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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2023
☐ 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: 001-09249

GRACO INC.
(Exact name of registrant as specified in its charter)

Minnesota |  | 41-0285640
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

88 - 11th Avenue N.E. |  |
Minneapolis, | Minnesota |  | 55413
(Address of principal executive offices) |  | (Zip Code)

(612) | 623-6000
(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
Common Stock, par value $1.00 per share | GGG | The New York Stock Exchange

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 pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such 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 an 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 | ☒ |

168,340,317 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding as of April 12, 2023.

TABLE OF CONTENTS

|  |  |  | Page
PART I - FINANCIAL INFORMATION |
| Item 1. |  | Financial Statements |
|  |  | Consolidated Statements of Earnings | 3
|  |  | Consolidated Statements of Comprehensive Income | 3
|  |  | Consolidated Balance Sheets | 4
|  |  | Consolidated Statements of Cash Flows | 5
|  |  | Consolidated Statements of Shareholders' Equity | 6
|  |  | Notes to Consolidated Financial Statements | 7
| Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14
| Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk | 20
| Item 4. |  | Controls and Procedures | 20
PART II - OTHER INFORMATION |
| Item 1A. |  | Risk Factors | 21
| Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds | 22
| Item 6. |  | Exhibits | 23
SIGNATURES |
EXHIBITS |

2

Table of Contents
PART I Item 1.
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In thousands except per share amounts)

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  | $ | 529,646 |  |  | $ | 494,285 |
Cost of products sold |  |  |  |  | 244,506 |  |  | 239,810 |
Gross Profit |  |  |  |  | 285,140 |  |  | 254,475 |
Product development |  |  |  |  | 20,479 |  |  | 19,078 |
Selling, marketing and distribution |  |  |  |  | 65,383 |  |  | 62,995 |
General and administrative |  |  |  |  | 42,610 |  |  | 44,039 |
Operating Earnings |  |  |  |  | 156,668 |  |  | 128,363 |
Interest expense |  |  |  |  | 1,347 |  |  | 5,287 |
Other (income) expense, net |  |  |  |  | (2,029) |  |  | 153 |
Earnings Before Income Taxes |  |  |  |  | 157,350 |  |  | 122,923 |
Income taxes |  |  |  |  | 28,184 |  |  | 22,080 |
Net Earnings |  |  |  |  | $ | 129,166 |  |  | $ | 100,843 |
Net Earnings per Common Share |  |  |  |  |  |  |
Basic |  |  |  |  | $ | 0.77 |  |  | $ | 0.59 |
Diluted |  |  |  |  | $ | 0.75 |  |  | $ | 0.58 |

See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (In thousands)

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Earnings |  |  |  |  | $ | 129,166 |  |  | $ | 100,843 |
Components of other comprehensive income (loss) |  |  |  |  |  |  |
Cumulative translation adjustment |  |  |  |  | 4,975 |  |  | (2,960) |
Pension and postretirement medical liability adjustment |  |  |  |  | 1,132 |  |  | 894 |
Income taxes - pension and postretirement medical liability adjustment |  |  |  |  | (244) |  |  | (194) |
Other comprehensive income (loss) |  |  |  |  | 5,863 |  |  | (2,260) |
Comprehensive Income |  |  |  |  | $ | 135,029 |  |  | $ | 98,583 |

See notes to consolidated financial statements.
3

Table of Contents
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)

| March 31, 2023 |  | December 30, 2022
ASSETS |  |  |
Current Assets |  |  |
Cash and cash equivalents | $ | 395,313 |  |  | $ | 339,196 |
Accounts receivable, less allowances of $5,600 and $7,000 | 356,473 |  |  | 346,010 |
Inventories | 497,242 |  |  | 476,790 |
Other current assets | 39,433 |  |  | 43,624 |
Total current assets | 1,288,461 |  |  | 1,205,620 |
Property, Plant and Equipment, net | 633,482 |  |  | 607,609 |
Goodwill | 370,103 |  |  | 368,171 |
Other Intangible Assets, net | 134,131 |  |  | 137,507 |
Operating Lease Assets | 29,742 |  |  | 29,785 |
Deferred Income Taxes | 56,183 |  |  | 57,090 |
Other Assets | 34,161 |  |  | 33,118 |
Total Assets | $ | 2,546,263 |  |  | $ | 2,438,900 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current Liabilities |  |  |
Notes payable to banks | $ | 41,910 |  |  | $ | 20,974 |
Trade accounts payable | 80,375 |  |  | 84,218 |
Salaries and incentives | 43,342 |  |  | 63,969 |
Dividends payable | 39,457 |  |  | 39,963 |
Other current liabilities | 176,614 |  |  | 190,793 |
Total current liabilities | 381,698 |  |  | 399,917 |
Long-term Debt | 75,000 |  |  | 75,000 |
Retirement Benefits and Deferred Compensation | 61,994 |  |  | 61,672 |
Operating Lease Liabilities | 21,384 |  |  | 21,057 |
Deferred Income Taxes | 8,986 |  |  | 9,443 |
Other Non-current Liabilities | 10,858 |  |  | 12,159 |
Shareholders’ Equity |  |  |
Common stock | 168,308 |  |  | 167,702 |
Additional paid-in-capital | 821,570 |  |  | 784,477 |
Retained earnings | 1,059,980 |  |  | 976,851 |
Accumulated other comprehensive income (loss) | (63,515) |  |  | (69,378) |
Total shareholders’ equity | 1,986,343 |  |  | 1,859,652 |
Total Liabilities and Shareholders’ Equity | $ | 2,546,263 |  |  | $ | 2,438,900 |

