Graybar Electric Company Inc.

10/28/2024 | Press release | Distributed by Public on 10/28/2024 13:34

Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

c402-20240930x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 000-00255

GRAYBAR ELECTRIC COMPANY, INC.

(Exact name of registrant as specified in its charter)

New York

13-0794380

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

34 North Meramec Avenue, St. Louis, Missouri

63105

(Address of principal executive offices)

(Zip Code)

(314) 573 - 9200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

N/A

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files).

YES NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES NO

Common Stock Outstanding at October 15, 2024: 32,113,992

(Number of Shares)

Graybar Electric Company, Inc. and Subsidiaries

Quarterly Report on Form 10-Q

For the Period Ended September 30, 2024

(Unaudited)

Table of Contents

PART I.

FINANCIAL INFORMATION

Page

Item 1.

Financial Statements

Condensed Consolidated Statements of Income

3

Condensed Consolidated Statements of Comprehensive Income

4

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Cash Flows

6

Condensed Consolidated Statements of Changes in Shareholders' Equity

7

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

22

PART II.

OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 5.

Other Information

23

Item 6.

Exhibits

24

Signatures

25


‎

2

PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Stated in millions, except per share data)

2024

2023

2024

2023

Net Sales

$

2,979.5

$

2,852.6

$

8,717.5

$

8,317.3

Cost of merchandise sold

(2,382.3)

(2,283.7)

(6,986.5)

(6,640.6)

Gross Margin

597.2

568.9

1,731.0

1,676.7

Selling, general and administrative expenses

(426.8)

(389.6)

(1,235.8)

(1,126.9)

Depreciation and amortization

(20.2)

(18.0)

(59.9)

(47.6)

Other income, net

1.1

1.6

8.7

3.5

Income from Operations

151.3

162.9

444.0

505.7

Non-operating expenses, net

(0.8)

(2.7)

(2.9)

(8.6)

Income before Provision for Income Taxes

150.5

160.2

441.1

497.1

Provision for income taxes

(40.0)

(42.1)

(114.5)

(129.6)

Net Income

110.5

118.1

326.6

367.5

Net income attributable to noncontrolling interests

(0.3)

(0.4)

(0.8)

(0.8)

Net Income attributable to Graybar Electric Company, Inc.

$

110.2

$

117.7

$

325.8

$

366.7

Net Income attributable to Graybar Electric Company, Inc. per share of Common Stock(A)

$

3.42

$

3.67

$

10.08

$

11.40

Cash Dividends per share of Common Stock

$

0.30

$

0.30

$

0.90

$

0.90

Average Common Shares Outstanding(A)

32.2

32.1

32.3

32.2

(A)Adjusted for the declaration of a 20% stock dividend in 2023, shares related to which were issued in February 2024. Prior to the adjustment, the average common shares outstanding were 26.7million and 26.8million for the three and nine months ended September 30, 2023.

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.


‎

3

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended
‎September 30,

Nine Months Ended
‎September 30,

(Stated in millions)

2024

2023

2024

2023

Net Income

$

110.5

$

118.1

$

326.6

$

367.5

Other Comprehensive Income (Loss)

Foreign currency translation

2.4

(4.4)

(3.5)

(0.7)

Pension and postretirement benefits liability adjustments (net of
‎ tax of $(0.5), $(-), $(1.5) and $(0.2) respectively)

1.4

0.3

4.2

0.7

Total Other Comprehensive Income (Loss)

3.8

(4.1)

0.7

-

Comprehensive Income

$

114.3

$

114.0

$

327.3

$

367.5

Less: Comprehensive income attributable to noncontrolling
‎ interests, net of tax

0.4

0.1

0.8

0.6

Comprehensive Income attributable to Graybar Electric Company, Inc.

$

113.9

$

113.9

$

326.5

$

366.9

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.


‎

4

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

(Stated in millions, except share and per share data)

2024

2023

ASSETS

(Unaudited)

Current Assets

Cash and cash equivalents

$

202.4

$

98.6

Trade receivables (less allowances of $13.7and $13.6, respectively)

1,813.4

1,657.3

Merchandise inventory

893.2

908.4

Other current assets

102.3

79.6

Total Current Assets

3,011.3

2,743.9

Property, at cost

Land

96.0

97.4

Buildings

585.8

598.7

Furniture and fixtures

335.6

310.3

Software

161.1

158.7

Finance leases

7.2

13.4

Total Property, at cost

1,185.7

1,178.5

Accumulated depreciation and amortization

(700.2)

(678.6)

Net Property

485.5

499.9

Operating Lease Right-of-use Assets

222.2

219.2

Goodwill

230.9

179.0

Intangible Assets (less accumulated amortization of $55.8and $38.0, respectively)

319.1

261.9

Other Non-current Assets

130.2

102.2

Total Assets

$

4,399.2

$

4,006.1

LIABILITIES

Current Liabilities

Trade accounts payable

1,376.4

1,255.3

Accrued payroll and benefit costs

173.4

192.1

Current operating lease liabilities

54.8

51.9

Other current liabilities

234.1

224.0

Total Current Liabilities

1,838.7

1,723.3

Postretirement Benefits Liability

56.2

55.9

Pension Liability

83.2

107.3

Non-current Operating Lease Liabilities

184.6

183.4

Other Non-current Liabilities

46.7

47.9

Total Liabilities

2,209.4

2,117.8

SHAREHOLDERS' EQUITY

Shares at

Capital Stock

September 30, 2024

December 31, 2023

Common, stated value $20.00per share

Authorized

50,000,000

50,000,000

Issued to voting trustees

27,539,105

26,614,542

Issued to shareholders

5,675,278

5,518,543

In treasury, at cost

(1,028,114)

(69,174)

Outstanding Common Stock

32,186,269

32,063,911

643.7

641.3

Advance Payments on Subscriptions to Common Stock

1.4

-

Retained Earnings

1,713.8

1,417.1

Accumulated Other Comprehensive Loss

(177.2)

(177.9)

Total Graybar Electric Company, Inc. Shareholders' Equity

2,181.7

1,880.5

Noncontrolling Interests

8.1

7.8

Total Shareholders' Equity

2,189.8

1,888.3

Total Liabilities and Shareholders' Equity

$

4,399.2

$

4,006.1

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.
‎

5

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

(Stated in millions)

2024

2023

Cash Flows from Operating Activities

Net Income

$

326.6

$

367.5

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

59.9

47.6

Non-cash operating lease expense

44.5

36.8

Deferred income taxes

15.2

22.5

Net gain on disposal of property

(6.2)

(0.5)

Losses on impairment of assets

-

0.4

Earnings on investment in employee deferred compensation trust

(1.0)

(0.5)

Net income attributable to noncontrolling interests

(0.8)

(0.8)

Changes in assets and liabilities:

Trade receivables

(133.4)

(10.1)

Merchandise inventory

26.7

162.9

Other current assets

(22.6)

1.7

Other non-current assets

(44.8)

(1.1)

Trade accounts payable

112.1

(27.2)

Accrued payroll and benefit costs

(19.3)

(57.4)

Other current liabilities

9.8

(5.6)

