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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 September 26, 2025
OR
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 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 | ☒ |

165,794,118 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding as of October 8, 2025.

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 | 16
| Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk | 22
| Item 4. |  | Controls and Procedures | 22
PART II - OTHER INFORMATION |
| Item 1A. |  | Risk Factors | 23
| Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds | 24
| Item 5. |  | Other Information | 25
| Item 6. |  | Exhibits | 26
SIGNATURES |

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 |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales | $ | 543,358 |  |  | $ | 519,212 |  |  | $ | 1,643,448 |  |  | $ | 1,564,644 |
Cost of products sold | 254,133 |  |  | 243,082 |  |  | 776,960 |  |  | 721,463 |
Gross Profit | 289,225 |  |  | 276,130 |  |  | 866,488 |  |  | 843,181 |
Product development | 20,251 |  |  | 21,306 |  |  | 60,357 |  |  | 65,076 |
Selling, marketing and distribution | 68,019 |  |  | 65,143 |  |  | 203,567 |  |  | 200,773 |
General and administrative | 50,295 |  |  | 43,958 |  |  | 150,407 |  |  | 137,252 |
Contingent consideration | (14,061) |  |  | — |  |  | (14,061) |  |  | — |
Operating Earnings | 164,721 |  |  | 145,723 |  |  | 466,218 |  |  | 440,080 |
Interest expense | 711 |  |  | 656 |  |  | 2,079 |  |  | 2,034 |
Other income, net | (4,450) |  |  | (6,225) |  |  | (14,003) |  |  | (18,756) |
Earnings Before Income Taxes | 168,460 |  |  | 151,292 |  |  | 478,142 |  |  | 456,802 |
Income taxes | 30,832 |  |  | 29,095 |  |  | 88,790 |  |  | 79,426 |
Net Earnings | $ | 137,628 |  |  | $ | 122,197 |  |  | $ | 389,352 |  |  | $ | 377,376 |
Net Earnings per Common Share |  |  |  |  |  |  |
Basic | $ | 0.83 |  |  | $ | 0.72 |  |  | $ | 2.34 |  |  | $ | 2.24 |
Diluted | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 2.30 |  |  | $ | 2.19 |

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

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Earnings | $ | 137,628 |  |  | $ | 122,197 |  |  | $ | 389,352 |  |  | $ | 377,376 |
Components of other comprehensive income |  |  |  |  |  |  |
Cumulative translation adjustment | 1,501 |  |  | 19,491 |  |  | 78,387 |  |  | (26) |
Pension and postretirement medical liability adjustment | 808 |  |  | (268) |  |  | 534 |  |  | 1,954 |
Income taxes - pension and postretirement medical liability adjustment | (235) |  |  | 66 |  |  | (178) |  |  | (523) |
Other comprehensive income | 2,074 |  |  | 19,289 |  |  | 78,743 |  |  | 1,405 |
Comprehensive Income | $ | 139,702 |  |  | $ | 141,486 |  |  | $ | 468,095 |  |  | $ | 378,781 |

See notes to consolidated financial statements.
3

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

| September 26, 2025 |  | December 27, 2024
ASSETS |  |  |
Current Assets |  |  |
Cash and cash equivalents | $ | 618,662 |  |  | $ | 675,336 |
Accounts receivable, less allowances of $5,900 and $6,000 | 389,314 |  |  | 362,533 |
Inventories | 426,809 |  |  | 404,676 |
Other current assets | 52,803 |  |  | 54,896 |
Total current assets | 1,487,588 |  |  | 1,497,441 |
Property, Plant and Equipment, net | 762,499 |  |  | 771,656 |
Goodwill | 560,490 |  |  | 487,468 |
Other Intangible Assets, net | 271,093 |  |  | 233,306 |
Operating Lease Assets | 25,483 |  |  | 19,678 |
Deferred Income Taxes | 38,121 |  |  | 46,910 |
Other Assets | 87,676 |  |  | 82,753 |
Total Assets | $ | 3,232,950 |  |  | $ | 3,139,212 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current Liabilities |  |  |
Notes payable to banks | $ | 35,127 |  |  | $ | 28,537 |
Current portion of long-term debt | 1,615 |  |  | — |
Trade accounts payable | 81,103 |  |  | 60,816 |
Salaries and incentives | 67,577 |  |  | 58,169 |
Dividends payable | 45,539 |  |  | 46,558 |
Other current liabilities | 236,817 |  |  | 211,728 |
Total current liabilities | 467,778 |  |  | 405,808 |
Retirement Benefits and Deferred Compensation | 83,131 |  |  | 80,381 |
Operating Lease Liabilities | 17,434 |  |  | 12,278 |
Deferred Income Taxes | 44,799 |  |  | 37,822 |
Other Non-current Liabilities | 10,808 |  |  | 18,788 |
Shareholders’ Equity |  |  |
Common stock | 165,774 |  |  | 169,394 |
Additional paid-in-capital | 984,038 |  |  | 955,051 |
Retained earnings | 1,430,019 |  |  | 1,509,264 |
Accumulated other comprehensive income (loss) | 29,169 |  |  | (49,574) |
Total shareholders’ equity | 2,609,000 |  |  | 2,584,135 |
Total Liabilities and Shareholders’ Equity | $ | 3,232,950 |  |  | $ | 3,139,212 |