See notes to consolidated financial statements.
4

Table of Contents
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

| Three Months Ended
| March 31, 2023 |  | April 1, 2022
Cash Flows From Operating Activities |  |  |
Net Earnings | $ | 129,166 |  |  | $ | 100,843 |
Adjustments to reconcile net earnings to net cash provided by operating activities |  |  |
Depreciation and amortization | 17,987 |  |  | 15,570 |
Deferred income taxes | 230 |  |  | 10,973 |
Share-based compensation | 8,914 |  |  | 7,088 |
Change in |  |  |
Accounts receivable | (8,519) |  |  | (14,296) |
Inventories | (18,959) |  |  | (52,979) |
Trade accounts payable | (3,802) |  |  | 9,216 |
Salaries and incentives | (21,303) |  |  | (35,341) |
Retirement benefits and deferred compensation | 1,156 |  |  | (136) |
Other accrued liabilities | (10,787) |  |  | (8,690) |
Other | (3,254) |  |  | (923) |
Net cash provided by operating activities | 90,829 |  |  | 31,325 |
Cash Flows From Investing Activities |  |  |
Property, plant and equipment additions | (38,290) |  |  | (47,093) |
Acquisition of businesses, net of cash acquired | — |  |  | (25,016) |
Other | (352) |  |  | (134) |
Net cash used in investing activities | (38,642) |  |  | (72,243) |
Cash Flows From Financing Activities |  |  |
Borrowings on short-term lines of credit, net | 20,721 |  |  | (3,420) |
Payments on long-term debt | — |  |  | (75,000) |
Payments of debt issuance costs | (6) |  |  | — |
Common stock issued | 31,026 |  |  | 21,294 |
Common stock repurchased | (7,766) |  |  | (108,706) |
Taxes paid related to net share settlement of equity awards | (1,225) |  |  | (1,219) |
Cash dividends paid | (39,431) |  |  | (35,801) |
Net cash provided (used) in financing activities | 3,319 |  |  | (202,852) |
Effect of exchange rate changes on cash | 611 |  |  | (45) |
Net increase (decrease) in cash and cash equivalents | 56,117 |  |  | (243,815) |
Cash and Cash Equivalents |  |  |
Beginning of year | 339,196 |  |  | 624,302 |
End of period | $ | 395,313 |  |  | $ | 380,487 |

See notes to consolidated financial statements.
5

Table of Contents
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 March 31, 2023 |  |  |  |  |  |  |  |  |
Balance, December 30, 2022 | $ | 167,702 |  |  | $ | 784,477 |  |  | $ | 976,851 |  |  | $ | (69,378) |  |  | $ | 1,859,652 |
Shares issued | 721 |  |  | 29,080 |  |  | — |  |  | — |  |  | 29,801 |
Shares repurchased | (115) |  |  | (539) |  |  | (7,112) |  |  | — |  |  | (7,766) |
Stock compensation cost | — |  |  | 8,552 |  |  | — |  |  | — |  |  | 8,552 |
Net earnings | — |  |  | — |  |  | 129,166 |  |  | — |  |  | 129,166 |
Dividends declared ($0.235 per share) | — |  |  | — |  |  | (38,925) |  |  | — |  |  | (38,925) |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | 5,863 |  |  | 5,863 |
Balance, March 31, 2023 | $ | 168,308 |  |  | $ | 821,570 |  |  | $ | 1,059,980 |  |  | $ | (63,515) |  |  | $ | 1,986,343 |