Non-current liabilities

(62.5)

(119.7)

Total adjustments to net income

(22.4)

49.0

Net cash provided by operating activities

304.2

416.5

Cash Flows from Investing Activities

Proceeds from disposal of property

13.7

0.8

Capital expenditures for property

(37.9)

(58.7)

Amounts attributable to acquisitions

(146.3)

(380.2)

Investment in employee deferred compensation trust

(0.6)

(25.0)

Net cash used by investing activities

(171.1)

(463.1)

Cash Flows from Financing Activities

Net increase in short-term borrowings

-

70.4

Principal payments under finance arrangements

(1.2)

(1.3)

Sales of common stock

23.0

20.3

Purchases of common stock

(19.2)

(16.0)

Sales of noncontrolling interests' common stock

-

1.5

Purchases of noncontrolling interests' common stock

(0.5)

(0.2)

Dividends paid

(29.1)

(24.2)

Contingent consideration paid

(2.3)

-

Net cash (used) provided by financing activities

(29.3)

50.5

Net Increase in Cash

103.8

3.9

Cash, Beginning of Year

98.6

69.4

Cash, End of Period

$

202.4

$

73.3

Non-cash Investing and Financing Activities

Acquisitions of equipment under finance leases

$

-

$

0.5

Acquisitions of assets under operating leases

$

47.3

$

53.2

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.
‎

6

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, stated in millions)

Graybar Electric Company, Inc. Shareholders' Equity

Common

Accumulated

Stock

Other

Total

Common

Subscribed,

Retained

Comprehensive

Noncontrolling

Shareholders'

Stock

Unissued

Earnings

Loss

Interests

Equity

December 31, 2023

$

641.3

$

-

$

1,417.1

$

(177.9)

$

7.8

$

1,888.3

Net income

105.2

0.3

105.5

Other comprehensive loss

(2.9)

(0.1)

(3.0)

Stock issued

13.5

13.5

Stock purchased

(5.4)

(0.2)

(5.6)

Advance payments

0.7

0.7

Dividends declared

(9.7)

(9.7)

March 31, 2024

$

649.4

$

0.7

$

1,512.6

$

(180.8)

$

7.8

$

1,989.7

Net income

110.4

0.2

110.6

Other comprehensive loss

(0.1)

-

(0.1)

Stock issued

4.1

4.1

Stock purchased

(8.3)

(0.3)

(8.6)

Advance payments

0.7

0.7

Dividends declared

(9.7)

(9.7)

June 30, 2024

$

645.2

$

1.4

$

1,613.3

$

(180.9)

$

7.7

$

2,086.7

Net income

110.2

0.3

110.5

Other comprehensive income

3.7

0.1

3.8

Stock issued

4.0

-

4.0

Stock purchased

(5.5)

-

(5.5)

Dividends declared

(9.7)

(9.7)

September 30, 2024

$

643.7

$

1.4

$

1,713.8

$

(177.2)

$

8.1

$

2,189.8

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.


‎

7

Graybar Electric Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, stated in millions)

Graybar Electric Company, Inc. Shareholders' Equity

Common

Accumulated

Stock

Other

Total

Common

Subscribed,

Retained

Comprehensive

Noncontrolling

Shareholders'

Stock

Unissued

Earnings

Loss

Interests

Equity

December 31, 2022

$

531.8

$

-

$

1,141.0

$

(152.8)

$

5.6

$

1,525.6

Net income

124.8

0.2

125.0

Other comprehensive income

0.3

-

0.3

Stock issued

11.6

11.6

Stock purchased

(5.4)

(0.2)

(5.6)

Advance payments

1.2

1.2

Dividends declared

(8.0)

(8.0)

March 31, 2023

$

538.0

$

1.2

$

1,257.8

$

(152.5)

$

5.6

$

1,650.1

Net income

124.2

0.2

124.4

Other comprehensive income

3.7

0.1

3.8

Stock issued

4.1

4.1

Stock purchased

(6.1)

-

(6.1)

Dividends declared

(8.1)

(8.1)

June 30, 2023

$

536.0

$

1.2

$

1,373.9

$

(148.8)

$

5.9

$

1,768.2

Net income

117.7

0.4

118.1

Other comprehensive loss

(3.8)

(0.3)

(4.1)

Stock issued

3.5

1.5

5.0

Stock purchased

(4.5)

-

(4.5)

Advance payments

(0.1)

(0.1)

Dividends declared

(8.1)

(8.1)

September 30, 2023

$

535.0

$

1.1

$

1,483.5

$

(152.6)

$

7.5

$

1,874.5

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.


‎

8

Graybar Electric Company, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Stated in millions, except share and per share data)

(Unaudited)

1. DESCRIPTION OF THE BUSINESS

Graybar Electric Company, Inc. ("Graybar", "Company", "we", "our", or "us") is a New York corporation, incorporated in 1925. We are engaged in the distribution of electrical and communications and data networking products and are a provider of related supply chain management and logistics services. We primarily serve customers in the construction, commercial, institutional and government ("CIG"), and industrial & utility vertical markets, with products and services that support new construction, infrastructure updates, building renovation, facility maintenance, repair and operations ("MRO"), and original equipment manufacturers ("OEM"). In our primary role as third-party wholesale distributor, we neither manufacture nor contract to manufacture the products that we sell; however, one of our subsidiaries may contract to manufacture some of its private label lighting fixtures. Our business activity is primarily based in the United States ("U.S."). We also have subsidiary operations with distribution facilities in Canada and Puerto Rico.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accounting policies conform to generally accepted accounting principles in the U.S. ("GAAP") and are applied on a consistent basis among all years presented. The full summary of our significant accounting policies is included in our latest Annual Report on Form 10-K for the year ended December 31, 2023.

Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by Graybar pursuant to the rules and regulations of the U.S. Securities and Exchange Commission applicable to interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that our disclosures are adequate to make the information presented not misleading. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect reported amounts. Our condensed consolidated financial statements include amounts that are based on management's best estimates and judgments. Actual results could differ from those estimates. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, included in our latest Annual Report on Form 10-K.

In the opinion of management, this quarterly report includes all adjustments, consisting of normal recurring accruals and adjustments, necessary for the fair presentation of the condensed consolidated financial statements presented. Results for interim periods are not necessarily indicative of results to be expected for the full year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Graybar and our subsidiary companies. All material intercompany balances and transactions have been eliminated. The ownership interests that are held by owners other than the Company are in subsidiaries owned by the Company and are accounted for and reported as noncontrolling interests.

Reclassifications

Certain reclassifications have been made to prior year's financial information to conform to the September 30, 2024 presentation. These changes consisted of aggregating current portion of long-term debt and other accrued taxes with other current liabilities, and aggregating long-term debt with other non-current liabilities within the December 31, 2023 consolidated balance sheet. The reclassifications had no effect on total assets or liabilities as of December 31, 2023.