See notes to consolidated financial statements.
4

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

| Nine Months Ended
| September 26, 2025 |  | September 27, 2024
Cash Flows From Operating Activities |  |  |
Net Earnings | $ | 389,352 |  |  | $ | 377,376 |
Adjustments to reconcile net earnings to net cash provided by operating activities |  |  |
Depreciation and amortization | 75,744 |  |  | 62,054 |
Deferred income taxes | 4,692 |  |  | 14,646 |
Share-based compensation | 24,495 |  |  | 27,312 |
Gain on sale of building | (4,737) |  |  | (1,216) |
Contingent consideration | (14,061) |  |  | — |
Change in |  |  |
Accounts receivable | (6,470) |  |  | (460) |
Inventories | 19,671 |  |  | (1,871) |
Trade accounts payable | 11,952 |  |  | (2,133) |
Salaries and incentives | 2,146 |  |  | (9,901) |
Retirement benefits and deferred compensation | (769) |  |  | 4,525 |
Other accrued liabilities | (14,024) |  |  | (27,977) |
Other | (729) |  |  | (5,869) |
Net cash provided by operating activities | 487,262 |  |  | 436,486 |
Cash Flows From Investing Activities |  |  |
Property, plant and equipment additions | (33,646) |  |  | (92,788) |
Proceeds from sale of building | 11,182 |  |  | 5,630 |
Acquisition of businesses, net of cash acquired | (70,107) |  |  | (7,750) |
Other | (2,215) |  |  | (308) |
Net cash used in investing activities | (94,786) |  |  | (95,216) |
Cash Flows From Financing Activities |  |  |
Borrowings (payments) on short-term lines of credit, net | 5,912 |  |  | (338) |
Common stock issued | 35,618 |  |  | 50,002 |
Common stock repurchased | (360,952) |  |  | (31,350) |
Taxes paid related to net share settlement of equity awards | (3,833) |  |  | (4,612) |
Cash dividends paid | (137,764) |  |  | (129,026) |
Net cash used in financing activities | (461,019) |  |  | (115,324) |
Effect of exchange rate changes on cash | 11,869 |  |  | 556 |
Net (decrease) increase in cash and cash equivalents | (56,674) |  |  | 226,502 |
Cash and Cash Equivalents |  |  |
Beginning of year | 675,336 |  |  | 537,951 |
End of period | $ | 618,662 |  |  | $ | 764,453 |

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 (Loss) Income |  | Total
Three Months Ended September 26, 2025 |  |  |  |  |  |  |  |  |
Balance, June 27, 2025 | $ | 165,637 |  |  | $ | 970,332 |  |  | $ | 1,337,956 |  |  | $ | 27,095 |  |  | $ | 2,501,020 |
Shares issued (canceled) | 137 |  |  | 6,888 |  |  | — |  |  | — |  |  | 7,025 |
Shares repurchased | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock compensation cost | — |  |  | 7,542 |  |  | — |  |  | — |  |  | 7,542 |
Restricted stock canceled (issued) | — |  |  | (724) |  |  | — |  |  | — |  |  | (724) |
Net earnings | — |  |  | — |  |  | 137,628 |  |  | — |  |  | 137,628 |
Dividends declared ($0.275 per share) | — |  |  | — |  |  | (45,565) |  |  | — |  |  | (45,565) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | 2,074 |  |  | 2,074 |
Balance, September 26, 2025 | $ | 165,774 |  |  | $ | 984,038 |  |  | $ | 1,430,019 |  |  | $ | 29,169 |  |  | $ | 2,609,000 |
Nine Months Ended September 26, 2025 |  |  |  |  |  |  |  |  |
Balance, December 27, 2024 | $ | 169,394 |  |  | $ | 955,051 |  |  | $ | 1,509,264 |  |  | $ | (49,574) |  |  | $ | 2,584,135 |
Shares issued | 764 |  |  | 31,745 |  |  | — |  |  | — |  |  | 32,509 |
Shares repurchased | (4,384) |  |  | (24,714) |  |  | (331,854) |  |  | — |  |  | (360,952) |
Stock compensation cost | — |  |  | 22,680 |  |  | — |  |  | — |  |  | 22,680 |
Restricted stock canceled (issued) | — |  |  | (724) |  |  | — |  |  | — |  |  | (724) |
Net earnings | — |  |  | — |  |  | 389,352 |  |  | — |  |  | 389,352 |
Dividends declared ($0.825 per share) | — |  |  | — |  |  | (136,743) |  |  | — |  |  | (136,743) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | 78,743 |  |  | 78,743 |
Balance, September 26, 2025 | $ | 165,774 |  |  | $ | 984,038 |  |  | $ | 1,430,019 |  |  | $ | 29,169 |  |  | $ | 2,609,000 |
Three Months Ended September 27, 2024 |  |  |  |  |  |  |  |  |
Balance, June 28, 2024 | $ | 168,927 |  |  | $ | 922,203 |  |  | $ | 1,380,234 |  |  | $ | (52,879) |  |  | $ | 2,418,485 |
Shares issued | 77 |  |  | 3,124 |  |  | — |  |  | — |  |  | 3,201 |
Shares repurchased | (175) |  |  | (1,104) |  |  | (12,308) |  |  | — |  |  | (13,587) |
Stock compensation cost | — |  |  | 6,701 |  |  | — |  |  | — |  |  | 6,701 |
Net earnings | — |  |  | — |  |  | 122,197 |  |  | — |  |  | 122,197 |
Dividends declared ($0.255 per share) | — |  |  | — |  |  | (42,992) |  |  | — |  |  | (42,992) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | 19,289 |  |  | 19,289 |
Balance, September 27, 2024 | $ | 168,829 |  |  | $ | 930,924 |  |  | $ | 1,447,131 |  |  | $ | (33,590) |  |  | $ | 2,513,294 |
Nine Months Ended September 27, 2024 |  |  |  |  |  |  |  |  |
Balance, December 29, 2023 | $ | 167,946 |  |  | $ | 863,336 |  |  | $ | 1,227,938 |  |  | $ | (34,995) |  |  | $ | 2,224,225 |
Shares issued | 1,282 |  |  | 44,108 |  |  | — |  |  | — |  |  | 45,390 |
Shares repurchased | (399) |  |  | (2,049) |  |  | (28,902) |  |  | — |  |  | (31,350) |
Stock compensation cost | — |  |  | 25,529 |  |  | — |  |  | — |  |  | 25,529 |
Net earnings | — |  |  | — |  |  | 377,376 |  |  | — |  |  | 377,376 |
Dividends declared ($0.765 per share) | — |  |  | — |  |  | (129,281) |  |  | — |  |  | (129,281) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | 1,405 |  |  | 1,405 |
Balance, September 27, 2024 | $ | 168,829 |  |  | $ | 930,924 |  |  | $ | 1,447,131 |  |  | $ | (33,590) |  |  | $ | 2,513,294 |