Three Months Ended April 1, 2022 |  |  |  |  |  |  |  |  |
Balance, December 31, 2021 | $ | 170,308 |  |  | $ | 742,288 |  |  | $ | 876,916 |  |  | $ | (80,169) |  |  | $ | 1,709,343 |
Shares issued | 437 |  |  | 19,638 |  |  | — |  |  | — |  |  | 20,075 |
Shares repurchased | (1,522) |  |  | (6,636) |  |  | (100,548) |  |  | — |  |  | (108,706) |
Stock compensation cost | — |  |  | 6,670 |  |  | — |  |  | — |  |  | 6,670 |
Restricted stock canceled (issued) | — |  |  | (1) |  |  | — |  |  | — |  |  | (1) |
Net earnings | — |  |  | — |  |  | 100,843 |  |  | — |  |  | 100,843 |
Dividends declared ($0.210 per share) | — |  |  | — |  |  | (35,708) |  |  | — |  |  | (35,708) |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | (2,260) |  |  | (2,260) |
Balance, April 1, 2022 | $ | 169,223 |  |  | $ | 761,959 |  |  | $ | 841,503 |  |  | $ | (82,429) |  |  | $ | 1,690,256 |

See notes to consolidated financial statements.
6

Table of Contents
GRACO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated balance sheet of Graco Inc. and subsidiaries (the “Company”) as of March 31, 2023 and the related statements of earnings, comprehensive income and shareholders' equity for the three months ended March 31, 2023 and April 1, 2022, and cash flows for the three months ended March 31, 2023 and April 1, 2022 have been prepared by the Company and have not been audited.
In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 2023, and the results of operations and cash flows for all periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Therefore, these statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2022 Annual Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year.
2. Segment Information
The Company has three reportable segments: Contractor, Industrial and Process. Sales and operating earnings by segment were as follows (in thousands):

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  |  |  |
Contractor |  |  |  |  | $ | 245,971 |  |  | $ | 234,592 |
Industrial |  |  |  |  | 150,190 |  |  | 144,669 |
Process |  |  |  |  | 133,485 |  |  | 115,024 |
Total |  |  |  |  | $ | 529,646 |  |  | $ | 494,285 |
Operating Earnings |  |  |  |  |  |  |
Contractor |  |  |  |  | $ | 73,772 |  |  | $ | 58,947 |
Industrial |  |  |  |  | 52,770 |  |  | 52,630 |
Process |  |  |  |  | 40,565 |  |  | 27,488 |
Unallocated corporate (expense) |  |  |  |  | (10,439) |  |  | (10,702) |
Total |  |  |  |  | $ | 156,668 |  |  | $ | 128,363 |

Assets by segment were as follows (in thousands):

| March 31, 2023 |  | December 30, 2022
Contractor | $ | 779,617 |  |  | $ | 752,729 |
Industrial | 603,494 |  |  | 578,302 |
Process | 575,792 |  |  | 564,539 |
Unallocated corporate | 587,360 |  |  | 543,330 |
Total | $ | 2,546,263 |  |  | $ | 2,438,900 |

7

Table of Contents
Geographic information follows (in thousands):

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales (based on customer location) |  |  |  |  |  |  |
United States |  |  |  |  | $ | 288,989 |  |  | $ | 255,082 |
Other countries |  |  |  |  | 240,657 |  |  | 239,203 |
Total |  |  |  |  | $ | 529,646 |  |  | $ | 494,285 |

| March 31, 2023 |  | December 30, 2022
Long-lived Assets |  |  |
United States | $ | 550,124 |  |  | $ | 532,401 |
Other countries | 83,358 |  |  | 75,208 |
Total | $ | 633,482 |  |  | $ | 607,609 |

3. Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net earnings available to common shareholders |  |  |  |  | $ | 129,166 |  |  | $ | 100,843 |
Weighted average shares outstanding for basic earnings per share |  |  |  |  | 168,018 |  |  | 169,809 |
Dilutive effect of stock options computed using the treasury stock method and the average market price |  |  |  |  | 3,658 |  |  | 4,869 |
Weighted average shares outstanding for diluted earnings per share |  |  |  |  | 171,676 |  |  | 174,678 |
Basic earnings per share |  |  |  |  | $ | 0.77 |  |  | $ | 0.59 |
Diluted earnings per share |  |  |  |  | $ | 0.75 |  |  | $ | 0.58 |
Anti-dilutive shares not included in diluted earnings per share computation |  |  |  |  | 3,235 |  |  | 1,250 |

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4. Share-Based Awards
Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):

| Option Shares |  | Weighted Average Exercise Price |  | Options Exercisable |  | Weighted Average Exercise Price
Outstanding, December 30, 2022 | 10,265 |  |  | $ | 44.40 |  |  | 7,793 |  |  | $ | 37.22 |
Granted | 1,101 |  |  | 71.38 |  |  |  |  |
Exercised | (427) |  |  | 29.80 |  |  |  |  |
Canceled | (37) |  |  | 66.85 |  |  |  |  |
Outstanding, March 31, 2023 | 10,902 |  |  | $ | 47.63 |  |  | 8,033 |  |  | $ | 39.68 |