9

New Accounting Standards

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU" or "Update") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which requires public entities to provide enhanced disclosures of significant segment expenses and other segment items. Public entities with a single reportable segment must provide all the disclosures required by Topic 280, including the significant segment expense disclosures. The guidance requires public entities to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The guidance applies to all public entities and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The guidance shall be applied retrospectively to all periods presented in the financial statements. We are currently evaluating the impact of adopting the Update to our required disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" which is intended to enhance the transparency and decision usefulness of annual income tax disclosures. The guidance addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Unless we choose to adopt these provisions early, the guidance is effective for annual periods beginning after December 15, 2024 and shall be applied on a prospective basis. We are currently evaluating the impact of this Update on our consolidated financial statements and expect expansion of our income tax footnote disclosures.

3. REVENUE

The following table summarizes the percentages of our net sales attributable to each of our vertical markets for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024

2023

2024

2023

Construction

60.0

%

59.4

%

59.8

%

57.8

%

CIG

21.9

22.7

22.4

24.1

Industrial & Utility

18.1

17.9

17.8

18.1

Total net sales

100.0

%

100.0

%

100.0

%

100.0

%

Certain reclassifications have been made to the vertical market assigned to customers in the prior year's information to conform to the September 30, 2024 presentation.

We had nomaterial contract assets, contract liabilities, or deferred contract costs recorded on the condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023. In addition, for the three and nine months ended September 30, 2024 and 2023, revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was not material.

4. INCOME TAXES

Our total provision for income taxes was $40.0million and $114.5million for the three and nine months ended September 30, 2024, respectively. We record our income tax provision using a full-year forecasted methodology, including discrete items in the period in which they occur. Our year-to-date effective tax rate was 26.0% for the nine months ended September 30, 2024 compared to 26.1% for the nine months ended September 30, 2023.

In 2021, the Organization for Economic Cooperation and Development ("OECD") introduced a framework, referred to as Pillar Two, creating a 15% global minimum effective tax rate for large multinational corporations. Effective January 1, 2024, Pillar Two legislation was enacted or substantively enacted in certain jurisdictions. The Company reviewed the Pillar Two effective rates in all jurisdictions in which the Company operates and confirmed that these rates were all above 15%. Consequently, the Company has concluded that there will be no "top-up" tax liability for 2024.

Our federal income tax returns for the tax years 2021 and forward are available for examination by the U.S. Internal Revenue Service ("IRS"). The statute of limitations for the 2020 federal return expired on October 15, 2024. Our state income tax returns for 2019 through 2023 remain subject to examination by various state authorities with the latest period closing on December 31, 2028. We have not extended the statutes of limitations in any state jurisdictions with respect to years prior to 2019.

10

5. DEBT

Revolving Credit Facility

At December 31, 2023, we, along with Graybar Canada Limited, our Canadian operating subsidiary ("Graybar Canada"), had an unsecured, five-year, $750.0million committed revolving credit agreement maturing in August 2026with Bank of America, N.A. and the other lenders named therein (the "Credit Agreement"), which included a combined letter of credit sub-facility of up to $25.0million, a U.S. swing-line loan facility of up to $75.0million, and a Canadian swing-line loan facility of up to $20.0million. The Credit Agreement included a $100.0million sublimit (in U.S. or Canadian dollars) available for borrowings by Graybar Canada. Our borrowing availability under the facility is reduced by the amount of borrowings by Graybar Canada, but we may use the sublimit amount to increase our borrowings, to the extent available. If we were to use available borrowings under the Credit Agreement that included the sublimit amount, then Graybar Canada's available capacity would be reduced by our use of such amount. The Credit Agreement contained an accordion feature, which allowed us to request increases in the aggregate borrowing commitments of up to $375.0million.

On June 26, 2024, we, along with Graybar Canada, amended the Credit Agreement, pursuant to the terms and conditions of a CDOR transition amendment (the "CDOR Amendment"), by and among Graybar, as parent borrower, Graybar Canada Limited, as a borrower, the lenders party thereto, Bank of America, N.A. as Domestic Administrative Agent, Domestic Swing Line Lender and Domestic L/C Issuer and Bank of America, N.A., acting through its Canada Branch, as Canadian Administrative Agent, Canadian Swing Line Lender and Canadian L/C Issuer.

The CDOR Amendment amended the Credit Agreement to, among other things, change the interest rate under the Credit Agreement for borrowings denominated in Canadian Dollars from a CDOR-based rate to a rate based on Canadian Overnight Repo Rate Average (CORRA), subject to the adjustments specified in the Credit Agreement. Our borrowing availability remains unchanged under the revised Credit Agreement (the "Amended Credit Agreement").

Interest on our borrowings under the Amended Credit Agreement will be based on, at the borrower's election, either (A) (i) the base rate (as defined in the agreement) or (ii) term SOFR (as defined in the agreement, in the case of U.S. dollar-denominated borrowings) or (B) (i) the base rate or (ii) term CORRA (as defined in the agreement, in the case of Graybar Canada as borrower with respect to Canadian dollar-denominated borrowings), in each case plus an applicable rate, as determined by the pricing grid set forth in the Amended Credit Agreement. In connection with such a borrowing, the applicable borrower will also select the term of the loan from available tenors, up to six months, or automatically renew with the consent of the lenders. Swing line loans, which are daily loans, will bear interest at a rate based on, at the borrower's election, either (i) the base rate or (ii) term SOFR (or term CORRA, in the case of Graybar Canada with respect to Canadian dollar-denominated borrowings). In addition to interest payments, there are certain fees and obligations associated with borrowings, swing-line loans, letters of credit and other administrative matters.

We were in compliance with all covenants under the Amended Credit Agreement and Credit Agreement, respectively, as of September 30, 2024 and December 31, 2023.

At September 30, 2024, we had total debt of $2.4million, of which $0.9million was long-term debt. At December 31, 2023, we had total debt of $4.7million, of which $2.8million was long-term debt. There were noshort-term borrowings as of September 30, 2024 and December 31, 2023, respectively.

Short-term borrowings outstanding during the nine months ended September 30, 2024 ranged from noshort-term borrowings to a maximum of $38.0million. Short-term borrowings outstanding during the nine months ended September 30, 2023 ranged from noshort-term borrowings to a maximum of $232.0million.

At September 30, 2024, we had unused lines of credit under the Amended Credit Agreement amounting to $744.7million available, compared to $746.4million at December 31, 2023 under the Credit Agreement. These lines are available to meet our short-term cash requirements and are subject to annual fees of up to 40 basis points (0.40%).

We had interest income, net of $0.6million for the three months ended September 30, 2024, compared to interest expense, net of $1.5million for the three months ended September 30, 2023. We had interest income, net of $1.6million for the nine months ended September 30, 2024, compared to interest expense, net of $3.9million for the nine months ended September 30, 2023.

11

Private Placement Shelf Agreements

We have an uncommitted, unsecured $200.0million private placement shelf agreement (the "Prudential Shelf Agreement") with PGIM, Inc., which is expected to allow us to issue senior promissory notes to affiliates of PGIM, Inc. at fixed rate terms to be agreed upon at the time of any issuance during a three-yearissuance period ending in August 2026.