See notes to consolidated financial statements.
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GRACO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation
The consolidated balance sheet of Graco Inc. and subsidiaries (the “Company”) as of September 26, 2025 and the related statements of earnings, comprehensive income and shareholders' equity for the three and nine months ended September 26, 2025 and September 27, 2024, and cash flows for the nine months ended September 26, 2025 and September 27, 2024 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 September 26, 2025, 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 Annual Report on Form 10-K for the year ended December 27, 2024 (the "2024 Annual Report").
The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year. Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year presentation.
2. Segment Information
Effective January 1, 2025, the Company began to classify its business into three 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.
Segment information follows (in thousands):

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Contractor |  |  |  |  |  |  |
Net Sales | $ | 262,428 |  |  | $ | 242,295 |  |  | $ | 806,419 |  |  | $ | 741,975 |
Cost of products sold | 134,398 |  |  | 117,932 |  |  | 415,820 |  |  | 356,764 |
Gross Profit | 128,030 |  |  | 124,363 |  |  | 390,599 |  |  | 385,211 |
Operating expenses | 60,157 |  |  | 53,310 |  |  | 185,307 |  |  | 163,656 |
Contractor Operating Earnings | $ | 67,873 |  |  | $ | 71,053 |  |  | $ | 205,292 |  |  | $ | 221,555 |
Industrial |  |  |  |  |  |  |
Net Sales | $ | 238,591 |  |  | $ | 235,875 |  |  | $ | 712,521 |  |  | $ | 702,613 |
Cost of products sold | 98,121 |  |  | 101,797 |  |  | 295,996 |  |  | 298,398 |
Gross Profit | 140,470 |  |  | 134,078 |  |  | 416,525 |  |  | 404,215 |
Operating expenses | 59,737 |  |  | 56,540 |  |  | 173,825 |  |  | 172,023 |
Industrial Operating Earnings | $ | 80,733 |  |  | $ | 77,538 |  |  | $ | 242,700 |  |  | $ | 232,192 |

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Expansion Markets |  |  |  |  |  |  |
Net Sales | $ | 42,339 |  |  | $ | 41,042 |  |  | $ | 124,508 |  |  | $ | 120,056 |
Cost of products sold | 20,139 |  |  | 21,821 |  |  | 59,868 |  |  | 61,021 |
Gross Profit | 22,200 |  |  | 19,221 |  |  | 64,640 |  |  | 59,035 |
Operating expenses | 11,811 |  |  | 11,946 |  |  | 35,357 |  |  | 36,574 |
Expansion Markets Operating Earnings | $ | 10,389 |  |  | $ | 7,275 |  |  | $ | 29,283 |  |  | $ | 22,461 |
Reportable Segment Operating Earnings Total | $ | 158,995 |  |  | $ | 155,866 |  |  | $ | 477,275 |  |  | $ | 476,208 |
Unallocated corporate expense | 8,335 |  |  | 10,143 |  |  | 25,118 |  |  | 36,128 |
Contingent consideration | (14,061) |  |  | — |  |  | (14,061) |  |  | — |
Operating Earnings | 164,721 |  |  | 145,723 |  |  | 466,218 |  |  | 440,080 |
Interest expense | 711 |  |  | 656 |  |  | 2,079 |  |  | 2,034 |
Other income, net | (4,450) |  |  | (6,225) |  |  | (14,003) |  |  | (18,756) |
Earnings Before Income Taxes | $ | 168,460 |  |  | $ | 151,292 |  |  | $ | 478,142 |  |  | $ | 456,802 |

Geographic information follows (in thousands):

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales (based on customer location) |  |  |  |  |  |  |
United States | $ | 293,517 |  |  | $ | 289,553 |  |  | $ | 881,101 |  |  | $ | 872,480 |
Other countries | 249,841 |  |  | 229,659 |  |  | 762,347 |  |  | 692,164 |
Total | $ | 543,358 |  |  | $ | 519,212 |  |  | $ | 1,643,448 |  |  | $ | 1,564,644 |

| September 26, 2025 |  | December 27, 2024
Long-lived Assets |  |  |
United States | $ | 607,876 |  |  | $ | 635,698 |
Other countries | 154,623 |  |  | 135,958 |
Total | $ | 762,499 |  |  | $ | 771,656 |

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

| September 26, 2025 |  | December 27, 2024
Finished products and components | $ | 197,904 |  |  | $ | 197,242 |
Products and components in various stages of completion | 133,397 |  |  | 114,647 |
Raw materials and purchased components | 212,602 |  |  | 214,902 |
Subtotal | 543,903 |  |  | 526,791 |
Reduction to LIFO cost | (117,094) |  |  | (122,115) |
Total | $ | 426,809 |  |  | $ | 404,676 |

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

| Pension and Post-retirement Medical |  | Cumulative Translation Adjustment |  | Total
Three Months Ended September 26, 2025 |  |  |  |  |
Balance, June 27, 2025 | $ | (13,362) |  |  | $ | 40,457 |  |  | $ | 27,095 |
Other comprehensive income (loss) before reclassifications | — |  |  | 1,501 |  |  | 1,501 |
Reclassified to pension cost and deferred tax | 573 |  |  | — |  |  | 573 |
Balance, September 26, 2025 | $ | (12,789) |  |  | $ | 41,958 |  |  | $ | 29,169 |

Nine Months Ended September 26, 2025 |  |  |  |  |
Balance, December 27, 2024 | $ | (13,145) |  |  | $ | (36,429) |  |  | $ | (49,574) |
Other comprehensive income (loss) before reclassifications | — |  |  | 78,387 |  |  | 78,387 |
Reclassified to pension cost and deferred tax | 356 |  |  | — |  |  | 356 |
Balance, September 26, 2025 | $ | (12,789) |  |  | $ | 41,958 |  |  | $ | 29,169 |

