,156,398 Operating earnings United States $ 349,713 $ 309,460 $ 706,217 $ 619,102 Canada (13,667) (27,727) (33,824) (44,456) Other Businesses 40,899 (14,222) 77,321 17,285 Unallocated expense (32,959) (38,431) (70,898) (70,350) Operating earnings $ 343,986 $ 229,080 $ 678,816 $ 521,581 Company operating margin 12.0 % 8.8% 12.1 % 10.1 % ROIC* for Company 28.4 % 21.7 % ROIC* for United States 46.1 % 39.7 % ROIC* for Canada -13.9% -16.4% *The GAAP financial statements are the source for all amounts used in the Return on Invested Capital (ROIC) calculation. ROIC is calculated using operating earnings divided by net working assets (a 3-point average for the year-to-date). Net working assets are working assets minus working liabilities defined as follows: working assets equal total assets less cash equivalents (3-point average of $96.7 million), deferred taxes, and investments in unconsolidated entities, plus the LIFO reserve (3-point average of $383.7 million). Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to employees' profit sharing plans, and accrued expenses. 20

21 Q and 2018 GAAP to Non-GAAP Reconciliations 2018 Three Months Ended June 30, Gross Profit % 2017 Gross Profit % Gross profit reported $ 1,110, % $ 1,039, % Restructuring (United States) 300 Restructuring (Canada) (34) 2, Restructuring (Other Businesses) 1, Subtotal 1, , Gross profit adjusted $ 1,112, % $ 1,042, % Segment operating earnings adjusted Three Months Ended June 30, Six Months Ended June 30, % % United States 355, , , ,883 Canada (1,649) (7,242 ) (10,886) (22,884) Other Businesses 43,271 27,288 80,868 58,795 Unallocated expense (38,017) (38,431) (75,586) (70,350) Segment operating earnings adjusted $ 359,282 $ 291,178 23% $ 702,150 $ 578,444 21% ROIC* for Company 29.3% 24.0% 2018 Three Months Ended June 30, Operating Margin % 2017 Operating Margin % ROIC* for United States 46.2% 39.3% ROIC* for Canada -4.5% -8.4% Operating earnings reported $ 343, % $ 229, % Restructuring (United States) 7, , Branch gains (United States) (1,385) (13,438) (0.5) Restructuring (Canada) 12, , Restructuring (Other Businesses) 2, , Restructuring (Unallocated expense) (5,058) (0.2) Subtotal 15, , *Adjusted ROIC is calculated as defined on slide 20 of this presentation, excluding the items adjusting operating earnings as noted above. Operating earnings adjusted $ 359, % $ 291, % 21

22 Q and 2018 GAAP to Non-GAAP Reconciliations Three Months Ended June 30, Six Months Ended June30, % % Net earnings reported $ 236,981 $ 97, % $ 468,516 $ 272,665 72% Restructuring (United States) 5,589 11,161 7,948 13,081 Branch gains (United States) (1,053) (8,419) (6,778) (14,300) Restructuring (Canada) 8,880 16,498 17,210 17,301 Restructuring (Other Businesses) 2,270 43,969 3,220 43,969 Restructuring (Unallocated expense) (3,847) (3,566) Subtotal 11,839 63,209 18,034 60,051 Net earnings adjusted $ 248,820 $ 161,130 54% $ 486,550 $ 332,716 46% Free Cash Flow Three Months Ended June 30, Six Months Ended June 30, Net cash provided by operating activities $247,954 $191,232 $394,839 $372,178 Less: Additions to property, building and equipment 53,934 52, , ,147 Add: Proceeds from the sale of assets 17,293 21,452 43,280 69,758 Free Cash Flow $ 211,313 $160,305 $335,036 $310,789 Diluted earnings per share reported $ 4.16 $ % $ 8.23 $ % Pretax adjustments: Restructuring (United Sates) Branch gains (United States) (0.02) (0.23) (0.16) (0.39) Restructuring (Canada) Restructuring (Other Businesses) Restructuring (Unallocated expense) (0.09) (0.08) Total pretax adjustments Tax effect (1) (0.06) 0.01 (0.09) 0.05 Total, net of tax Diluted earnings per share adjusted $ 4.37 $ % $ 8.55 $ % (1) The tax impact of adjustments is calculated based on the income tax rate in each applicable jurisdiction, subject to deductibility limitations and the Company's ability to realize the associated tax benefits 22

23 IR Contacts Irene Holman Vice President, Investor Relations Michael P. Ferreter Senior Manager, Investor Relations

W.W. Grainger, Inc. Standard IR Presentation. As of March 1, 2018

W.W. Grainger, Inc. Standard IR Presentation As of March 1, 2018 Safe Harbor Statement And Non-GAAP Financial Measures Safe Harbor Statement All statements in this communication, other than those relating