We also have an uncommitted, unsecured private placement shelf agreement (the "MetLife Shelf Agreement") with MetLife Investment Management, LLC (formerly known as MetLife Investment Advisors, LLC), and MetLife Investment Management Limited (collectively, "MetLife") and each other MetLife affiliate that becomes a party to the agreement. The MetLife Shelf Agreement is expected to allow us to issue senior promissory notes to MetLife at fixed or floating rate economic terms to be agreed upon at the time of issuance. On June 25, 2024, we amended the MetLife Shelf Agreement to, among other things, increase availability from $150.0million to $200.0million, and extend the issuance period to June 2027, and thereafter, for successive three-year periods until either party notifies the other party at least 30 days prior to the then applicable stated period end date of its intent not to extend.

We remain obligated under a most favored lender clause which is designed to ensure that any notes in the future under the Prudential Shelf Agreement and MetLife Shelf Agreement will continue to be of equal ranking with indebtedness under our Amended Credit Agreement.

Nonotes have been issued under either the Prudential Shelf Agreement or the MetLife Shelf Agreement as of September 30, 2024 and December 31, 2023.

Each shelf agreement contains representations and warranties of the Company and the applicable lender, events of default and affirmative and negative covenants, customary for agreements of this type. These covenants are substantially similar to those contained in the Amended Credit Agreement, subject to a number of exceptions and qualifications set forth in the applicable shelf agreement. All outstanding obligations of Graybar under one or both of these agreements may be declared immediately due and payable upon the occurrence of an event of default.

We were in compliance with all covenants under the Prudential Shelf Agreement and the MetLife Shelf Agreement as of September 30, 2024 and December 31, 2023.

Letters of Credit

We had total letters of credit of $11.1million outstanding as of September 30, 2024, of which $5.3million were issued under the Amended Credit Agreement. We had total letters of credit of $9.4million as of December 31, 2023, of which $3.6million were issued under the Credit Agreement. The letters of credit are issued primarily to support certain workers' compensation insurance policies and support performance under certain customer contracts.

6. PENSION AND OTHER POSTRETIREMENT BENEFITS

We have a noncontributory defined benefit pension plan (the "Pension Plan") covering substantially all employees first hired prior to July 1, 2015 after the completion of one year of service and 1,000 hours of service. The Pension Plan provides retirement benefits based on an employee's final average earnings and years of service. A supplemental benefit plan provides nonqualified pension benefits for compensation in excess of the IRS compensation limits applicable to the Pension Plan and eligible compensation deferred by a participant.

Our funding policy is to make contributions to the Pension Plan, provided that the total annual contributions will not be less than the Employee Retirement Income Security Act of 1974 ("ERISA") and the Pension Protection Act of 2006 minimums or greater than the maximum tax-deductible amount, to review the contribution and funding strategy on a regular basis, and to allow discretionary contributions to be made by us from time to time. The assets of the Pension Plan are invested primarily in fixed income investments and equity securities. We pay nonqualified pension benefits when they are due according to the terms of the supplemental benefit plan. We have an employee deferred compensation trust to meet funding obligations for nonqualified pension benefits to certain participants in the supplemental benefit plan. The assets of the employee deferred compensation trust are invested in highly liquid money market funds and U.S. Treasury securities.

We provide certain postretirement healthcare and life insurance benefits to retired employees. Substantially all of our employees hired or rehired prior to 2014 may become eligible for postretirement medical benefits if they reach the age and service requirements of the retiree medical plan and retire on a pension (except a deferred pension) under the Pension Plan. Postretirement life insurance

12

benefits are insured through an insurance company. We fund postretirement benefits as incurred, and accordingly, there were noassets held in the postretirement benefits plan at September 30, 2024 and December 31, 2023.

The net periodic benefit cost for the three and nine months ended September 30, 2024 and 2023 included the following components:

Pension Benefits

Postretirement Benefits

Three Months Ended

Three Months Ended

September 30,

September 30,

Components of Net Periodic Benefit Cost

2024

2023

2024

2023

Selling, general and administrative expenses:

Service cost

$

5.7

$

6.1

$

0.4

$

0.3

Total selling, general and administrative expenses

$

5.7

$

6.1

$

0.4

$

0.3

Non-operating expenses, net:

Interest cost

$

8.0

$

8.0

$

0.8

$

0.9

Expected return on plan assets

(8.0)

(7.2)

-

-

Amortization of net actuarial loss

1.9

0.3

-

-

Total non-operating expenses, net

$

1.9

$

1.1

$

0.8

$

0.9

Net periodic benefit cost

$

7.6

$

7.2

$

1.2

$

1.2

Pension Benefits

Postretirement Benefits

Nine Months Ended

Nine Months Ended

September 30,

September 30,

Components of Net Periodic Benefit Cost

2024

2023

2024

2023

Selling, general and administrative expenses:

Service cost

$

17.0

$

18.3

$

1.1

$

1.0

Total selling, general and administrative expenses

$

17.0

$

18.3

$

1.1

$

1.0

Non-operating expenses, net:

Interest cost

$

24.0

$

23.9

$

2.4

$

2.6

Expected return on plan assets

(24.0)

(21.7)

-

-

Amortization of net actuarial loss

5.7

0.9

-

-

Total non-operating expenses, net

$

5.7

$

3.1

$

2.4

$

2.6

Net periodic benefit cost

$

22.7

$

21.4

$

3.5

$

3.6

We made qualified and nonqualified pension contributions totaling $20.0million during the three-month period ended September 30, 2024 and contributions totaling $80.0million during the three-month period ended September 30, 2023. Contributions made during the nine-month periods ended September 30, 2024 and 2023 totaled $41.1million and $103.9million, respectively. No additional contributions are expected to be paid during the remainder of 2024, but may change at our discretion.

7. CAPITAL STOCK

Our common stock is 100% owned by active and retired employees, and there is no public trading market for our common stock. Since 1928, substantially all of the issued and outstanding shares of common stock have been held of record by voting trustees under successive voting trust agreements. A new Voting Trust Agreement was established effective March 3, 2017, which expires by its terms on March 1, 2027 because under applicable New York law, a voting trust may not have a term greater than ten years. At September 30, 2024, approximately 83% of our outstanding common stock was held in the voting trust. The participation of shareholders in the voting trust is voluntary at the time the voting trust is created, but is irrevocable during its term. Shareholders who elect not to participate in the voting trust hold their common stock as shareholders of record. Shareholders may elect to participate in the voting trust at any time during the term of the voting trust.

No holder of our common stock or voting trust interests representing our common stock ("common stock", "common shares", or "shares") may sell, transfer or otherwise dispose of any shares without first offering us the option to purchase those shares at the price at which they were issued. We also have the option to purchase at the issue price the common shares of any shareholder who ceases to be an employee for any reason other than death or "retirement" (as defined in our amended restated certificate of incorporation), and on the first anniversary of any holder's death. In the past, we have always exercised these purchase options, and we expect to continue

13

to do so in the foreseeable future. However, we can make no assurance that we will continue to exercise our purchase option in the future. All outstanding shares have been issued at $20.00per share.

Cash dividends paid were $9.7million and $8.1million for the three months ended September 30, 2024 and 2023, respectively. Cash dividends paid were $29.1million and $24.2million for the nine months ended September 30, 2024 and 2023, respectively.