Three Months Ended September 27, 2024 |  |  |  |  |
Balance, June 28, 2024 | $ | (29,379) |  |  | $ | (23,500) |  |  | $ | (52,879) |
Other comprehensive income (loss) before reclassifications | — |  |  | 19,491 |  |  | 19,491 |
Reclassified to pension cost and deferred tax | (202) |  |  | — |  |  | (202) |
Balance, September 27, 2024 | $ | (29,581) |  |  | $ | (4,009) |  |  | $ | (33,590) |

Nine Months Ended September 27, 2024 |  |  |  |  |
Balance, December 29, 2023 | $ | (31,012) |  |  | $ | (3,983) |  |  | $ | (34,995) |
Other comprehensive income (loss) before reclassifications | — |  |  | (26) |  |  | (26) |
Reclassified to pension cost and deferred tax | 1,431 |  |  | — |  |  | 1,431 |
Balance, September 27, 2024 | $ | (29,581) |  |  | $ | (4,009) |  |  | $ | (33,590) |

Amounts related to pension and post-retirement medical adjustments are reclassified to non-service components of pension cost that are included within other income, net.
5. 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 27, 2024 | 9,139 |  |  | $ | 55.60 |  |  | 6,582 |  |  | $ | 47.16 |
Granted | 963 |  |  | 85.93 |  |  |  |  |
Exercised | (533) |  |  | 30.99 |  |  |  |  |
Canceled | (85) |  |  | 75.44 |  |  |  |  |
Outstanding, September 26, 2025 | 9,484 |  |  | $ | 59.87 |  |  | 6,786 |  |  | $ | 51.64 |

The Company recognized year-to-date share-based compensation of $25 million in 2025 and $27 million in 2024. As of September 26, 2025, there was $22 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 2.6 years.
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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:

| Nine Months Ended
| September 26, 2025 |  | September 27, 2024
Expected life in years | 6.6 |  | 6.6
Interest rate | 4.4 | % |  | 4.2 | %
Volatility | 26.2 | % |  | 26.3 | %
Dividend yield | 1.3 | % |  | 1.1 | %
Weighted average fair value per share | $ | 26.80 |  |  | $ | 28.03 |

Under the Company’s Employee Stock Purchase Plan, the Company issued 257,000 shares in 2025 and 330,000 shares in 2024. 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:

| Nine Months Ended
| September 26, 2025 |  | September 27, 2024
Expected life in years | 1.0 |  | 1.0
Interest rate | 4.1 | % |  | 4.9 | %
Volatility | 19.6 | % |  | 24.2 | %
Dividend yield | 1.3 | % |  | 1.1 | %
Weighted average fair value per share | $ | 19.65 |  |  | $ | 23.16 |

6. 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 |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net earnings available to common shareholders | $ | 137,628 |  |  | $ | 122,197 |  |  | $ | 389,352 |  |  | $ | 377,376 |
Weighted average shares outstanding for basic earnings per share | 165,733 |  |  | 168,810 |  |  | 166,693 |  |  | 168,800 |
Dilutive effect of stock options computed using the treasury stock method and the average market price | 2,890 |  |  | 3,301 |  |  | 2,896 |  |  | 3,548 |
Weighted average shares outstanding for diluted earnings per share | 168,623 |  |  | 172,111 |  |  | 169,589 |  |  | 172,348 |
Basic earnings per share | $ | 0.83 |  |  | $ | 0.72 |  |  | $ | 2.34 |  |  | $ | 2.24 |
Diluted earnings per share | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 2.30 |  |  | $ | 2.19 |
Anti-dilutive shares not included in diluted earnings per share computation | 1,825 |  |  | 1,154 |  |  | 1,827 |  |  | 3,293 |

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

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Pension Benefits |  |  |  |  |  |  |
Service cost | $ | 1,162 |  |  | $ | 1,102 |  |  | $ | 3,454 |  |  | $ | 3,822 |
Interest cost | 2,375 |  |  | 2,256 |  |  | 7,086 |  |  | 6,890 |
Expected return on assets | (2,917) |  |  | (2,543) |  |  | (8,724) |  |  | (7,610) |
Amortization and other | (218) |  |  | 835 |  |  | 148 |  |  | 2,478 |
Net periodic benefit cost | $ | 402 |  |  | $ | 1,650 |  |  | $ | 1,964 |  |  | $ | 5,580 |
Postretirement Medical |  |  |  |  |  |  |
Service cost | $ | 76 |  |  | $ | 91 |  |  | $ | 229 |  |  | $ | 258 |
Interest cost | 285 |  |  | 305 |  |  | 854 |  |  | 861 |
Amortization | (68) |  |  | 53 |  |  | (204) |  |  | — |
Net periodic benefit cost | $ | 293 |  |  | $ | 449 |  |  | $ | 879 |  |  | $ | 1,119 |

8. Receivables and Credit Losses
Accounts receivable includes trade receivables of $373 million and other receivables of $16 million as of September 26, 2025 and $348 million and $15 million of trade receivables and other receivables, respectively, as of December 27, 2024.
Allowance for Credit Losses
Following is a summary of activity for credit losses (in thousands):

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Balance, beginning | $ | 5,331 |  |  | $ | 4,885 |  |  | $ | 4,973 |  |  | $ | 4,655 |
(Reversals) additions charged to costs and expenses | (47) |  |  | 233 |  |  | 46 |  |  | 738 |
Deductions from reserves (1) | (152) |  |  | (295) |  |  | (157) |  |  | (462) |
Other additions (2) | 5 |  |  | 118 |  |  | 275 |  |  | 10 |
Balance, ending | $ | 5,137 |  |  | $ | 4,941 |  |  | $ | 5,137 |  |  | $ | 4,941 |