The Company recognized year-to-date share-based compensation of $8.9 million in 2023 and $7.1 million in 2022. As of March 31, 2023, there was $33.0 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 3.1 years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:

| Three Months Ended
| March 31, 2023 |  | April 1, 2022
Expected life in years | 6.7 |  | 7.3
Interest rate | 4.0 | % |  | 1.9 | %
Volatility | 26.3 | % |  | 25.5 | %
Dividend yield | 1.3 | % |  | 1.2 | %
Weighted average fair value per share | $ | 21.74 |  |  | $ | 19.06 |

Under the Company’s Employee Stock Purchase Plan, the Company issued 323,000 shares in 2023 and 298,000 shares in 2022. The fair value of the employees’ purchase rights under this Plan was estimated on the date of grant. The benefit of the 15 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:

| Three Months Ended
| March 31, 2023 |  | April 1, 2022
Expected life in years | 1.0 |  | 1.0
Interest rate | 5.1 | % |  | 0.9 | %
Volatility | 26.4 | % |  | 20.5 | %
Dividend yield | 1.4 | % |  | 1.2 | %
Weighted average fair value per share | $ | 18.04 |  |  | $ | 16.01 |

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5. Retirement Benefits
The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Pension Benefits |  |  |  |  |  |  |
Service cost |  |  |  |  | $ | 1,464 |  |  | $ | 2,170 |
Interest cost |  |  |  |  | 3,777 |  |  | 2,738 |
Expected return on assets |  |  |  |  | (3,975) |  |  | (4,802) |
Amortization and other |  |  |  |  | 440 |  |  | 1,076 |
Net periodic benefit cost |  |  |  |  | $ | 1,706 |  |  | $ | 1,182 |
Postretirement Medical |  |  |  |  |  |  |
Service cost |  |  |  |  | $ | 100 |  |  | $ | 175 |
Interest cost |  |  |  |  | 210 |  |  | 225 |
Amortization |  |  |  |  | 90 |  |  | 175 |
Net periodic benefit cost |  |  |  |  | $ | 400 |  |  | $ | 575 |

6. Shareholders’ Equity
Changes in components of accumulated other comprehensive income (loss), net of tax were as follows (in thousands):

| Pension and Postretirement Medical |  | Cumulative Translation Adjustment |  | Total
Three Months Ended March 31, 2023 |  |  |  |  |
Balance, December 30, 2022 | $ | (39,734) |  |  | $ | (29,644) |  |  | $ | (69,378) |
Other comprehensive income (loss) before reclassifications | — |  |  | 4,975 |  |  | 4,975 |
Reclassified to pension cost and deferred tax | 888 |  |  | — |  |  | 888 |
Balance, March 31, 2023 | $ | (38,846) |  |  | $ | (24,669) |  |  | $ | (63,515) |

Three Months Ended April 1, 2022 |  |  |  |  |
Balance, December 31, 2021 | $ | (60,107) |  |  | $ | (20,062) |  |  | $ | (80,169) |
Other comprehensive income (loss) before reclassifications | — |  |  | (2,960) |  |  | (2,960) |
Reclassified to pension cost and deferred tax | 700 |  |  | — |  |  | 700 |
Balance, April 1, 2022 | $ | (59,407) |  |  | $ | (23,022) |  |  | $ | (82,429) |

Amounts related to pension and postretirement medical adjustments are reclassified to non-service components of pension cost that are included within other non-operating expenses.
7. Receivables and Credit Losses
Accounts receivable includes trade receivables of $345 million and other receivables of $11 million as of March 31, 2023 and $334 million and $12 million, respectively, as of December 30, 2022.
Allowance for Credit Losses
Following is a summary of activity in the year to date allowance for credit losses (in thousands):
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| March 31, 2023 |  | April 1, 2022
Balance, beginning | $ | 6,130 |  |  | $ | 3,254 |
Additions (reversals) charged to costs and expenses | (137) |  |  | 3,220 |
Deductions from reserves (1) | (1,820) |  |  | (33) |
Other additions (deductions) (2) | 59 |  |  | 33 |
Balance, ending | $ | 4,232 |  |  | $ | 6,474 |

(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.
8. Inventories
Major components of inventories were as follows (in thousands):

| March 31, 2023 |  | December 30, 2022
Finished products and components | $ | 246,401 |  |  | $ | 222,326 |
Products and components in various stages of completion | 147,687 |  |  | 138,957 |
Raw materials and purchased components | 232,913 |  |  | 248,636 |
Subtotal | 627,001 |  |  | 609,919 |
Reduction to LIFO cost | (129,759) |  |  | (133,129) |
Total | $ | 497,242 |  |  | $ | 476,790 |

