GRACO INC - Quarter Report: 2024 June (Form 10-Q)

Operating Earnings Interest expense Other (income) expense, net()()()()Earnings Before Income Taxes Income taxes Net Earnings$ $ $ $

Net Earnings per Common Share

Basic

$ $ $ $

Diluted

$ $ $ $ Property, Plant and Equipment, net Goodwill Other Intangible Assets, net Operating Lease Assets Deferred Income Taxes Other Assets Total Assets$ $ LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent LiabilitiesNotes payable to banks$ $ Trade accounts payable Salaries and incentives Dividends payable Other current liabilities Total current liabilities Retirement Benefits and Deferred Compensation Operating Lease Liabilities Deferred Income Taxes Other Non-current Liabilities Shareholders’ EquityCommon stock Additional paid-in-capital Retained earnings Accumulated other comprehensive loss()()Total shareholders’ equity Total Liabilities and Shareholders’ Equity$ $

See notes to consolidated financial statements.

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GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


	Six Months Ended
	June 28, 2024	June 30, 2023
Cash Flows From Operating Activities
Net Earnings	$	$
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization
Deferred income taxes
Share-based compensation
Change in
Accounts receivable	()	()
Inventories	()	()
Trade accounts payable		()
Salaries and incentives	()	()
Retirement benefits and deferred compensation
Other accrued liabilities	()	()
Other	()	()
Net cash provided by operating activities
Cash Flows From Investing Activities
Property, plant and equipment additions	()	()
Other		()
Net cash used in investing activities	()	()
Cash Flows From Financing Activities
Borrowings on short-term lines of credit, net
Payments of debt issuance costs		()
Common stock issued
Common stock repurchased	()	()
Taxes paid related to net share settlement of equity awards	()	()
Cash dividends paid	()	()
Net cash used in financing activities	()	()
Effect of exchange rate changes on cash	()
Net increase in cash and cash equivalents
Cash and Cash Equivalents
Beginning of year
End of period	$	$

See notes to consolidated financial statements.

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GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited) (In thousands)

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total

Three Months Ended June 28, 2024

Balance, March 29, 2024

()

Shares issued

—

Shares repurchased

()

—

()

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income (loss)

—

Balance, June 28, 2024

()

Six Months Ended June 28, 2024

Balance, December 29, 2023

()

Shares issued

—

Shares repurchased

()

—

()

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income (loss)

—

()

Balance, June 28, 2024

()

Three Months Ended June 30, 2023

Balance, March 31, 2023

()

Shares issued

—

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income (loss)

—

Balance, June 30, 2023

()

Six Months Ended June 30, 2023

Balance, December 30, 2022

()

Shares issued

—

Shares repurchased

()

—

()

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income (loss)

—

Balance, June 30, 2023

()

See notes to consolidated financial statements.

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GRACO INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

reportable segments: Contractor, Industrial and Process. $ $ $ Industrial Process Total$ $ $ $ Operating Earnings Contractor$ $ $ $ Industrial Process Unallocated corporate (expense)()()()() Total$ $ $ $

Assets by segment were as follows (in thousands):


	June 28, 2024	December 29, 2023
Contractor	$	$
Industrial
Process
Unallocated corporate
Total	$	$

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$ $ $

Other countries

Total

$ $ $ $


	June 28, 2024	December 29, 2023
Long-lived Assets
United States	$	$
Other countries
Total	$	$

$ $ $ Weighted average shares outstanding for basic earnings per share Dilutive effect of stock options computed using the treasury stock method and the average market price Weighted average shares outstanding for diluted earnings per share

Basic earnings per share

$ $ $ $

Diluted earnings per share

$ $ $ $ Anti-dilutive shares not included in diluted earnings per share computation

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$ $ Granted Exercised() Canceled() Outstanding, June 28, 2024 $ $

The Company recognized year-to-date share-based compensation expense of $ million in 2024 and $ million in 2023. As of June 28, 2024, there was $ million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of years.