(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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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 September 26, 2025 |  |  |  |  |  |  |  |  |
Cost | $ | 290,256 |  |  | $ | 37,805 |  |  | $ | 5,447 |  |  | $ | 101,231 |  |  | $ | 434,739 |
Accumulated amortization | (159,346) |  |  | (9,494) |  |  | (1,365) |  |  | — |  |  | (170,205) |
Foreign currency translation | (1,686) |  |  | 1,206 |  |  | — |  |  | 7,039 |  |  | 6,559 |
Book value | $ | 129,224 |  |  | $ | 29,517 |  |  | $ | 4,082 |  |  | $ | 108,270 |  |  | $ | 271,093 |
Weighted average life in years | 14 |  | 9 |  | 2 |  | N/A |  |

As of December 27, 2024 |  |  |  |  |  |  |  |  |
Cost | $ | 270,910 |  |  | $ | 34,731 |  |  | $ | 3,756 |  |  | $ | 95,091 |  |  | $ | 404,488 |
Accumulated amortization | (143,689) |  |  | (10,534) |  |  | (1,478) |  |  | — |  |  | (155,701) |
Foreign currency translation | (12,102) |  |  | (1,182) |  |  | (79) |  |  | (2,118) |  |  | (15,481) |
Book value | $ | 115,119 |  |  | $ | 23,015 |  |  | $ | 2,199 |  |  | $ | 92,973 |  |  | $ | 233,306 |
Weighted average life in years | 14 |  | 9 |  | 3 |  | N/A |  |

Amortization of intangibles for the third quarter was $7 million in 2025 and $5 million in 2024, and for the year to date was $20 million in 2025 and $13 million in 2024. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):

| 2025 (Remainder) |  | 2026 |  | 2027 |  | 2028 |  | 2029 |  | Thereafter
Estimated Amortization Expense | $ | 5,829 |  |  | $ | 21,682 |  |  | $ | 17,898 |  |  | $ | 14,680 |  |  | $ | 14,076 |  |  | $ | 88,658 |

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

| Contractor |  | Industrial |  | Expansion Markets |  | Total
Balance, December 27, 2024 | $ | 198,038 |  |  | $ | 217,698 |  |  | $ | 71,732 |  |  | $ | 487,468 |
Adjustments from business acquisitions | 1,164 |  |  | 43,058 |  |  | (266) |  |  | 43,956 |
Foreign currency translation | 16,653 |  |  | 12,413 |  |  | — |  |  | 29,066 |
Balance, September 26, 2025 | $ | 215,855 |  |  | $ | 273,169 |  |  | $ | 71,466 |  |  | $ | 560,490 |

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

| September 26, 2025 |  | December 27, 2024
Accrued self-insurance retentions | $ | 8,172 |  |  | $ | 8,240 |
Accrued warranty and service liabilities | 20,420 |  |  | 18,712 |
Accrued trade promotions | 8,302 |  |  | 11,086 |
Payable for employee stock purchases | 11,413 |  |  | 16,767 |
Customer advances and deferred revenue | 103,418 |  |  | 52,522 |
Income taxes payable | 8,659 |  |  | 8,102 |
Tax payable, other | 12,007 |  |  | 14,557 |
Right of return refund liability | 14,254 |  |  | 15,557 |
Operating lease liabilities, current | 9,001 |  |  | 7,838 |
Acquisition-related consideration payable | — |  |  | 10,339 |
Other | 41,171 |  |  | 48,008 |
Total | $ | 236,817 |  |  | $ | 211,728 |

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 27, 2024 | $ | 18,712 |
Assumed in business acquisition | 117 |
Charged to expense | 9,745 |
Margin on parts sales reversed | 4,983 |
Reductions for claims settled | (13,137) |
Balance, September 26, 2025 | $ | 20,420 |

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 and nine months ended September 26, 2025, we recognized $4 million and $50 million, respectively, that was included in deferred revenue at December 27, 2024. During the three and nine months ended September 27, 2024, we recognized $8 million and $50 million, respectively, that was included in deferred revenue at December 29, 2023.
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 |  | September 26, 2025 |  | December 27, 2024
Assets |  |  |  |  |
Cash surrender value of life insurance | 2 |  | $ | 27,698 |  |  | $ | 24,411 |
Forward exchange contracts | 2 |  | — |  |  | 116 |
Total assets at fair value |  |  | $ | 27,698 |  |  | $ | 24,527 |
Liabilities |  |  |  |  |
Contingent consideration | 3 |  | $ | 1,639 |  |  | $ | 14,647 |
Deferred compensation | 2 |  | 7,952 |  |  | 8,196 |
Forward exchange contracts | 2 |  | 207 |  |  | — |
Total liabilities at fair value |  |  | $ | 9,798 |  |  | $ | 22,843 |

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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 liabilities represent 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. In the third quarter of 2025, the Company recognized a $14 million gain from the reduction in fair value of contingent consideration related to the acquisition of Corob S.p.A. ("Corob") in 2024.
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.
12. Acquisitions
On November 4, 2024, the Company acquired Corob for €230 million in cash, subject to normal post-closing purchase price adjustments, with up to €30 million in additional contingent consideration. As of September 26, 2025, the purchase price allocation remains preliminary as the Company completes its assessment, principally related to income taxes.
The total purchase consideration consisted of the following (in thousands):

Cash paid | $ | 276,188 |
Contingent consideration | 14,498 |
Total purchase consideration | $ | 290,686 |

Preliminary purchase consideration was allocated to assets acquired and liabilities assumed based on estimated fair values as follows (in thousands):

Cash and cash equivalents | $ | 30,899 |
Accounts receivable | 28,120 |
Inventories | 26,119 |
Other current assets | 18,515 |
Property, plant and equipment | 16,619 |
Other non-current assets | 5,854 |
Identifiable intangible assets | 131,240 |
Goodwill | 127,252 |
Current liabilities | (52,968) |
Deferred income taxes, net | (33,474) |
Other non-current liabilities | (7,490) |
Total net assets acquired | $ | 290,686 |