9. Intangible Assets
Components of other intangible assets were as follows (dollars in thousands):

| Finite Life |  | Indefinite Life |  |
| Customer Relationships |  | Patents and Proprietary Technology |  | Trademarks, Trade Names and Other |  | Trade Names |  | Total
As of March 31, 2023 |  |  |  |  |  |  |  |  |
Cost | $ | 197,417 |  |  | $ | 26,374 |  |  | $ | 1,300 |  |  | $ | 62,633 |  |  | $ | 287,724 |
Accumulated amortization | (122,816) |  |  | (18,738) |  |  | (388) |  |  | — |  |  | (141,942) |
Foreign currency translation | (9,301) |  |  | (863) |  |  | — |  |  | (1,487) |  |  | (11,651) |
Book value | $ | 65,300 |  |  | $ | 6,773 |  |  | $ | 912 |  |  | $ | 61,146 |  |  | $ | 134,131 |
Weighted average life in years | 13 |  | 10 |  | 6 |  | N/A |  |

As of December 30, 2022 |  |  |  |  |  |  |  |  |
Cost | $ | 202,103 |  |  | $ | 26,374 |  |  | $ | 1,300 |  |  | $ | 62,633 |  |  | $ | 292,410 |
Accumulated amortization | (123,603) |  |  | (18,027) |  |  | (330) |  |  | — |  |  | (141,960) |
Foreign currency translation | (10,060) |  |  | (894) |  |  | — |  |  | (1,989) |  |  | (12,943) |
Book value | $ | 68,440 |  |  | $ | 7,453 |  |  | $ | 970 |  |  | $ | 60,644 |  |  | $ | 137,507 |
Weighted average life in years | 13 |  | 10 |  | 6 |  | N/A |  |

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Amortization of intangibles for the year to date was $4.5 million in 2023 and $4.6 million in 2022. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):

| 2023 (Remainder) |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter
Estimated Amortization Expense | $ | 12,786 |  |  | $ | 16,311 |  |  | $ | 15,849 |  |  | $ | 9,050 |  |  | $ | 6,406 |  |  | $ | 12,583 |

Changes in the carrying amount of goodwill for each reportable segment were as follows (in thousands):

| Contractor |  | Industrial |  | Process |  | Total
Balance, December 30, 2022 | $ | 77,034 |  |  | $ | 134,771 |  |  | $ | 156,366 |  |  | $ | 368,171 |
Additions, adjustments from business acquisitions | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation | 259 |  |  | 1,257 |  |  | 416 |  |  | 1,932 |
Balance, March 31, 2023 | $ | 77,293 |  |  | $ | 136,028 |  |  | $ | 156,782 |  |  | $ | 370,103 |

10. Other Current Liabilities
Components of other current liabilities were as follows (in thousands):

| March 31, 2023 |  | December 30, 2022
Accrued self-insurance retentions | $ | 9,246 |  |  | $ | 9,338 |
Accrued warranty and service liabilities | 14,917 |  |  | 14,674 |
Accrued trade promotions | 8,951 |  |  | 13,799 |
Payable for employee stock purchases | 1,055 |  |  | 16,497 |
Customer advances and deferred revenue | 45,134 |  |  | 50,747 |
Income taxes payable | 27,258 |  |  | 15,987 |
Tax payable, other | 11,584 |  |  | 9,614 |
Right of return refund liability | 18,533 |  |  | 18,449 |
Operating lease liabilities, current | 9,451 |  |  | 9,555 |
Other | 30,485 |  |  | 32,133 |
Total | $ | 176,614 |  |  | $ | 190,793 |

A liability is established for estimated future warranty and service claims that relate to current and prior period sales. The Company estimates warranty costs based on historical claim experience and other factors including evaluating specific product warranty issues. Following is a summary of activity in accrued warranty and service liabilities (in thousands):

Balance, December 30, 2022 | $ | 14,674 |
Charged to expense | 2,392 |
Margin on parts sales reversed | 1,351 |
Reductions for claims settled | (3,500) |
Balance, March 31, 2023 | $ | 14,917 |

Customer Advances and Deferred Revenue
Revenue is deferred when cash payments are received or due in advance of performance, including amounts which are refundable. This is also the case for services associated with certain product sales. During the three months ended March 31, 2023, we recognized $20.6 million that was included in deferred revenue at December 30, 2022. During the
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three months ended April 1, 2022, we recognized $22.5 million that was included in deferred revenue at December 31, 2021.
11. Fair Value
Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):

| Level |  | March 31, 2023 |  | December 30, 2022
Assets |  |  |  |  |
Cash surrender value of life insurance | 2 |  | $ | 20,239 |  |  | $ | 19,192 |
Liabilities |  |  |  |  |
Contingent consideration | 3 |  | $ | 13,410 |  |  | $ | 14,914 |
Deferred compensation | 2 |  | 5,830 |  |  | 5,842 |
Forward exchange contracts | 2 |  | 132 |  |  | 520 |
Total liabilities at fair value |  |  | $ | 19,372 |  |  | $ | 21,276 |

Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.
Contingent consideration liability represents the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of certain acquired businesses based on future revenues.
Long-term notes payable with fixed interest rates had a carrying amount of $75 million and estimated fair value of $75 million as of both March 31, 2023 and December 30, 2022. The fair value of variable rate borrowings approximates carrying value. The Company uses significant other observable inputs to estimate fair value (level 2 of the fair value hierarchy) based on the present value of future cash flows and rates that would be available for issuance of debt with similar terms and remaining maturities.
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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 Company continued to experience supply chain disruptions and the associated effects of inflation in the first quarter of 2023; however, the impact was not as significant as compared to the same period in the prior year. Pricing actions implemented have generally mitigated the effects of increased costs and expenses. The Company expects isolated supply chain disruptions and an overall inflationary environment to continue through the remainder of 2023.
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
|  |  |  |  |  |  | Mar 31, 2023 |  | Apr 1, 2022 |  | % Change
Net Sales |  |  |  |  |  |  | $ | 529.6 |  |  | $ | 494.3 |  |  | 7 | %
Operating Earnings |  |  |  |  |  |  | 156.7 |  |  | 128.4 |  |  | 22 | %
Net Earnings |  |  |  |  |  |  | 129.2 |  |  | 100.8 |  |  | 28 | %
Net Earnings, adjusted (1) |  |  |  |  |  |  | 126.6 |  |  | 99.3 |  |  | 27 | %
Diluted Net Earnings per Common Share |  |  |  |  |  |  | $ | 0.75 |  |  | $ | 0.58 |  |  | 29 | %
Diluted Net Earnings per Common Share, adjusted (1) |  |  |  |  |  |  | $ | 0.74 |  |  | $ | 0.57 |  |  | 30 | %

(1) See below for a reconciliation of adjusted non-GAAP financial measures to GAAP.
Sales increased 7 percent for the quarter, led by double-digit growth in the Process segment. Sales increases in the Americas and EMEA were partially offset by a decrease in Asia Pacific. Changes in currency translation rates decreased sales and net earnings by approximately $11 million and $6 million, respectively, for the quarter. Sales from acquired operations contributed approximately $2 million for the quarter.
Gross profit margin rate was more than 2 percentage points higher than the first quarter last year mainly due to the impact of price changes and favorable product and channel mix.
Total operating expenses increased 2 percentage points, but decreased as a percentage of sales by 1 percentage point.
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Excluding the impact of excess tax benefits related to stock option exercises presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP measurements of adjusted income taxes, effective income tax rates, net earnings and diluted earnings per share follows (in millions except per share amounts):

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Earnings before income taxes |  |  |  |  | $ | 157.4 |  |  | $ | 122.9 |
Income taxes, as reported |  |  |  |  | $ | 28.2 |  |  | $ | 22.1 |
Excess tax benefit from option exercises |  |  |  |  | 2.6 |  |  | 1.5 |
Income taxes, adjusted |  |  |  |  | $ | 30.8 |  |  | $ | 23.6 |
Effective income tax rate |  |  |  |  |  |  |
As reported |  |  |  |  | 17.9 | % |  | 18.0 | %
Adjusted |  |  |  |  | 19.5 | % |  | 19.2 | %
Net Earnings, as reported |  |  |  |  | $ | 129.2 |  |  | $ | 100.8 |
Excess tax benefit from option exercises |  |  |  |  | (2.6) |  |  | (1.5) |
Net Earnings, adjusted |  |  |  |  | $ | 126.6 |  |  | $ | 99.3 |
Weighted Average Diluted Shares |  |  |  |  | 171.7 |  |  | 174.7 |
Diluted Earnings per Share |  |  |  |  |  |  |
As reported |  |  |  |  | $ | 0.75 |  |  | $ | 0.58 |
Adjusted |  |  |  |  | $ | 0.74 |  |  | $ | 0.57 |

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

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  | 100.0 | % |  | 100.0 | %
Cost of products sold |  |  |  |  | 46.2 |  |  | 48.5 |
Gross Profit |  |  |  |  | 53.8 |  |  | 51.5 |
Product development |  |  |  |  | 3.9 |  |  | 3.9 |
Selling, marketing and distribution |  |  |  |  | 12.3 |  |  | 12.7 |
General and administrative |  |  |  |  | 8.0 |  |  | 8.9 |
Operating Earnings |  |  |  |  | 29.6 |  |  | 26.0 |
Interest expense |  |  |  |  | 0.3 |  |  | 1.1 |
Other (income) expense, net |  |  |  |  | (0.4) |  |  | — |
Earnings Before Income Taxes |  |  |  |  | 29.7 |  |  | 24.9 |
Income taxes |  |  |  |  | 5.3 |  |  | 4.5 |
Net Earnings |  |  |  |  | 24.4 | % |  | 20.4 | %

