GRACO INC - Quarter Report: 2025 June (Form 10-Q)

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

Net Earnings per Common Share

Basic

$ $ $ $

Diluted

$ $ $ $ Change inAccounts 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 ActivitiesProperty, plant and equipment additions()()Proceeds from sale of building Acquisition of businesses, net of cash acquired() Other()()Net cash used in investing activities()()Cash Flows From Financing Activities(Payments) borrowings on short-term lines of credit, net() 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 (decrease) increase in cash and cash equivalents() Cash and Cash EquivalentsBeginning 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 (Loss) Income

Total

Three Months Ended June 27, 2025

Balance, March 28, 2025

()

Shares issued (cancelled)

()

—

()

Shares repurchased

()

—

()

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income

—

Balance, June 27, 2025

Six Months Ended June 27, 2025

Balance, December 27, 2024

()

Shares issued

—

Shares repurchased

()

—

()

Stock compensation cost

—

Net earnings

—

Dividends declared ($ per share)

—

()

—

()

Other comprehensive income

—

Balance, June 27, 2025

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

—

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 loss

—

()

Balance, June 28, 2024

()

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 Expansion Markets. The Industrial segment consists of the newly formed Industrial Division and the Powder Division. The Company’s former Industrial and Lubrication Equipment Divisions, along with the Process Transfer Equipment business that was part of the Company’s former Process Division, were combined to form the new global Industrial Division. The Powder Division remains unchanged. The Expansion Markets segment consists of the Expansion Markets Division. The Company’s environmental, semiconductor, high-pressure valves and electric motors businesses, together with select future ventures and acquisitions, reside within this division. The Contractor segment, consisting of the Contractor Division, remains unchanged as a reportable segment relative to prior periods. Prior year segment information has been recast to conform to the current organizational structure.

$ $ $ Cost of products sold Gross Profit Operating expenses Contractor Operating Earnings$ $ $ $ IndustrialNet Sales$ $ $ $ Cost of products sold Gross Profit Operating expenses Industrial Operating Earnings$ $ $ $

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$ $ $ Cost of products sold Gross Profit Operating expenses Expansion Markets Operating Earnings$ $ $ $ Reportable Segment Operating Earnings Total$ $ $ $ Unallocated corporate expense Operating Earnings Interest expense Other income, net()()()()Earnings Before Income Taxes$ $ $ $

$ $ $

Other countries

Total

$ $ $ $


	June 27, 2025	December 27, 2024
Long-lived Assets
United States	$	$
Other countries
Total	$	$

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

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)$()$()Other comprehensive income (loss) before reclassifications Reclassified to pension cost and deferred tax() ()Balance, June 27, 2025$()$ $

Six Months Ended June 27, 2025

Balance, December 27, 2024

()

Other comprehensive income (loss) before reclassifications

Reclassified to pension cost and deferred tax

()

Balance, June 27, 2025

()

Three Months Ended June 28, 2024

Balance, March 29, 2024

()

Other comprehensive income (loss) before reclassifications

()

Reclassified to pension cost and deferred tax

Balance, June 28, 2024

()

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

$ $ Granted Exercised() Canceled() Outstanding, June 27, 2025 $ $

The Company recognized year-to-date share-based compensation of $ million in 2025 and $ million in 2024. As of June 27, 2025, there was $ million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of years.

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Interest rate

% %

Volatility

% %

Dividend yield

% %

Weighted average fair value per share

$ $

Under the Company’s Employee Stock Purchase Plan, the Company issued shares in 2025 and shares in 2024. The fair value of the employees’ purchase rights under this plan was estimated on the date of grant. percent discount from the lesser of the fair market value per common share on the first day and the last day of the plan year was added to the fair value of the employees’ purchase rights determined using the Black-Scholes option pricing model with the following assumptions and results:

Interest rate

% %

Volatility

% %

Dividend yield

% %

Weighted average fair value per share

$ $

$ $ $ 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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$ $ $

Interest cost

Expected return on assets

()()()()

Amortization and other

Net periodic benefit cost

$ $ $ $

Postretirement Medical

Service cost

$ $ $ $

Interest cost

Amortization

()()()()

Net periodic benefit cost

$ $ $ $

million and other receivables of $ million as of June 27, 2025 and $ million and $ million of trade receivables and other receivables, respectively, as of December 27, 2024.

Allowance for Credit Losses

$ $ $ (Reversals) additions charged to costs and expenses()

Deductions from reserves (1)

()()()()

Other additions (deductions) (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.