Interest rate

% %

Volatility

% %

Dividend yield

% %

Weighted average fair value per share

$ $

Under the Company’s Employee Stock Purchase Plan, the Company issued shares in 2024 and shares in 2023. The fair value of the employees’ purchase rights under this plan was estimated on the date of grant. percent

Interest rate

% %

Volatility

% %

Dividend yield

% %

Weighted average fair value per share

$ $

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$ $ $

Interest cost

Expected return on assets

()()()()

Amortization and other

Net periodic benefit cost

$ $ $ $

Postretirement Medical

Service cost

$ $ $ $

Interest cost

Amortization

() ()

Net periodic benefit cost

$ $ $ $

)$()$()Other comprehensive income (loss) before reclassifications ()()Reclassified to pension cost and deferred tax Balance, June 28, 2024$()$()$()

Six Months Ended June 28, 2024

Balance, December 29, 2023

()

Other comprehensive income (loss) before reclassifications

()

Reclassified to pension cost and deferred tax

Balance, June 28, 2024

()

Three Months Ended June 30, 2023

Balance, March 31, 2023

()

Other comprehensive income (loss) before reclassifications

Reclassified to pension cost and deferred tax

Balance, June 30, 2023

()

)$()$()Other comprehensive income (loss) before reclassifications Reclassified to pension cost and deferred tax Balance, June 30, 2023$()$()$()Amoun

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million and other receivables of $ million as of June 28, 2024 and $ million and $ million of trade receivables and other receivables, respectively, as of December 29, 2023.

Allowance for Credit Losses

$ $ $ Additions charged to costs and expenses

Deductions from reserves (1)

()()()()

Other (deductions) additions (2)

()()() Balance, ending$ $ $ $

(1) Represents amounts determined to be uncollectible and charged against reserves, net of collections on accounts previously charged against reserves.

(2) Includes effects of foreign currency translation.

$ Products and components in various stages of completion Raw materials and purchased components Subtotal Reduction to LIFO cost()()Total$ $

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$ $ $ $

Accumulated amortization

()()()— ()Foreign currency translation()() ()()

Book value

$ $ $ $ $

Weighted average life in years

N/A

As of December 29, 2023

Cost

Accumulated amortization

()

—

()

Foreign currency translation

()

Book value

Weighted average life in years

N/A

Amortization of intangibles for the second quarter was $ million in 2024 and $ million in 2023, and for the year to date was $ million in 2024 and $ million in 2023.

$ $ $ $ $

$ $ $ Foreign currency translation()()()()Balance, June 28, 2024$ $ $ $

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10.

Accrued warranty and service liabilities

Accrued trade promotions

Payable for employee stock purchases

Customer advances and deferred revenue

Income taxes payable

Tax payable, other Right of return refund liability Operating lease liabilities, current Charged to expense Margin on parts sales reversed Reductions for claims settled()Balance, June 28, 2024$

Customer Advances and Deferred Revenue

million and $ million, respectively, that was included in deferred revenue at December 29, 2023. During the three and six months ended June 30, 2023, we recognized $ million and $ million, respectively, that were included in deferred revenue at December 30, 2022.

11.

$ Forward exchange contracts2 Total assets at fair value$ $ LiabilitiesContingent consideration3$ $ Deferred compensation2 Forward exchange contracts2 Total liabilities at fair value$ $

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Item 2. GRACO INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Company supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and coating materials. Management classifies the Company’s business into three reportable segments: Contractor, Industrial and Process. Key strategies include developing and marketing new products, leveraging products and technologies into additional, growing end-user markets, expanding distribution globally and completing strategic acquisitions that provide additional channel and technologies.

The following Management’s Discussion and Analysis reviews significant factors affecting the Company’s results of operations and financial condition. This discussion should be read in conjunction with the financial statements and the accompanying notes to the financial statements.