We also have authorized 10,000,000shares of Delegated Authority Preferred Stock ("preferred stock"), par value one cent ($0.01). The preferred stock may be issued in one or more series, with the designations, relative rights, preferences, and limitations of shares of each such series being fixed by a resolution of our Board of Directors. There were noshares of preferred stock outstanding at September 30, 2024 and December 31, 2023.

8. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table represents amounts reclassified from accumulated other comprehensive loss for the three months ended September 30, 2024 and 2023:

Three Months Ended
‎September 30, 2024

Three Months Ended
‎September 30, 2023

Amortization of Pension
‎and Other
‎Postretirement Benefits Items

Amortization of Pension
‎and Other
‎Postretirement Benefits Items

Actuarial
‎Losses
‎Recognized

Actuarial
‎Losses
‎Recognized

Affected Line in Condensed Consolidated Statement of Income:

Non-operating expenses, net

$

1.9

$

0.3

Tax benefit

(0.5)

-

Total reclassifications for the period, net of tax

$

1.4

$

0.3

The following table represents amounts reclassified from accumulated other comprehensive loss for the nine months ended September 30, 2024 and 2023:

Nine Months Ended
‎September 30, 2024

Nine Months Ended
‎September 30, 2023

Amortization of Pension
‎and Other
‎Postretirement Benefits Items

Amortization of Pension
‎and Other
‎Postretirement Benefits Items

Actuarial
‎Losses
‎Recognized

Actuarial
‎Losses
‎Recognized

Affected Line in Condensed Consolidated Statement of Income:

Non-operating expenses, net

$

5.7

$

0.9

Tax benefit

(1.5)

(0.2)

Total reclassifications for the period, net of tax

$

4.2

$

0.7

14

The following table represents the activity included in accumulated other comprehensive loss for the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30, 2024

Three Months Ended

September 30, 2023

Foreign
‎Currency

Pension and Other Postretirement
‎Benefits

Total

Foreign
‎Currency

Pension and Other Postretirement
‎Benefits

Total

Beginning balance July 1,

$

(16.4)

$

(164.5)

$

(180.9)

$

(11.0)

$

(137.8)

$

(148.8)

Other comprehensive income (loss) before reclassifications

2.3

-

2.3

(4.1)

-

(4.1)

Amounts reclassified from accumulated other comprehensive income (net of tax $(0.5) and $(-))

-

1.4

1.4

-

0.3

0.3

Net current-period other comprehensive income (loss)

2.3

1.4

3.7

(4.1)

0.3

(3.8)

Ending balance September 30,

$

(14.1)

$

(163.1)

$

(177.2)

$

(15.1)

$

(137.5)

$

(152.6)

The following table represents the activity included in accumulated other comprehensive loss for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Foreign
‎Currency

Pension and Other Postretirement
‎Benefits

Total

Foreign
‎Currency

Pension and Other Postretirement
‎Benefits

Total

Beginning balance January 1,

$

(10.6)

$

(167.3)

$

(177.9)

$

(14.6)

$

(138.2)

$

(152.8)

Other comprehensive loss before reclassifications

(3.5)

-

(3.5)

(0.5)

-

(0.5)

Amounts reclassified from accumulated other comprehensive income (net of tax $(1.5) and $(0.2))

-

4.2

4.2

-

0.7

0.7

Net current-period other comprehensive (loss) income

(3.5)

4.2

0.7

(0.5)

0.7

0.2

Ending balance September 30,

$

(14.1)

$

(163.1)

$

(177.2)

$

(15.1)

$

(137.5)

$

(152.6)

9. COMMITMENTS AND CONTINGENCIES

We are subject to various claims, disputes, and administrative and legal matters incidental to our past and current business activities. As a result, contingencies arise resulting from an existing condition, situation, or set of circumstances involving an uncertainty as to the realization of a possible loss.

We have in place insurance coverage for litigation defense and claim settlement costs incurred in connection with our asbestos claims. We estimate the value of probable insurance recoveries associated with our asbestos reserve based on management's interpretations and estimates surrounding the available or applicable insurance coverage. We estimate the future payments for litigation defense and claim settlement costs based on our historical liabilities and current and projected caseloads. At September 30, 2024 and December 31, 2023, we had $2.3million and $38.4million of insurance receivables recorded in other current assets and other non-current assets, respectively, and $2.3million and $38.4million recorded in other current liabilities and other non-current liabilities, respectively, related to our asbestos litigation defense and claims settlement reserve.

15

Estimated loss contingencies are accrued only if the loss is probable and the amount of the loss can be reasonably estimated. With respect to a particular loss contingency, it may be probable that a loss has occurred but the estimate of the loss is a wide range. If we deem an amount within the range to be a better estimate than any other amount within the range, that amount will be accrued. However, if no amount within the range is a better estimate than any other amount, the minimum amount of the range is accrued. While we believe that none of these claims, disputes, administrative, and legal matters will have a material adverse effect on our financial position, these matters are uncertain and we cannot at this time determine whether the financial impact, if any, of these matters will be material to our results of operations in the period in which such matters are resolved or a better estimate becomes available.

10. ACQUISITIONS

During the nine months ended September 30, 2024, we completed fouracquisitions for a combined preliminary purchase price of $149.3million in cash, net of cash acquired. The preliminary purchase price allocation resulted in $55.1million and $75.2million of tax-deductible goodwill and other intangible assets, respectively. The acquisitions were funded with cash on hand. Since the dates of acquisition, the results of the acquired businesses are reflected in our condensed consolidated financial statements. Pro forma results of the acquisitions were not material; therefore, they are not presented. Additionally, during the nine months ended September 30, 2024, we received a post-closing working capital adjustment of $3.0million related to a 2023 acquisition.

16

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and notes thereto, and our audited consolidated financial statements, notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2023, included in our Annual Report on Form 10-K for such period as filed with the United States Securities and Exchange Commission (the "Commission"). The results shown herein are not necessarily indicative of the results to be expected in any future periods.

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes", "projects", "expects", "anticipates", "estimates", "intends", "strategy", "plan", "may", "will", "would",

"will be", "will continue", "will likely result", and other similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the PSLRA. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse impact on our operations and future prospects on a consolidated basis include, but are not limited to: general economic conditions, particularly in the commercial, industrial building, and residential construction industries; a sustained interruption in the operation of our information systems; cyber-attacks; volatility in the prices of industrial commodities; disruptions in our sources of supply; increased funding requirements and expenses related to our pension plan; the inability, or limitations on our ability, to borrow under our existing credit facilities or any replacements thereof; adverse legal proceedings or other claims; compliance with changing governmental regulations; a pandemic, epidemic, or other public health emergency; and the inability, or limitations on our ability, to raise debt or equity capital. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by applicable securities law. Further information concerning our business, including additional factors that could materially impact our financial results, is included herein and in our other filings with the Commission. Actual results and the timing of events could differ materially from the forward-looking statements as a result of certain factors, a number of which are outlined in Item 1A., "Risk Factors", of our Annual Report on Form 10-K for the year ended December 31, 2023.