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$ $ $ $

Accumulated amortization

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

Book value

$ $ $ $ $

Weighted average life in years

N/A

As of December 27, 2024

Cost

Accumulated amortization

()

—

()

Foreign currency translation

()

Book value

Weighted average life in years

N/A

Amortization of intangibles for the year to date was $ million in 2025 and $ million in 2024.

$ $ $ $ $

$ $ $ Adjustments from business acquisitions () Foreign currency translation Balance, June 27, 2025$ $ $ $

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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 Acquisition-related consideration payable

Unaudited pro forma information has been provided for comparative purposes only and the information does not necessarily reflect what the combined company's results of operations would have been had the acquisition occurred at the beginning of 2023. It also may not be useful in predicting the future results of operations of the combined company.

The Company completed another acquisition in 2024 that was not material to the consolidated financial statements.

million, subject to certain customary adjustments. Color Service is a global leader in automated dosing systems for powder and liquid applications and serves a wide range of industries including textiles, rubber, cosmetics plastics and food. The acquisition is expected to be completed during the third quarter of fiscal year 2025 and its results will be included within the Powder Division in the Industrial Segment. The acquisition will be funded with cash on hand.

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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 Expansion Markets. 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 channels 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.

Global Trade Uncertainty

Our operations, supply chain and financial performance are directly impacted by evolving global trade policies and tariffs as well as associated geopolitical tensions. Our global operating footprint and worldwide sales reach expose us to risks associated with trade conflicts between the U.S. and its trading partners. Escalating global trade conflicts could result in inflationary costs to manufacture, assemble and export our products. We may be required to increase prices to our customers, which may reduce demand, or if we do not or are unable to increase prices without reducing demand, we will experience reduced profitability. Continued geopolitical issues may cause customers outside of the U.S. seeking to source products from local suppliers. We continue to analyze the impact of these global tariffs on our business and we are working to mitigate the impact of tariffs through pricing and sourcing strategies. We cannot be sure these strategies will effectively mitigate the impact of these costs and if we are unable to do so or if demand for our products otherwise decreases, we expect these new tariffs will have a material impact on our results of operations in fiscal year 2025.

Consolidated Results

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


	Three Months Ended						Six Months Ended
	Jun 27, 2025		Jun 28, 2024		% Change		Jun 27, 2025		Jun 28, 2024		% Change
Net Sales	$	571.8	$	553.2	3	%	$	1,100.1	$	1,045.4	5	%
Operating Earnings	157.5		161.4		(2)	%	301.5		294.4		2	%

Net Earnings	127.6		133.0		(4)	%	251.7		255.2		(1)	%
Net Earnings, adjusted (1)	126.9		132.2		(4)	%	247.3		244.8		1	%
Diluted Net Earnings per Common Share	$	0.76	$	0.77	(1)	%	$	1.48	$	1.48	—	%
Diluted Net Earnings per Common Share, adjusted (1)	$	0.75	$	0.77	(3)	%	$	1.45	$	1.42	2	%

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

Net sales for the second quarter increased 3 percent from the comparable period last year. Incremental sales from acquired operations contributed 6 percentage points of sales growth. EMEA and Asia Pacific sales growth was partially offset by a decrease in the Americas.

The gross profit margin rate declined approximately 2 percentage points for the second quarter due to higher product costs, including $4 million of increased tariff costs, and the unfavorable effects of lower margin rates from acquired operations.

Total operating expenses for the second quarter increased 2 percentage points but were flat as a percentage of sales.

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Other non-operating income decreased $3 million for the second quarter, primarily due to $5 million of exchange losses on net liabilities of certain foreign operations and lower interest income.

Net earnings decreased 4 percent for the second quarter due to a lower gross margin rate and lower non-operating income.

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 27, 2025			June 28, 2024			June 27, 2025			June 28, 2024

Earnings before income taxes	$	158.2		$	165.2		$	309.7		$	305.5

Income taxes, as reported	$	30.6		$	32.2		$	58.0		$	50.3
Excess tax benefit from option exercises	0.7			0.8			4.4			10.4
Income taxes, adjusted	$	31.3		$	33.0		$	62.4		$	60.7

Effective income tax rate
As reported	19.3		%	19.5		%	18.7		%	16.5		%
Adjusted	19.8		%	20.0		%	20.1		%	19.9		%

Net Earnings, as reported	$	127.6		$	133.0		$	251.7		$	255.2
Excess tax benefit from option exercises	(0.7)			(0.8)			(4.4)			(10.4)
Net Earnings, adjusted	$	126.9		$	132.2		$	247.3		$	244.8