Goodwill recognized from the Corob acquisition primarily reflects an intangible asset that does not qualify for separate recognition. None of the goodwill acquired with Corob is deductible for tax purposes.
Identifiable intangible assets and estimated useful life are as follows (in thousands):

|  |  | Estimated Life (years)
Trade name | $ | 32,458 |  |  | Indefinite
Customer relationship | 76,169 |  |  | 15
Developed technology | 20,557 |  |  | 10
Backlog | 2,056 |  |  | 0.5
Total identifiable intangibles assets | $ | 131,240 |  |  |

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The following unaudited pro forma information provides the results of operations for the periods ended September 26, 2025 and September 27, 2024, as if the acquisition of Corob had been completed at the beginning of fiscal year 2023 (in thousands, except per share amounts):

| Three Months Ended |  | Nine Months Ended |
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024 |  |
Net sales | $ | 543,358 |  |  | $ | 547,548 |  |  | $ | 1,643,448 |  |  | $ | 1,660,820 |  |  |
Net earnings | 137,628 |  |  | 121,935 |  |  | 390,887 |  |  | 379,689 |  |  |
Earnings per share |  |  |  |  |  |  |  |  |
Basic | $ | 0.83 |  |  | $ | 0.72 |  |  | $ | 2.34 |  |  | $ | 2.25 |  |  |
Diluted | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 2.30 |  |  | $ | 2.20 |  |  |

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 Corob 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.
In the third quarter of 2025, the Company completed the acquisition of Color Service s.r.l. for approximately $77 million of purchase consideration, and its results have been included within the Powder Division in the Industrial Segment.
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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 have resulted in, and their further escalation could result in additional inflationary costs to manufacture, assemble and export our products. We may be required to further 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 |  | Nine Months Ended
| Sep 26, 2025 |  | Sep 27, 2024 |  | % Change |  | Sep 26, 2025 |  | Sep 27, 2024 |  | % Change
Net Sales | $ | 543.4 |  |  | $ | 519.2 |  |  | 5 | % |  | $ | 1,643.4 |  |  | $ | 1,564.6 |  |  | 5 | %
Operating Earnings | 164.7 |  |  | 145.7 |  |  | 13 | % |  | 466.2 |  |  | 440.1 |  |  | 6 | %
Net Earnings | 137.6 |  |  | 122.2 |  |  | 13 | % |  | 389.4 |  |  | 377.4 |  |  | 3 | %
Net Earnings, adjusted (1) | 122.8 |  |  | 122.2 |  |  | — | % |  | 370.2 |  |  | 367.1 |  |  | 1 | %
Diluted Net Earnings per Common Share | $ | 0.82 |  |  | $ | 0.71 |  |  | 15 | % |  | $ | 2.30 |  |  | $ | 2.19 |  |  | 5 | %
Diluted Net Earnings per Common Share, adjusted (1) | $ | 0.73 |  |  | $ | 0.71 |  |  | 3 | % |  | $ | 2.18 |  |  | $ | 2.13 |  |  | 2 | %

(1) See below for a reconciliation of adjusted non-GAAP financial measures to GAAP.
Net sales for the third quarter increased 5 percent. Incremental sales from acquired operations contributed 6 percentage points of sales growth.
The gross profit margin rate was flat for the third quarter as price realization and favorable product and channel mix offset higher product costs and the unfavorable effects of lower margin rates from acquired operations.
Operating expenses for the third quarter decreased 5 percent and included a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration.
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Net earnings increased 13 percent for the third quarter. Adjusted net earnings were flat, as higher sales offset increased operating expenses and lower non-operating income.
Excluding the impact of excess tax benefits from stock option exercises and contingent consideration fair value adjustments presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP adjusted measurements of operating earnings, earnings before income taxes, income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Operating earnings | $ | 164.7 |  |  | $ | 145.7 |  |  | $ | 466.2 |  |  | $ | 440.1 |
Contingent consideration | (14.1) |  |  | — |  |  | (14.1) |  |  | — |
Operating earnings, adjusted | $ | 150.6 |  |  | $ | 145.7 |  |  | $ | 452.1 |  |  | $ | 440.1 |
Earnings before income taxes | $ | 168.5 |  |  | $ | 151.3 |  |  | $ | 478.1 |  |  | $ | 456.8 |
Contingent consideration | (14.1) |  |  | — |  |  | (14.1) |  |  | — |
Earnings before income taxes, adjusted | $ | 154.4 |  |  | $ | 151.3 |  |  | $ | 464.0 |  |  | $ | 456.8 |
Income taxes, as reported | $ | 30.8 |  |  | $ | 29.1 |  |  | $ | 88.8 |  |  | $ | 79.4 |
Excess tax benefit from option exercises | 0.7 |  |  | — |  |  | 5.1 |  |  | 10.3 |
Income taxes, adjusted | $ | 31.5 |  |  | $ | 29.1 |  |  | $ | 93.9 |  |  | $ | 89.7 |
Effective income tax rate |  |  |  |  |  |  |
As reported | 18.3 | % |  | 19.2 | % |  | 18.6 | % |  | 17.4 | %
Adjusted | 20.4 | % |  | 19.2 | % |  | 20.2 | % |  | 19.7 | %
Net Earnings, as reported | $ | 137.6 |  |  | $ | 122.2 |  |  | $ | 389.4 |  |  | $ | 377.4 |
Contingent consideration | (14.1) |  |  | — |  |  | (14.1) |  |  | — |
Excess tax benefit from option exercises | (0.7) |  |  | — |  |  | (5.1) |  |  | (10.3) |
Net Earnings, adjusted | $ | 122.8 |  |  | $ | 122.2 |  |  | $ | 370.2 |  |  | $ | 367.1 |
Weighted Average Diluted Shares | 168.6 |  |  | 172.1 |  |  | 169.6 |  |  | 172.3 |
Diluted Earnings per Share |  |  |  |  |  |  |
As reported | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 2.30 |  |  | $ | 2.19 |
Adjusted | $ | 0.73 |  |  | $ | 0.71 |  |  | $ | 2.18 |  |  | $ | 2.13 |