All dollar amounts, except per share data, are stated in millions in the following discussion and accompanying tables.

Background

Graybar Electric Company, Inc. ("Graybar", "Company", "we", "our", or "us") is a New York corporation, incorporated in 1925. We are engaged in the distribution of electrical and communications and data networking products and are a provider of related supply chain management and logistics services. We primarily serve customers in the construction, commercial, institutional and government ("CIG"), and industrial & utility vertical markets, with products and services that support new construction, infrastructure updates, building renovation, facility maintenance, repair and operations ("MRO"), and original equipment manufacturers ("OEM"). In our primary role as third-party wholesale distributor, we neither manufacture nor contract to manufacture the products that we sell; however, one of our subsidiaries may contract to manufacture some of its private label lighting fixtures. Our business activity is primarily based in the United States ("U.S."). We also have subsidiary operations with distribution facilities in Canada and Puerto Rico.

Our common stock is 100% owned by active and retired employees, and there is no public trading market for our common stock. No holder of our common stock or voting trust interests representing our common stock ("common stock", "common shares", or "shares") may sell, transfer, or otherwise dispose of any shares without first offering us the option to purchase those shares at the price at which they were issued. We also have the option to purchase at the issue price the common shares of any shareholder who ceases to be an employee for any reason other than death or "retirement" (as defined in our amended restated certificate of incorporation), and on the first anniversary of any holder's death. In the past, we have always exercised these purchase options, and we expect to continue to do so in the foreseeable future. However, we can make no assurance that we will continue to exercise our purchase option in the future. All outstanding shares have been issued at $20.00 per share.

Business Overview

Graybar net sales for the three months ended September 30, 2024 totaled $2,979.5 million compared to $2,852.6 million for the three months ended September 30, 2023, an increase of $126.9 million, or 4.4%. Gross margin for the third quarter of 2024 increased

17

$28.3 million, or 5.0%, to $597.2 million, compared to gross margin of $568.9 million for the same three-month period ended September 30, 2023. Our gross margin rate was 20.0% for the third quarter of 2024, compared to 19.9% for the third quarter of 2023.

Selling, general and administrative ("SG&A") expenses increased $37.2 million, or 9.5%, to $426.8 million for the three months ended September 30, 2024 from $389.6 million for the three months ended September 30, 2023, primarily due to higher compensation costs and information technology ("IT") expenses and consulting fees related to Graybar Connect, our multi-year, strategic business transformation project ("Graybar Connect"). SG&A expenses as a percentage of net sales increased to 14.3% for the third quarter of 2024, compared to 13.7% for the same three-month period in 2023.

Income from operations decreased $11.6 million, or 7.1%, to $151.3 million for the three months ended September 30, 2024, from $162.9 million for the same three-month period last year. The increase in gross margin was less than the increase in SG&A expenses, resulting in a decrease in net income attributable to Graybar for the three months ended September 30, 2024 of $7.5 million, or 6.4%, to $110.2 million for the three months ended September 30, 2024, compared to $117.7 million for the same three-month period last year.

Net sales for the nine months ended September 30, 2024 were $8,717.5 million, an increase of $400.2 million, or 4.8%, from net sales of $8,317.3 million for the same nine-month period last year. Gross margin for the nine months ended September 30, 2024 was $1,731.0 million, an increase of $54.3 million, or 3.2%, compared to gross margin of $1,676.7 million for the same nine-month period last year. Gross margin rate was 19.9% for the nine-month period ended September 30, 2024, compared to 20.2% for the nine months ended September 30, 2023. Net income attributable to Graybar for the nine months ended September 30, 2024 was $325.8 million, a decrease of $40.9 million, or 11.2%, from net income attributable to Graybar of $366.7 million for the same nine-month period last year.

We continue to see demand for our products and services, even as the markets we serve are affected by ongoing skilled labor shortages, rising costs and economic uncertainty. As we invest in our long-term growth and Graybar Connect, we remain focused on serving our customers, managing our business wisely, and pursuing opportunities to strengthen our industry leadership position.

Consolidated Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following table sets forth certain information relating to our operations stated in millions of dollars and as a percentage of net sales for the three months ended September 30, 2024 and 2023:

Three Months Ended
‎September 30, 2024

Three Months Ended
‎September 30, 2023

Dollars

Percent

Dollars

Percent

Net Sales

$

2,979.5

100.0

%

$

2,852.6

100.0

%

Cost of merchandise sold

(2,382.3)

(80.0)

(2,283.7)

(80.1)

Gross Margin

597.2

20.0

568.9

19.9

Selling, general and administrative expenses

(426.8)

(14.3)

(389.6)

(13.7)

Depreciation and amortization

(20.2)

(0.7)

(18.0)

(0.6)

Other income, net

1.1

0.1

1.6

0.1

Income from Operations

151.3

5.1

162.9

5.7

Non-operating expenses, net

(0.8)

-

(2.7)

(0.1)

Income before Provision for Income Taxes

150.5

5.1

160.2

5.6

Provision for income taxes

(40.0)

(1.4)

(42.1)

(1.5)

Net Income

110.5

3.7

118.1

4.1

Net income attributable to noncontrolling interests

(0.3)

-

(0.4)

-

Net Income attributable to Graybar Electric Company, Inc.

$

110.2

3.7

%

$

117.7

4.1

%

Net sales increased to $2,979.5 million for the quarter ended September 30, 2024, compared to $2,852.6 million for the quarter ended September 30, 2023, an increase of $126.9 million, or 4.4%. For the three months ended September 30, 2024, net sales in our construction, CIG, and industrial & utility vertical markets increased by 5.5%, 0.9%, and 5.5%, respectively, when compared to the same three-month period of 2023.

18

Gross margin increased $28.3 million, or 5.0%, to $597.2 million from $568.9 million for the three months ended September 30, 2024, compared to the same period of 2023. Our gross margin as a percentage of net sales was 20.0% for the three months ended September 30, 2024, up from 19.9% for the same three-month period in 2023.

SG&A expenses increased $37.2 million, or 9.5%, to $426.8 million in the third quarter of 2024 from $389.6 million in the third quarter of 2023, primarily due to higher compensation costs, and an increase in IT expenses and consulting fees associated with Graybar Connect.SG&A expenses as a percentage of net sales were 14.3% for the three months ended September 30, 2024, up from 13.7% for the three months ended September 30, 2023.

Depreciation and amortization for the three months ended September 30, 2024 increased $2.2 million, or 12.2%, to $20.2 million from $18.0 million, compared to the same period in 2023 primarily due to higher amortization expense of intangible assets associated with our acquisitions and an increase in property, at cost.

Income before provision for income taxes totaled $150.5 million for the three months ended September 30, 2024, a decrease of $9.7 million, or 6.1%, from $160.2 million for the three months ended September 30, 2023 primarily due to our increase in SG&A expenses, partially offset by our increase in gross margin.