Consolidated Results

A summary of financial results follows (in millions except per share amounts):


	Three Months Ended						Six Months Ended
	Jun 28, 2024		Jun 30, 2023		% Change		Jun 28, 2024		Jun 30, 2023		% Change
Net Sales	$	553.2	$	559.6	(1)	%	$	1,045.4	$	1,089.3	(4)	%
Operating Earnings	161.4		157.1		3	%	294.4		313.7		(6)	%

Net Earnings	133.0		134.3		(1)	%	255.2		263.4		(3)	%
Net Earnings, adjusted (1)	132.2		128.8		3	%	244.8		255.3		(4)	%
Diluted Net Earnings per Common Share	$	0.77	$	0.78	(1)	%	$	1.48	$	1.53	(3)	%
Diluted Net Earnings per Common Share, adjusted (1)	$	0.77	$	0.75	3	%	$	1.42	$	1.48	(4)	%

(1) See below for a reconciliation of adjusted non-GAAP financial measures to GAAP.

Net sales for the second quarter decreased 1 percent from the comparable period last year. Sales growth in the Contractor segment was unable to offset declines in the Industrial and Process segments. Regionally, sales decreased in EMEA and Asia Pacific and increased in the Americas. Changes in currency translation rates decreased worldwide net sales by $3 million for the quarter and $4 million for the year to date.

Operating earnings for the second quarter increased 3 percent from the comparable period last year, as an improved gross profit margin rate offset lower sales volume and higher operating expenses.

Net earnings for the second quarter decreased 1 percent from the comparable period last year as higher operating earnings and lower interest expense were unable to offset the impact of a higher effective income tax rate. On an adjusted basis, net earnings increased 3 percent.

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Excluding the impacts of excess tax benefits from stock option exercises presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP adjusted measurements of income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):


	Three Months Ended						Six Months Ended
	June 28, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Earnings before income taxes	$	165.2		$	159.6		$	305.5		$	317.0

Income taxes, as reported	$	32.2		$	25.4		$	50.3		$	53.5
Excess tax benefit from option exercises	0.8			5.5			10.4			8.1
Income taxes, adjusted	$	33.0		$	30.9		$	60.7		$	61.6

Effective income tax rate
As reported	19.5		%	15.9		%	16.5		%	16.9		%
Adjusted	20.0		%	19.4		%	19.9		%	19.4		%

Net Earnings, as reported	$	133.0		$	134.3		$	255.2		$	263.4
Excess tax benefit from option exercises	(0.8)			(5.5)			(10.4)			(8.1)
Net Earnings, adjusted	$	132.2		$	128.8		$	244.8		$	255.3

Weighted Average Diluted Shares	172.5			172.6			172.5			172.1
Diluted Earnings per Share
As reported	$	0.77		$	0.78		$	1.48		$	1.53
Adjusted	$	0.77		$	0.75		$	1.42		$	1.48

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The following table presents an overview of components of net earnings as a percentage of net sales:


	Three Months Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Net Sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	45.6		47.9		45.8		47.1
Gross Profit	54.4		52.1		54.2		52.9
Product development	4.0		3.8		4.1		3.8
Selling, marketing and distribution	12.5		12.2		13.0		12.3
General and administrative	8.8		8.0		8.9		8.0
Operating Earnings	29.2		28.1		28.2		28.8
Interest expense	0.1		0.3		0.1		0.3
Other (income) expense, net	(0.8)		(0.8)		(1.1)		(0.6)
Earnings Before Income Taxes	29.9		28.5		29.2		29.1
Income taxes	5.8		4.5		4.7		4.9
Net Earnings	24.0	%	24.0	%	24.4	%	24.2	%

Net Sales

The following table presents net sales by geographic region (in millions):


	Three Months Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Americas(1)	$	364.3	$	345.8	$	670.8	$	677.7
EMEA(2)	108.7		115.7		219.8		224.6
Asia Pacific	80.2		98.1		154.8		187.0
Consolidated	$	553.2	$	559.6	$	1,045.4	$	1,089.3

(1) North, South and Central America, including the United States

(2) Europe, Middle East and Africa

The following table presents the components of net sales change by geographic region:


	Three Months				Six Months
	Volume and Price	Acquisitions	Currency	Total	Volume and Price	Acquisitions	Currency	Total
Americas	5%	0%	0%	5%	(1)%	0%	0%	(1)%
EMEA	(5)%	0%	(1)%	(6)%	(3)%	0%	1%	(2)%
Asia Pacific	(16)%	0%	(2)%	(18)%	(15)%	0%	(2)%	(17)%
Consolidated	(1)%	0%	0%	(1)%	(4)%	0%	0%	(4)%

Gross Profit

Gross profit margin rate improved 2 percentage points for the second quarter and 1 percentage point for the year to date from the comparable periods last year mostly due to lower product costs and realized price increases.