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

|  |  | Three Months Ended
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Americas(1) |  |  |  |  | $ | 331.9 |  |  | $ | 293.2 |
EMEA(2) |  |  |  |  | 108.8 |  |  | 106.2 |
Asia Pacific |  |  |  |  | 88.9 |  |  | 94.9 |
Consolidated |  |  |  |  | $ | 529.6 |  |  | $ | 494.3 |

(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
|  |  |  |  |  |  |  |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas |  |  |  |  |  |  |  |  | 13% |  | 1% |  | (1)% |  | 13%
EMEA |  |  |  |  |  |  |  |  | 7% |  | 0% |  | (5)% |  | 2%
Asia Pacific |  |  |  |  |  |  |  |  | (1)% |  | 0% |  | (5)% |  | (6)%
Consolidated |  |  |  |  |  |  |  |  | 10% |  | 0% |  | (3)% |  | 7%

Gross Profit
Gross profit margin rate for the quarter was more than 2 percentage points higher than the first quarter last year. Favorable effects of realized pricing and product and channel mix offset the adverse impacts of higher product costs and changes in currency translation rates.
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Operating Expenses
Total operating expenses for the quarter increased $2 million (2 percent) compared to the first quarter last year. The increase includes higher stock compensation of $2 million and volume and rate-related increases of $5 million. Partially offsetting the increase was $2 million of favorable changes in currency translation rates and $3 million of credit losses on customer receivables in Russia in the prior year that did not repeat.
Interest and Other (Income) Expense
Interest expense for the quarter decreased $4 million as private placement debt was repaid in the first quarter last year. Other non-operating expenses for the quarter decreased by $2 million due to increased interest income and favorable market valuation changes on investments held to fund certain retirement benefits.
Income Taxes
The effective income tax rate of 18 percent for the quarter was flat compared with the first quarter 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
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  |  |  |
Americas |  |  |  |  | $ | 184.1 |  |  | $ | 170.5 |
EMEA |  |  |  |  | 42.1 |  |  | 41.2 |
Asia Pacific |  |  |  |  | 19.7 |  |  | 22.9 |
Total |  |  |  |  | $ | 245.9 |  |  | $ | 234.6 |
Operating earnings as a percentage of net sales |  |  |  |  | 30 | % |  | 25 | %

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

|  |  | Three Months
|  |  |  |  |  |  |  |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas |  |  |  |  |  |  |  |  | 8% |  | 0% |  | 0% |  | 8%
EMEA |  |  |  |  |  |  |  |  | 7% |  | 0% |  | (5)% |  | 2%
Asia Pacific |  |  |  |  |  |  |  |  | (8)% |  | 0% |  | (6)% |  | (14)%
Segment Total |  |  |  |  |  |  |  |  | 7% |  | 0% |  | (2)% |  | 5%

Contractor segment sales increased 5 percent, with favorable response to new product offerings and improved product availability. Price realization and favorable product and channel mix drove the operating margin rate 5 percentage points higher.
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
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  |  |  |
Americas |  |  |  |  | $ | 63.3 |  |  | $ | 54.3 |
EMEA |  |  |  |  | 48.1 |  |  | 47.9 |
Asia Pacific |  |  |  |  | 38.8 |  |  | 42.5 |
Total |  |  |  |  | $ | 150.2 |  |  | $ | 144.7 |
Operating earnings as a percentage of net sales |  |  |  |  | 35 | % |  | 36 | %

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

|  |  | Three Months
|  |  |  |  |  |  |  |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas |  |  |  |  |  |  |  |  | 17% |  | 0% |  | 0% |  | 17%
EMEA |  |  |  |  |  |  |  |  | 5% |  | 0% |  | (5)% |  | 0%
Asia Pacific |  |  |  |  |  |  |  |  | (3)% |  | 0% |  | (6)% |  | (9)%
Segment Total |  |  |  |  |  |  |  |  | 7% |  | 0% |  | (3)% |  | 4%

Underlying sales growth in the Americas and EMEA was partially offset by weakness in Asia Pacific, where finishing system sales and other project activity decreased. The unfavorable effects of currency translation drove a 1 percentage point decrease in the operating margin rate.
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
|  |  |  |  | March 31, 2023 |  | April 1, 2022
Net Sales |  |  |  |  |  |  |
Americas |  |  |  |  | $ | 84.5 |  |  | $ | 68.4 |
EMEA |  |  |  |  | 18.6 |  |  | 17.1 |
Asia Pacific |  |  |  |  | 30.4 |  |  | 29.5 |
Total |  |  |  |  | $ | 133.5 |  |  | $ | 115.0 |
Operating earnings as a percentage of net sales |  |  |  |  | 30 | % |  | 24 | %