Weighted Average Diluted Shares	168.6			172.5			170.1			172.5
Diluted Earnings per Share
As reported	$	0.76		$	0.77		$	1.48		$	1.48
Adjusted	$	0.75		$	0.77		$	1.45		$	1.42

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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 27, 2025		June 28, 2024		June 27, 2025		June 28, 2024
Net Sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	47.6		45.6		47.5		45.8
Gross Profit	52.4		54.4		52.5		54.2
Product development	3.6		4.0		3.6		4.1
Selling, marketing and distribution	12.0		12.5		12.3		13.0
General and administrative	9.3		8.8		9.2		8.9
Operating Earnings	27.5		29.2		27.4		28.2
Interest expense	0.1		0.1		0.1		0.1
Other income, net	(0.2)		(0.8)		(0.9)		(1.1)
Earnings Before Income Taxes	27.6		29.9		28.2		29.2
Income taxes	5.3		5.8		5.3		4.7
Net Earnings	22.3	%	24.0	%	22.9	%	24.4	%

Net Sales

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


	Three Months Ended				Six Months Ended
	June 27, 2025		June 28, 2024		June 27, 2025		June 28, 2024
Americas(1)	$	351.9	$	364.3	$	675.1	$	670.8
EMEA(2)	129.9		108.7		250.9		219.8
Asia Pacific	90.0		80.2		174.1		154.8
Consolidated	$	571.8	$	553.2	$	1,100.1	$	1,045.4

(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	(6)%	3%	0%	(3)%	(2)%	3%	0%	1%
EMEA	2%	12%	5%	19%	1%	12%	1%	14%
Asia Pacific	5%	8%	(1)%	12%	5%	9%	(2)%	12%
Consolidated	(3)%	6%	0%	3%	0%	6%	(1)%	5%

Gross Profit

The gross profit margin rate declined approximately 2 percentage points for both the second quarter and year to date from the comparable periods last year due to higher product costs, including $4 million of increased tariff costs, and the unfavorable effects of lower margin rates from acquired operations.

Operating Expenses

Total operating expenses increased $3 million (2 percent) for the second quarter and $3 million (1 percent) for the year to date, respectively, compared to last year. Incremental expenses from acquired operations of $9 million for the quarter and $19 million for the year to date were partially offset by decreases in product development spending, sales and earnings-

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based incentives and share-based compensation. The second quarter and year to date periods last year included $3 million of expenses associated with the relocation to a new distribution center.

Other (Income) Expense

Other non-operating income decreased $3 million for both the second quarter and year to date from the comparable periods last year and included exchange losses on net liabilities of certain foreign operations of $5 million for the quarter and $8 million for the year to date. Favorable market valuation changes on investments held to fund certain retirement benefits partially offset these exchange losses. Other income for the year to date included a $5 million gain in the first quarter from the sale of a former manufacturing and distribution facility in Switzerland.

Income Taxes

The effective income tax rate was 19 percent for both the second quarter and the year to date. Adjusted to exclude the impacts of excess tax benefits from stock option exercises (see Financial Results Adjusted for Comparability below), the adjusted effective income tax rate of 20 percent for both the quarter and year to date was comparable to the respective periods last year.

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 27, 2025			June 28, 2024			June 27, 2025			June 28, 2024
Net Sales
Americas	$	201.4		$	204.9		$	377.3		$	370.5
EMEA	61.1			44.7			115.6			91.1
Asia Pacific	26.5			20.0			51.1			38.1
Total	$	289.0		$	269.6		$	544.0		$	499.7
Operating earnings as a percentage of net sales	26		%	31		%	25		%	30		%

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	(8)%	6%	0%	(2)%	(4)%	6%	0%	2%
EMEA	1%	30%	6%	37%	(4)%	30%	1%	27%
Asia Pacific	3%	31%	(2)%	32%	2%	35%	(3)%	34%
Segment Total	(5)%	12%	0%	7%	(3)%	12%	0%	9%

Incremental sales from acquired operations in the Contractor segment for the quarter and year to date were partially offset by weakness in worldwide construction markets, particularly in North America. The operating margin rate declined 5 percentage points for the quarter and year to date, including 3 percentage points from higher product costs, mainly due to increased tariffs, and 2 percentage points from the unfavorable effects of lower margin rates of acquired operations.