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Operating Expenses

Total operating expenses for the second quarter were $5 million (4 percent) higher than the second quarter last year. The increase for the quarter included approximately $3 million of expenses associated with the relocation to a new distribution center and $2 million related to product development, growth initiatives and other corporate items. Year-to-date operating expenses increased $10 million (4 percent) compared to the first half last year. The increase included $5 million related to product development, growth initiatives and other corporate items, $3 million associated with the distribution center relocation, and $2 million of incremental share-based compensation. Operating expense rate-related increases of approximately 3 percent for both the quarter and year to date were mostly offset by reductions in sales and earnings-based expenses.

Interest and Other (Income) Expense

Interest expense was $1 million lower for the second quarter and $2 million lower for the year to date compared to the same periods last year as private placement debt was repaid in the third quarter of 2023. Other income was flat for the quarter and increased $6 million year to date from the comparable periods last year. The year-to-date increase was largely due to increased interest income.

Income Taxes

The effective income tax rate was up 4 percentage points to 20 percent for the second quarter and down 1 percentage point to 16 percent for the year to date from the comparable periods last year due primarily to variations in excess tax benefits related to stock option exercises.

Segment Results

Certain measurements of segment operations compared to last year are summarized below:

Contractor Segment

The following table presents net sales and operating earnings as a percentage of sales for the Contractor segment

(dollars in millions):


	Three Months Ended						Six Months Ended
	June 28, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Net Sales
Americas	$	204.9		$	188.4		$	370.5		$	372.5
EMEA	44.7			48.4			91.1			90.6
Asia Pacific	20.0			18.8			38.1			38.5
Total	$	269.6		$	255.6		$	499.7		$	501.6
Operating earnings as a percentage of net sales	31		%	27		%	30		%	28		%

The following table presents the components of net sales change by geographic region for the Contractor segment:


	Three Months				Six Months
	Volume and Price	Acquisitions	Currency	Total	Volume and Price	Acquisitions	Currency	Total
Americas	9%	0%	0%	9%	(1)%	0%	0%	(1)%
EMEA	(7)%	0%	(1)%	(8)%	0%	0%	1%	1%
Asia Pacific	10%	0%	(3)%	7%	3%	0%	(4)%	(1)%
Segment Total	6%	0%	(1)%	5%	0%	0%	0%	0%

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Favorable response from new product offerings led to a 5 percent increase in net sales for the second quarter. Net sales were flat for the year to date as favorable response from new product offerings offset softness in worldwide construction markets. The operating margin rate increased 4 percentage points for the quarter driven by lower product costs and price realization. For the year to date, lower product costs and price realization were partially offset by higher expenses, particularly in new product development, resulting in a 2 percentage point increase to the operating margin rate.

Industrial Segment

The following table presents net sales and operating earnings as a percentage of sales for the Industrial segment

(dollars in millions):


	Three Months Ended						Six Months Ended
	June 28, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Net Sales
Americas	$	72.5		$	65.7		$	134.1		$	129.0
EMEA	47.5			49.1			94.7			97.2
Asia Pacific	35.7			48.7			68.9			87.5
Total	$	155.7		$	163.5		$	297.7		$	313.7
Operating earnings as a percentage of net sales	34		%	34		%	33		%	35		%

The following table presents the components of net sales change by geographic region for the Industrial segment:


	Three Months				Six Months
	Volume and Price	Acquisitions	Currency	Total	Volume and Price	Acquisitions	Currency	Total
Americas	10%	0%	0%	10%	4%	0%	0%	4%
EMEA	(2)%	0%	(1)%	(3)%	(3)%	0%	0%	(3)%
Asia Pacific	(25)%	0%	(2)%	(27)%	(19)%	0%	(2)%	(21)%
Segment Total	(4)%	0%	(1)%	(5)%	(5)%	0%	0%	(5)%

Industrial segment net sales decreased 5 percent for the second quarter and year to date, as growth in the Americas was more than offset by double-digit declines in Asia Pacific. The operating margin rate was flat for the quarter and decreased 2 percentage points for the year to date. The favorable effects of product and channel mix was able to offset higher expenses for the quarter, but unable to offset higher expenses for the year to date. Changes in foreign currency translation rates further reduced the operating margin rate for the year to date.