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

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Cost of products sold | 46.8 |  |  | 46.8 |  |  | 47.3 |  |  | 46.1 |
Gross Profit | 53.2 |  |  | 53.2 |  |  | 52.7 |  |  | 53.9 |
Product development | 3.7 |  |  | 4.1 |  |  | 3.7 |  |  | 4.2 |
Selling, marketing and distribution | 12.5 |  |  | 12.5 |  |  | 12.4 |  |  | 12.8 |
General and administrative | 9.3 |  |  | 8.5 |  |  | 9.2 |  |  | 8.8 |
Contingent consideration | (2.6) |  |  | — |  |  | (0.9) |  |  | — |
Operating Earnings | 30.3 |  |  | 28.1 |  |  | 28.4 |  |  | 28.1 |
Interest expense | 0.1 |  |  | 0.1 |  |  | 0.1 |  |  | 0.1 |
Other income, net | (0.8) |  |  | (1.2) |  |  | (0.9) |  |  | (1.2) |
Earnings Before Income Taxes | 31.0 |  |  | 29.2 |  |  | 29.2 |  |  | 29.2 |
Income taxes | 5.7 |  |  | 5.7 |  |  | 5.4 |  |  | 5.1 |
Net Earnings | 25.3 | % |  | 23.5 | % |  | 23.8 | % |  | 24.1 | %

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

| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Americas(1) | $ | 341.0 |  |  | $ | 334.7 |  |  | $ | 1,016.1 |  |  | $ | 1,005.5 |
EMEA(2) | 117.8 |  |  | 105.1 |  |  | 368.6 |  |  | 324.9 |
Asia Pacific | 84.6 |  |  | 79.4 |  |  | 258.7 |  |  | 234.2 |
Consolidated | $ | 543.4 |  |  | $ | 519.2 |  |  | $ | 1,643.4 |  |  | $ | 1,564.6 |

(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 |  | Nine Months
| Volume and Price |  | Acquisitions |  | Currency |  | Total |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas | (1)% |  | 3% |  | 0% |  | 2% |  | (2)% |  | 3% |  | 0% |  | 1%
EMEA | (5)% |  | 11% |  | 6% |  | 12% |  | (1)% |  | 12% |  | 2% |  | 13%
Asia Pacific | (3)% |  | 10% |  | 0% |  | 7% |  | 3% |  | 9% |  | (2)% |  | 10%
Consolidated | (2)% |  | 6% |  | 1% |  | 5% |  | (1)% |  | 6% |  | 0% |  | 5%

Gross Profit
The gross profit margin rate was flat for the third quarter and decreased approximately 1 percentage point for the year to date from the comparable periods last year as price realization and favorable product and channel mix offset higher product costs and the unfavorable effects of lower margin rates from acquired operations for the quarter but unable to offset these items for the year to date. Higher product costs included increased tariff costs of $5 million for the quarter and $9 million for the year to date. Interim pricing actions in the third quarter began to offset the effects of increased tariff costs.
Operating Expenses
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Total operating expenses decreased $6 million (5 percentage points) for the third quarter and decreased $3 million (1 percentage point) year to date and included a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration. Incremental expenses from acquired operations of $10 million for the quarter and $29 million for the year to date were partially offset by decreases in product development spending and selling, marketing and distribution expenses.
Other (Income) Expense
Other non-operating income decreased $2 million for the third quarter from the comparable period last year largely due to decreased interest income. For the year to date, other non-operating income decreased $5 million compared to last year and included higher exchange losses on net liabilities of certain foreign operations of $8 million and decreased interest income of $7 million. Partially offsetting these year-to-date items were a $5 million gain in the first quarter from the sale of a former manufacturing and distribution facility in Switzerland and $1 million of favorable market valuation changes on investments held to fund certain retirement benefits.
Income Taxes
The effective income tax rate was 18 percent for the third quarter and 19 percent for the year to date. Adjusted to exclude the impacts of certain non-recurring items (see Financial Results Adjusted for Comparability), the adjusted effective income tax rate of 20 percent for the quarter increased 1 percentage point from the comparable period last year due to the unfavorable effects of foreign earnings taxed at higher rates than the U.S. For the year to date, the adjusted effective tax rate of 20 percent was flat compared to the same period 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 |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales |  |  |  |  |  |  |
Americas | $ | 186.1 |  |  | $ | 182.4 |  |  | $ | 563.4 |  |  | $ | 552.9 |
EMEA | 52.6 |  |  | 40.1 |  |  | 168.2 |  |  | 131.2 |
Asia Pacific | 23.7 |  |  | 19.8 |  |  | 74.8 |  |  | 57.9 |
Total | $ | 262.4 |  |  | $ | 242.3 |  |  | $ | 806.4 |  |  | $ | 742.0 |
Operating earnings as a percentage of net sales | 26 | % |  | 29 | % |  | 25 | % |  | 30 | %

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

| Three Months |  | Nine Months
| Volume and Price |  | Acquisitions |  | Currency |  | Total |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas | (3)% |  | 5% |  | 0% |  | 2% |  | (4)% |  | 6% |  | 0% |  | 2%
EMEA | (1)% |  | 26% |  | 6% |  | 31% |  | (3)% |  | 28% |  | 3% |  | 28%
Asia Pacific | (12)% |  | 33% |  | (1)% |  | 20% |  | (3)% |  | 34% |  | (2)% |  | 29%
Segment Total | (3)% |  | 11% |  | 0% |  | 8% |  | (3)% |  | 12% |  | 0% |  | 9%

Incremental sales from acquired operations in the Contractor segment for the third quarter and year to date were partially offset by sales declines in ongoing operations primarily due to continued weakness in worldwide construction markets. The operating margin rate declined 3 percentage points for the quarter and 5 percentage points for the year to date mainly due to higher product costs from increased tariffs and the unfavorable effects of lower margin rates of acquired operations. The rate of decline in operating margin lessened as price realization improved as the third quarter progressed.
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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 |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales |  |  |  |  |  |  |
Americas | $ | 129.4 |  |  | $ | 125.3 |  |  | $ | 377.4 |  |  | $ | 374.5 |
EMEA | 58.6 |  |  | 58.2 |  |  | 179.1 |  |  | 173.6 |
Asia Pacific | 50.6 |  |  | 52.3 |  |  | 156.0 |  |  | 154.5 |
Total | $ | 238.6 |  |  | $ | 235.8 |  |  | $ | 712.5 |  |  | $ | 702.6 |
Operating earnings as a percentage of net sales | 34 | % |  | 33 | % |  | 34 | % |  | 33 | %