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

|  |  | Three Months
|  |  |  |  |  |  |  |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas |  |  |  |  |  |  |  |  | 22% |  | 2% |  | 0% |  | 24%
EMEA |  |  |  |  |  |  |  |  | 12% |  | 1% |  | (4)% |  | 9%
Asia Pacific |  |  |  |  |  |  |  |  | 6% |  | 0% |  | (3)% |  | 3%
Segment Total |  |  |  |  |  |  |  |  | 16% |  | 2% |  | (2)% |  | 16%

The Process segment had sales growth in all product applications. The operating margin rate for this segment increased 6 percentage points primarily due to price realization and expense leverage.
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Liquidity and Capital Resources
Net cash provided by operating activities of $91 million in the first quarter of 2023 increased $60 million from the comparable period of 2022, mostly driven by higher net earnings, decreased inventory purchases, and decreased salary and incentive payments. Significant uses of cash in 2023 included dividend payments of $39 million and plant and equipment additions of $38 million. Net proceeds from shares issued in 2023 totaled $30 million, which was partially offset by share repurchases of $8 million.
Significant uses of cash in the first quarter of 2022 included share repurchases of $109 million, payments of long-term debt of $75 million, property, plant and equipment additions of $47 million, dividend payments of $36 million and $25 million to acquire businesses that were not material to the consolidated financial statements. Proceeds from shares issued in the first quarter of 2022 totaled $21 million.
As of March 31, 2023, the Company had available liquidity of $917 million, including cash and cash equivalents of $395 million, of which $146 million was held outside of the U.S., and available credit under existing committed credit facilities of $522 million.
Cash balances and unused financing sources are expected to provide the Company with the flexibility to meet its liquidity needs in 2023, including its capital expenditure plan, planned dividends, share repurchases, acquisitions and operating requirements. Capital expenditures for 2023 are expected to be approximately $200 million, including $130 million in facility expansion projects. The Company may make opportunistic share repurchases going forward.
Outlook
While end market activity and demand trends for the Company's new and existing products are solid, the Company remains cautious given the current macroeconomic uncertainty. The Company is confirming the revenue outlook for the year of low single-digit 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 2022 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: the impact of the COVID-19 pandemic on our business; Russia's invasion of Ukraine, and the sanctions and actions taken against Russia and Belarus in response to the invasion; economic conditions in the United States and other major world economies; our Company’s growth strategies, which include making acquisitions, investing in new products, expanding geographically and targeting new industries; changes in currency translation rates; the ability to meet our customers’ needs and changes in product demand; supply interruptions or delays; security breaches; new entrants who copy our products or infringe on our intellectual property; risks incident to conducting business internationally; catastrophic events; changes in laws and regulations; compliance with anti-corruption and trade laws; changes in tax rates or the adoption of new tax legislation; the possibility of asset impairments if acquired businesses do not meet performance expectations; political instability; results of and costs associated with litigation, administrative proceedings and regulatory reviews incident to our business; our ability to attract, develop and retain qualified personnel; the possibility of decline in purchases from a few large customers of the Contractor segment, variations in activity in the construction, automotive, mining and oil and natural gas industries, and the impact of declines in interest rates, asset values and investment returns on pension costs and required pension contributions. Please refer to Item 1A of our Annual Report on Form 10-K for fiscal year 2022 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
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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 2022 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 II OTHER INFORMATION
Item 1A. Risk Factors
There have been no material changes to the Company’s risk factors from those disclosed in the Company’s 2022 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)
December 31, 2022 - January 27, 2023 |  | — |  |  | $ | — |  |  | — |  |  | 14,971,377 |
January 28, 2023 - February 24, 2023 |  | 115,297 |  |  | $ | 67.36 |  |  | — |  |  | 14,856,080 |
February 25, 2023 - March 31, 2023 |  | — |  |  | $ | — |  |  | — |  |  | 14,856,080 |

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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).
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 First Quarter Earnings dated April 26, 2023.
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: |  | April 26, 2023 |  | By: |  | /s/ Mark W. Sheahan
|  |  |  |  |  | Mark W. Sheahan
|  |  |  |  |  | President and Chief Executive Officer
|  |  |  |  |  | (Principal Executive Officer)
Date: |  | April 26, 2023 |  | By: |  | /s/ David M. Lowe
|  |  |  |  |  | David M. Lowe
|  |  |  |  |  | Chief Financial Officer and Treasurer
|  |  |  |  |  | (Principal Financial Officer)
Date: |  | April 26, 2023 |  | By: |  | /s/ Kathryn L. Schoenrock
|  |  |  |  |  | Kathryn L. Schoenrock
|  |  |  |  |  | Executive Vice President, Corporate Controller and Information Systems
|  |  |  |  |  | (Principal Accounting Officer)