Industrial Segment

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

(dollars in millions):

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	Three Months Ended						Six Months Ended
	June 27, 2025			June 28, 2024			June 27, 2025			June 28, 2024
Net Sales
Americas	$	126.8		$	132.1		$	248.0		$	249.3
EMEA	61.1			57.6			120.5			115.4
Asia Pacific	54.3			52.2			105.4			102.0
Total	$	242.2		$	241.9		$	473.9		$	466.7
Operating earnings as a percentage of net sales	34		%	34		%	34		%	33		%

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	(4)%	0%	0%	(4)%	0%	0%	(1)%	(1)%
EMEA	1%	0%	5%	6%	3%	0%	1%	4%
Asia Pacific	4%	0%	0%	4%	5%	0%	(2)%	3%
Segment Total	(1)%	0%	1%	0%	2%	0%	0%	2%

Industrial segment sales for the second quarter were flat and increased 2 percentage points for the year to date as favorable volumes in EMEA and Asia Pacific offset decreased sales in the Americas. The operating margin rate for this segment was flat for the quarter as realized pricing offset unfavorable product and channel mix and higher product costs. The year to date operating margin increased 1 percentage point as realized pricing and lower expenses more than offset higher product costs.

Expansion Markets Segment

The following table presents net sales and operating earnings as a percentage of sales for the Expansion Markets segment (dollars in millions):


	Three Months Ended						Six Months Ended
	June 27, 2025			June 28, 2024			June 27, 2025			June 28, 2024
Net Sales
Americas	$	23.8		$	27.3		$	49.8		$	51.1
EMEA	7.6			6.4			14.7			13.2
Asia Pacific	9.2			8.0			17.7			14.7
Total	$	40.6		$	41.7		$	82.2		$	79.0
Operating earnings as a percentage of net sales	22		%	20		%	23		%	19		%

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


	Three Months				Six Months
	Volume and Price	Acquisitions	Currency	Total	Volume and Price	Acquisitions	Currency	Total
Americas	(12)%	0%	0%	(12)%	(2)%	0%	0%	(2)%
EMEA	14%	0%	2%	16%	9%	0%	1%	10%
Asia Pacific	14%	0%	1%	15%	21%	0%	0%	21%
Segment Total	(3)%	0%	0%	(3)%	4%	0%	0%	4%

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Expansion Market net sales decreased for the second quarter as continued sales growth in the semiconductor product application was more than offset by decreased sales in the environmental product application. For the year to date, double-digit sales growth in the semiconductor product application more than offset softness in other applications. The operating margin rate for this segment increased for both the quarter and year to date driven by increased sales volume and lower expenses.

Liquidity and Capital Resources

Net cash provided by operating activities of $308 million in the first six months of 2025 increased $50 million compared to the same period last year, mostly due to decreased inventory purchases and lower performance-based incentive payouts. Significant uses of cash in the first half of 2025 included share repurchases of $361 million (partially offset by $25 million of net proceeds from shares issued), dividend payments of $92 million and plant and equipment additions of $30 million.

For the first half of 2024, significant uses of cash 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.

As of June 27, 2025, the Company had available liquidity of $1,322 million, including cash and cash equivalents of $535 million, of which $223 million was held outside of the U.S., and available credit under existing committed credit facilities of $787 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, announced and potential future acquisitions and operating requirements. Capital expenditures for 2025 are expected to be approximately $60 to $70 million. The Company may make opportunistic share repurchases going forward.

Outlook

Pricing actions combined with upcoming new product launches and steady incoming order rates reaffirms the Company's 2025 revenue outlook of low single-digit sales growth on an organic constant-currency basis.

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 2024 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.

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 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 or tariff rates or the adoption of new tax or tariff legislation; and costs associated with legal proceedings. Please refer to Item 1A of our 2024 Annual Report on Form 10-K 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

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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 2024 Annual Report on Form 10-K.

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 2024 Annual Report on Form 10-K.

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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 29, 2025 - April 25, 2025	1,585,715	$	77.37	—	8,767,558
April 26, 2025 - May 23, 2025	—	$	—	—	8,767,558
May 24, 2025 - June 27, 2025	—	$	—	—	8,767,558

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Item 5.Other Information

During the three months ended June 27, 2025, 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 2024 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).

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 23, 2025.

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 23, 2025

By:

/s/ Mark W. Sheahan

Mark W. Sheahan

President and Chief Executive Officer

(Principal Executive Officer)

Date:

July 23, 2025

By:

/s/ David M. Lowe

David M. Lowe

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date:

July 23, 2025

By:

/s/ Christopher D. Knutson

Christopher D. Knutson

Vice President, Controller and Chief Accounting Officer

(Principal Accounting Officer)

GRACO INC - Quarter Report: 2025 June (Form 10-Q)

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