Process Segment

The following table presents net sales and operating earnings as a percentage of sales for the Process segment

(dollars in millions):


	Three Months Ended						Six Months Ended
	June 28, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Net Sales
Americas	$	86.9		$	91.7		$	166.2		$	176.2
EMEA	16.5			18.2			34.0			36.8
Asia Pacific	24.5			30.6			47.8			61.0
Total	$	127.9		$	140.5		$	248.0		$	274.0
Operating earnings as a percentage of net sales	29		%	31		%	29		%	31		%

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The following table presents the components of net sales change by geographic region for the Process segment:


	Three Months				Six Months
	Volume and Price	Acquisitions	Currency	Total	Volume and Price	Acquisitions	Currency	Total
Americas	(5)%	0%	0%	(5)%	(6)%	0%	0%	(6)%
EMEA	(9)%	0%	0%	(9)%	(8)%	0%	0%	(8)%
Asia Pacific	(19)%	0%	(1)%	(20)%	(20)%	0%	(2)%	(22)%
Segment Total	(9)%	0%	0%	(9)%	(9)%	0%	0%	(9)%

Process segment net sales decreased 9 percent for both the second quarter and year to date, as sales decreased in most product applications. Weakness in the semiconductor and industrial lubrication product applications was notable for both the quarter and year to date. The operating margin rate for this segment decreased approximately 2 percentage points for the quarter and year to date due primarily to unfavorable expense leverage on lower sales volume.

Liquidity and Capital Resources

Net cash provided by operating activities totaled $258 million in the first six months of 2024 compared to $282 million in 2023. Lower net earnings and increased inventory purchases in 2024 drove most of the decrease. Inventory levels increased in 2024 primarily due to the effect of new product offerings. Significant uses of cash in the first half of 2024 included plant and equipment additions of $73 million and dividend payments of $86 million. Net proceeds from shares issued totaled $42 million, which were partially offset by share repurchases of $18 million.

In the first half of 2023, significant uses of cash included plant and equipment additions of $92 million and dividend payments of $79 million. Net proceeds from shares issued totaled $51 million, which was partially offset by share repurchases of $8 million.

As of June 28, 2024, the Company had available liquidity of $1,441 million, including cash and cash equivalents of $666 million, of which $226 million was held outside of the U.S., and available credit under existing committed credit facilities of $775 million.

Cash balances and unused financing sources are expected to provide the Company with the flexibility to meet its liquidity needs for the next 12 months and beyond, including its capital expenditure plan, planned dividends, share repurchases, acquisitions and operating requirements. Capital expenditures for 2024 are expected to be approximately $120 million, including $70 million in facility expansion projects. The Company may make opportunistic share repurchases going forward.

Outlook

Given the slow first half of the year in both the Industrial and Process segments, we lowered our full-year 2024 worldwide outlook to low single-digit sales decline on an organic, constant currency basis. While overall economic conditions are challenging, particularly in Asia Pacific, we continue to pursue our proven growth strategies and invest in our businesses.

Cautionary Statement Regarding Forward-Looking Statements

The Company desires to take advantage of the “safe harbor” provisions regarding forward-looking statements of the Private Securities Litigation Reform Act of 1995 and is filing this Cautionary Statement in order to do so. From time to time various forms filed by our Company with the Securities and Exchange Commission, including our Form 10-K, Form 10-Qs and Form 8-Ks, and other disclosures, including our 2023 Overview report, press releases, earnings releases, analyst briefings, conference calls and other written documents or oral statements released by our Company, may contain forward-looking statements. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” and similar expressions, and reflect our Company’s expectations concerning the future. All forecasts and projections are forward-looking statements. Forward-looking statements are based upon currently available information, but various risks and uncertainties may cause our Company’s actual results to differ materially from those expressed in these statements. The Company undertakes no obligation to update these statements in light of new information or future events.