Our total provision for income taxes decreased $2.1 million, or 5.0%, to $40.0 million for the three months ended September 30, 2024, compared to $42.1 million for the same period of 2023. This decrease in our provision for income taxes was due to lower pretax income. Our effective tax rate was 26.6% for the three months ended September 30, 2024, compared to 26.3% for the same period of 2023. The effective tax rate for the three months ended September 30, 2024 was higher than the 21.0% U.S. federal statutory rate primarily due to state, local and foreign income taxes.

Net income attributable to Graybar Electric Company, Inc. for the three months ended September 30, 2024 decreased $7.5 million, or 6.4%, to $110.2 million from $117.7 million for the three months ended September 30, 2023.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table sets forth certain information relating to our operations stated in millions of dollars and as a percentage of net sales for the nine months ended September 30, 2024 and 2023:

Nine Months Ended
‎September 30, 2024

Nine Months Ended
‎September 30, 2023

Dollars

Percent

Dollars

Percent

Net Sales

$

8,717.5

100.0

%

$

8,317.3

100.0

%

Cost of merchandise sold

(6,986.5)

(80.1)

(6,640.6)

(79.8)

Gross Margin

1,731.0

19.9

1,676.7

20.2

Selling, general and administrative expenses

(1,235.8)

(14.2)

(1,126.9)

(13.5)

Depreciation and amortization

(59.9)

(0.7)

(47.6)

(0.6)

Other income, net

8.7

0.1

3.5

-

Income from Operations

444.0

5.1

505.7

6.1

Non-operating expenses, net

(2.9)

(0.1)

(8.6)

(0.1)

Income before Provision for Income Taxes

441.1

5.0

497.1

6.0

Provision for income taxes

(114.5)

(1.3)

(129.6)

(1.6)

Net Income

326.6

3.7

367.5

4.4

Net income attributable to noncontrolling interests

(0.8)

-

(0.8)

-

Net Income attributable to Graybar Electric Company, Inc.

$

325.8

3.7

%

$

366.7

4.4

%

Net sales increased to $8,717.5 million for the nine months ended September 30, 2024, compared to $8,317.3 million for the nine months ended September 30, 2023, an increase of $400.2 million, or 4.8%. Net sales in our construction and industrial & utility vertical markets increased by 8.5%, and 2.9%, respectively, for the nine months ended September 30, 2024, compared to the same nine-month period of 2023. Net sales in our CIG vertical market decreased by 2.7% for the nine months ended September 30, 2024, compared to the same nine-month period of 2023.

Gross margin increased $54.3 million, or 3.2%, to $1,731.0 million from $1,676.7 million for the nine months ended September 30, 2024, compared to the same period of 2023. Our gross margin as a percentage of net sales was 19.9% for the nine

19

months ended September 30, 2024, down from 20.2% for the same nine-month period in 2023 primarily due to competitive pricing pressures.

SG&A expenses increased $108.9 million, or 9.7%, to $1,235.8 million, for the nine months ended September 30, 2024, compared to $1,126.9 million for the nine months ended September 30, 2023, mainly due to higher compensation costs, as well as an increase in IT expenses and consulting fees associated with Graybar Connect. SG&A expenses as a percentage of net sales were 14.2% for the nine months ended September 30, 2024, up from 13.5% for the nine months ended September 30, 2023.

Depreciation and amortization for the nine months ended September 30, 2024 increased $12.3 million, or 25.8%, to $59.9 million from $47.6 million for the same nine-month period in 2023 primarily due to higher amortization expense of intangible assets associated with our acquisitions and an increase in property, at cost.

Other income, net totaled $8.7 million for the nine months ended September 30, 2024, compared to $3.5 million for the nine months ended September 30, 2023. Other income, net consists primarily of gains or losses on the disposal of property, trade receivable interest charges to customers, and other miscellaneous income items related to our business activities. The increase in other income, net was primarily due to a $6.5 million gain on the sale of property, which had been previously classified as an asset held for sale, during the nine-month period ended September 30, 2024.

Income before provision for income taxes totaled $441.1 million for the nine months ended September 30, 2024, a decrease of $56.0 million, or 11.3%, from $497.1 million for the nine months ended September 30, 2023. The decrease was primarily due to our increase in SG&A expenses, partially offset by our increase in gross margin.

Our total provision for income taxes decreased $15.1 million, or 11.7%, to $114.5 million for the nine months ended September 30, 2024, compared to $129.6 million for the same period in 2023. The decrease in our provision for income taxes year over year resulted from decreased pretax income. Our year-to-date effective tax rate was 26.0% for the nine months ended September 30, 2024 compared to 26.1% for 2023. The effective tax rate for the nine months ended September 30, 2024 was higher than the 21.0% U.S. federal statutory rate primarily due to state, local, and foreign income taxes.

Net income attributable to Graybar Electric Company, Inc. for the nine-month period ended September 30, 2024 decreased $40.9 million, or 11.2%, to $325.8 million from $366.7 million for the nine months ended September 30, 2023.

Financial Condition and Liquidity

We manage our liquidity and capital levels so that we have the capability to invest in the growth of our business, meet debt service obligations, fund acquisitions, finance anticipated capital expenditures, finance information technology needs, pay dividends, make benefit payments, and finance other miscellaneous cash outlays. We believe that maintaining a strong company financial condition enables us to competitively access multiple financing channels and invest in strategic long-term growth plans.

We have historically funded our working capital requirements using cash flows generated from the collection of trade receivables and trade accounts payable terms with our suppliers, supplemented by short-term borrowings on our revolving credit facility, if necessary. Acquisitions and capital expenditures have been financed primarily with cash from working capital management and short-term borrowings on our revolving credit facility.

Our cash and cash equivalents at September 30, 2024 were $202.4 million, compared to $98.6 million at December 31, 2023, an increase of $103.8 million. The increase in cash on hand at September 30, 2024 from December 31, 2023 is reflective of strong cash flows from operating activities as a result of effective working capital management. As a result, we had no short-term borrowings at September 30, 2024 and December 31, 2023. Current assets exceeded current liabilities by $1,172.6 million at September 30, 2024, an increase of $152.0 million, or 14.9%, from $1,020.6 million at December 31, 2023.

Operating Activities

Net cash flows provided by operating activities for the nine months ended September 30, 2024 was $304.2 million, compared to net cash flows provided by operating activities of $416.5 million for the nine months ended September 30, 2023, a decrease of $112.3 million. Net cash provided by operating activities for the nine months ended September 30, 2024 was primarily attributable to net income of $326.6 million, adjusted for non-cash depreciation and amortization expenses of $59.9 million, and an increase in trade accounts payable of $112.1 million during the nine months ended September 30, 2024, partially offset by an increase in trade receivables of $133.4 million and a decrease in non-current liabilities of $62.5 million from December 31, 2023 to September 30, 2024.

20

The average number of days of sales in trade receivables for the quarter ended September 30, 2024 improved moderately compared to the quarter ended September 30, 2023. The days in inventory improved significantly for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023.