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

| Three Months |  | Nine Months
| Volume and Price |  | Acquisitions |  | Currency |  | Total |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas | 3% |  | 0% |  | 0% |  | 3% |  | 1% |  | 0% |  | 0% |  | 1%
EMEA | (7)% |  | 2% |  | 6% |  | 1% |  | 0% |  | 1% |  | 2% |  | 3%
Asia Pacific | (6)% |  | 3% |  | 0% |  | (3)% |  | 1% |  | 1% |  | (1)% |  | 1%
Segment Total | (2)% |  | 1% |  | 2% |  | 1% |  | 1% |  | 0% |  | 0% |  | 1%

Industrial segment sales increased 1 percent for both the third quarter and year to date. For the quarter, sales growth in the vehicle service product application in the Americas more than offset finishing system sales in the prior year that did not repeat. Year-to-date sales increased 1 percent largely due to improved activity in the Americas and Asia Pacific, particularly in China. The operating margin rate for this segment increased 1 percentage point for both the quarter and year to date as realized pricing and favorable product and channel mix offset higher product costs, including tariffs.
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):
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| Three Months Ended |  | Nine Months Ended
| September 26, 2025 |  | September 27, 2024 |  | September 26, 2025 |  | September 27, 2024
Net Sales |  |  |  |  |  |  |
Americas | $ | 25.5 |  |  | $ | 27.0 |  |  | $ | 75.3 |  |  | $ | 78.1 |
EMEA | 6.6 |  |  | 6.8 |  |  | 21.3 |  |  | 20.1 |
Asia Pacific | 10.3 |  |  | 7.3 |  |  | 27.9 |  |  | 21.8 |
Total | $ | 42.4 |  |  | $ | 41.1 |  |  | $ | 124.5 |  |  | $ | 120.0 |
Operating earnings as a percentage of net sales | 25 | % |  | 18 | % |  | 24 | % |  | 19 | %

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

| Three Months |  | Nine Months
| Volume and Price |  | Acquisitions |  | Currency |  | Total |  | Volume and Price |  | Acquisitions |  | Currency |  | Total
Americas | (6)% |  | 0% |  | 0% |  | (6)% |  | (4)% |  | 0% |  | 0% |  | (4)%
EMEA | (4)% |  | 0% |  | 1% |  | (3)% |  | 5% |  | 0% |  | 1% |  | 6%
Asia Pacific | 40% |  | 0% |  | 1% |  | 41% |  | 27% |  | 0% |  | 0% |  | 27%
Segment Total | 3% |  | 0% |  | 0% |  | 3% |  | 4% |  | 0% |  | 0% |  | 4%

Expansion Market net sales increased 3 percent for the third quarter and 4 percent for the year to date as continued sales growth in the semiconductor and electric motor product applications more than offset decreased sales in the environmental product application. The operating margin rate for this segment increased for both the quarter and year to date driven by increased sales volume and favorable product and channel mix.
Liquidity and Capital Resources
Net cash provided by operating activities of $487 million in the first nine months of 2025 increased $51 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 nine months of 2025 included share repurchases of $361 million (partially offset by $32 million of net proceeds from shares issued), dividend payments of $138 million, business acquisitions totaling $70 million and plant and equipment additions of $34 million.
For the first nine months of 2024, significant uses of cash included plant and equipment additions of $93 million and dividend payments of $129 million. Net proceeds from shares issued totaled $45 million, which were partially offset by share repurchases of $31 million.
As of September 26, 2025, the Company had available liquidity of $1,399 million, including cash and cash equivalents of $619 million, of which $190 million was held outside of the U.S., and available credit under existing committed credit facilities of $780 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, potential future acquisitions and operating requirements. Capital expenditures for 2025 are expected to be approximately $50 to $60 million. The Company may make opportunistic share repurchases going forward.
Outlook
Pricing actions combined with steady incoming order rates reaffirms the Company's 2025 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
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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, industrial and construction activity worldwide; changes in currency translation rates; international and domestic instability; interest rate fluctuations and changes in credit markets; global sourcing of materials; inflationary cost pressures and our ability to raise prices without decreasing demand for our products; interruptions of or intrusions into our information systems; intellectual property rights; the use of generative artificial intelligence and other emerging technologies; 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 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 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 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)
June 28, 2025 - July 25, 2025 |  | — |  |  | $ | — |  |  | — |  |  | 8,767,558 |
July 26, 2025 - August 22, 2025 |  | — |  |  | $ | — |  |  | — |  |  | 8,767,558 |
August 23, 2025 - September 26, 2025 |  | — |  |  | $ | — |  |  | — |  |  | 8,767,558 |

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Item 5.Other Information
During the three months ended September 26, 2025, none 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 Third Quarter Earnings dated October 22, 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: |  | October 22, 2025 |  | By: |  | /s/ Mark W. Sheahan
|  |  |  |  |  | Mark W. Sheahan
|  |  |  |  |  | President and Chief Executive Officer
|  |  |  |  |  | (Principal Executive Officer)
Date: |  | October 22, 2025 |  | By: |  | /s/ David M. Lowe
|  |  |  |  |  | David M. Lowe
|  |  |  |  |  | Chief Financial Officer and Treasurer
|  |  |  |  |  | (Principal Financial Officer)
Date: |  | October 22, 2025 |  | By: |  | /s/ Christopher D. Knutson
|  |  |  |  |  | Christopher D. Knutson
|  |  |  |  |  | Vice President, Controller and Chief Accounting Officer
|  |  |  |  |  | (Principal Accounting Officer)