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Future results could differ materially from those expressed, due to the impact of changes in various factors. These risk factors include, but are not limited to, risks relating to the demand for our products and the level of commercial and industrial activity worldwide; changes in currency translation rates; international and domestic political instability; interest rate fluctuations and changes in credit markets; global sourcing of materials; interruptions of or intrusions into our information systems; intellectual property rights; the use of generative artificial intelligence; conducting business internationally; catastrophic events; our ability to attract, develop and retain qualified personnel; public health crises; our growth strategies and acquisitions; potential goodwill impairment; our ability to compete effectively; our dependence on a few large customers; our dependence on cyclical industries; changes in laws and regulations; climate-related laws, regulations and accords; environmental, social and governance-related expectations and requirements; compliance with anti-corruption and trade laws; changes in tax rates or the adoption of new tax legislation; and costs associated with legal proceedings. Please refer to Item 1A of our 2023 Annual Report and Item 1A of this Form 10-Q for a more comprehensive discussion of these and other risk factors. These reports are available on the Company’s website at www.graco.com and the Securities and Exchange Commission’s website at www.sec.gov. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

Investors should realize that factors other than those identified above and in Item 1A might prove important to the Company’s future results. It is not possible for management to identify each and every factor that may have an impact on the Company’s operations in the future as new factors can develop from time to time.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes related to market risk from the disclosures made in the Company's 2023 Annual Report.

Item 4.Controls and Procedures

Evaluation of disclosure controls and procedures

As of the end of the fiscal quarter covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures. This evaluation was done under the supervision and with the participation of the Company’s President and Chief Executive Officer and the Chief Financial Officer and Treasurer. Based upon that evaluation, the Company's President and Chief Executive Officer and the Chief Financial Officer and Treasurer concluded that the Company’s disclosure controls and procedures are effective.

Changes in internal controls

During the quarter, there was no change in the Company’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART IIOTHER INFORMATION

Item 1A.Risk Factors

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s 2023 Annual Report.

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

Issuer Purchases of Equity Securities

On December 7, 2018, the Board of Directors authorized the purchase of up to 18 million shares of common stock, primarily through open market transactions. The authorization is for an indefinite period of time or until terminated by the Board.

In addition to shares purchased under the Board authorization, the Company purchases shares of common stock held by employees who wish to tender owned shares to satisfy the exercise price or tax due upon exercise of options or vesting of restricted stock.

Information on issuer purchases of equity securities follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (at end of period)
March 30, 2023 - April 26, 2024	—	$	—	—	13,549,640
April 27, 2024 - May 31, 2024	—	$	—	—	13,549,640
June 1, 2024 - June 28, 2024	223,943	$	78.74	—	13,325,697

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Item 5.Other Information

During the three months ended June 28, 2024, of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

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Item 6.Exhibits


3.1						Restated Articles of Incorporation as amended December 8, 2017. (Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K filed December 8, 2017.)

3.2						Restated Bylaws as amended February 17, 2023. (Incorporated by reference to Exhibit 3.2 to the Company’s 2022 Annual Report on Form 10-K.)

31.1						Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a).

31.2						Certification of Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a).
10.1						Graco Inc. Amended and Restated 2019 Stock Incentive Plan (Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed March 13, 2024.)

32						Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C.

99.1						Press Release Reporting Second Quarter Earnings dated July 24, 2024.

101						Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language).

104						Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).

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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.

GRACO INC.

Date:

July 24, 2024

By:

/s/ Mark W. Sheahan

Mark W. Sheahan

President and Chief Executive Officer

(Principal Executive Officer)

Date:

July 24, 2024

By:

/s/ David M. Lowe

David M. Lowe

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date:

July 24, 2024

By:

/s/ Christopher D. Knutson

Christopher D. Knutson

Executive Vice President, Corporate Controller

(Principal Accounting Officer)

GRACO INC - Quarter Report: 2024 June (Form 10-Q)

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