Investing Activities

Net cash used by investing activities totaled $171.1 million for the nine months ended September 30, 2024, compared to net cash used by investing activities of $463.1 million for the same nine-month period in 2023, a decrease of $292.0 million. Cash used by investing activities for the nine months ended September 30, 2024 was primarily the result of amounts attributable to acquisitions of $146.3 million and capital expenditures of $37.9 million, partially offset by proceeds from the disposal of property of $13.7 million. Cash used by investing activities for the nine months ended September 30, 2023 was primarily the result of amounts attributable to acquisitions of $380.2 million, capital expenditures of $58.7 million, and an investment in an employee deferred compensation trust of $25.0 million.

Financing Activities

Net cash used by financing activities for the nine months ended September 30, 2024 totaled $29.3 million, compared to net cash provided by financing activities of $50.5 million for the nine months ended September 30, 2023. There was no net change in short-term borrowings for the nine months ended September 30, 2024, compared to a net increase in short-term borrowings of $70.4 million for the nine months ended September 30, 2023. Cash dividends paid were $29.1 million during the nine months ended September 30, 2024, compared to $24.2 million during the nine months ended September 30, 2023.

Liquidity

Our cash and cash equivalents at September 30, 2024 were $202.4 million, compared to $98.6 million at December 31, 2023. We also had a $750.0 million unsecured, committed revolving credit facility ("Amended Credit Agreement") with $744.7 million in available capacity at September 30, 2024, compared to available capacity of $746.4 million at December 31, 2023 under the Credit Agreement. At September 30, 2024 and December 31, 2023, we also had two uncommitted, unsecured private placement shelf agreements ("Shelf Agreements"). One of the Shelf Agreements is expected to allow us to issue senior promissory notes up to $200.0 million to PGIM, Inc. at fixed rate terms to be agreed upon at the time of any issuance during a three-year issuance period ending in August 2026. Our other Shelf Agreement is expected to allow us to issue senior promissory notes to MetLife Investment Management, LLC, and MetLife Investment Management Limited (collectively, "MetLife") and each other MetLife affiliate that becomes party to the agreement at fixed or floating rate economic terms to be agreed upon at the time of any issuance during a three-year issuance period. On June 25, 2024, we amended the MetLife Shelf Agreement to, among other things, increase availability from $150.0 million to $200.0 million, and extend the issuance period to June 2027, and thereafter, for successive three-year periods until either party notifies the other party at least 30 days prior to the then applicable stated period end date of its intent not to extend.

We have not issued any notes under the Shelf Agreements as of September 30, 2024 and December 31, 2023. For further discussion related to our Amended Credit Agreement and our Shelf Agreements, refer to Note 5, "Debt", of the notes to the condensed consolidated financial statements located in Item 1., "Financial Statements", of this Quarterly Report on Form 10-Q.

We had total letters of credit of $11.1 million outstanding at September 30, 2024, of which $5.3 million were issued under the Amended Credit Agreement. We had total letters of credit of $9.4 million at December 31, 2023, of which $3.6 million were issued under the Credit Agreement. The letters of credit are issued primarily to support certain workers' compensation insurance policies and support performance under certain customer contracts.

New Accounting Standards Updates

Our adoption of new accounting standards is discussed in Note 2, "Summary of Significant Accounting Policies", of the notes to the condensed consolidated financial statements located in Item 1., "Financial Statements", of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the policies, procedures, controls, or risk profile from those provided in Item 7A., "Quantitative and Qualitative Disclosures About Market Risk", of our Annual Report on Form 10-K for the year ended December 31, 2023.

21

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2024, was performed under the supervision and with the participation of management. Based on that evaluation, our management, including the Principal Executive Officer and Principal Financial Officer, concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

During the nine months ended September 30, 2024, we completed four acquisitions which operated under their own set of systems and internal controls. Management is in process of evaluating and integrating the internal controls of the acquired businesses during the first year of the business combination into our internal controls framework.

(b) Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are likely to materially affect, our internal control over financial reporting.
‎

22

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Our common stock is 100% owned by active and retired employees, and there is no public trading market for our common stock. Since 1928, substantially all of the issued and outstanding shares of common stock have been held of record by voting trustees under successive voting trust agreements. A new Voting Trust Agreement was established effective March 3, 2017, which expires by its terms on March 1, 2027, because under applicable New York law, a voting trust may not have a term greater than ten years. At September 30, 2024, approximately 83% of our outstanding common stock was held in the voting trust. The participation of shareholders in the voting trust is voluntary at the time the voting trust is created, but is irrevocable during its term. Shareholders who elect not to participate in the voting trust hold their common stock as shareholders of record. Shareholders may elect to participate in the voting trust at any time during the term of the voting trust.

No holder of our common stock or voting trust interests representing our common stock ("common stock", "common shares", or "shares") may sell, transfer, or otherwise dispose of any shares without first offering us the option to purchase those shares at the price at which they were issued. We also have the option to purchase at the issue price the common shares of any shareholder who ceases to be an employee for any cause other than death or "retirement" (as defined in our amended restated certificate of incorporation), and on the first anniversary of any holder's death. In the past, we have always exercised these purchase options, and we expect to continue to do so in the foreseeable future. However, we can make no assurance that we will continue to exercise our purchase option in the future. All outstanding shares have been issued at $20.00 per share.

The following table sets forth information regarding purchases of common stock by the Company, all of which were made pursuant to the foregoing provisions:

Issuer Purchases of Equity Securities

Period

Total Number of
‎Shares Purchased

Average
‎Price Paid
‎Per Share

Total Number of Shares
‎Purchased as Part of Publicly
‎Announced Plans or Programs

July 1 - July 31, 2024

38,212

$20.00

N/A

August 1 - August 31, 2024

92,319

$20.00

N/A

September 1 - September 30, 2024

141,577

$20.00

N/A

Total

272,108

$20.00

N/A

Item 5. Other Information.

(c)None of the Company's directors or officers adoptedor terminateda Rule 10b5-1trading arrangement or a non-Rule 10b5-1trading arrangement during the Company's fiscal quarter ended September 30, 2024. Such arrangements would not apply to the Company because no holder of our shares may sell, transfer or otherwise dispose of our shares without first offering the Company the option to purchase those shares at the price at which they were issued.


‎

23

Item 6. Exhibits.

3.1

Restated Certificate of Incorporation, as amended to date.

3.2

By-laws as amended through March 8, 2023, filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K dated March 8, 2023 (Commission File No. 000-00255) and incorporated herein by reference.

4

Voting Trust Agreement, dated as of March 3, 2017, a form of which is attached as Exhibit A to the Prospectus dated January 6, 2017, constituting a part of the Company's Registration Statement on Form S-1/A (Registration No. 333-214560), and incorporated herein by reference.

9

Voting Trust Agreement dated as of March 3, 2017, included at Exhibit 4 above.

10

Management Incentive Plan effective January 1, 2025*

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Principal Executive Officer

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Principal Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Principal Executive Officer

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Principal Financial Officer

101.INS

XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted in Inline XBRL contained in Exhibit 101)

* Compensation arrangement


‎

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GRAYBAR ELECTRIC COMPANY, INC.

October 28, 2024

/s/ Kathleen M. Mazzarella

Date

Kathleen M. Mazzarella

President and Chief Executive Officer

(Principal Executive Officer)

October 28, 2024

/s/ David M. Meyer

Date

David M. Meyer

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

25