ggg-20240927

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 27, 2024

☐ 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

☒

☐

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

☒

☐

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

☐

☒

168,849,576 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding as of October 9, 2024.

TABLE OF CONTENTS

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Statements of Earnings

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders' Equity

Notes to Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Item 6.

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 27, 2024		September 29, 2023		September 27, 2024		September 29, 2023
Net Sales	$	519,212	$	539,672	$	1,564,644	$	1,628,962
Cost of products sold	243,082		255,148		721,463		767,883
Gross Profit	276,130		284,524		843,181		861,079
Product development	21,306		19,817		65,076		61,582
Selling, marketing and distribution	65,143		60,495		200,773		194,258
General and administrative	43,958		41,823		137,252		129,130
Contingent consideration	—		(8,600)		—		(8,600)
Impairment	—		7,800		—		7,800
Operating Earnings	145,723		163,189		440,080		476,909

Interest expense	656		1,391		2,034		4,536
Other income, net	(6,225)		(2,483)		(18,756)		(8,877)
Earnings Before Income Taxes	151,292		164,281		456,802		481,250
Income taxes	29,095		31,158		79,426		84,693
Net Earnings	$	122,197	$	133,123	$	377,376	$	396,557
Net Earnings per Common Share
Basic	$	0.72	$	0.79	$	2.24	$	2.35
Diluted	$	0.71	$	0.77	$	2.19	$	2.30

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands)


	Three Months Ended				Nine Months Ended
	September 27, 2024		September 29, 2023		September 27, 2024		September 29, 2023
Net Earnings	$	122,197	$	133,123	$	377,376	$	396,557
Components of other comprehensive income (loss)
Cumulative translation adjustment	19,491		(9,022)		(26)		506
Pension and postretirement medical liability adjustment	(268)		1,100		1,954		3,427
Income taxes - pension and postretirement medical liability adjustment	66		(252)		(523)		(760)
Other comprehensive income (loss)	19,289		(8,174)		1,405		3,173
Comprehensive Income	$	141,486	$	124,949	$	378,781	$	399,730

See notes to consolidated financial statements.

Table of Contents

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands)


	September 27, 2024		December 29, 2023
ASSETS
Current Assets
Cash and cash equivalents	$	764,453	$	537,951
Accounts receivable, less allowances of $6,200 and $5,300	354,999		354,439
Inventories	440,917		438,349
Other current assets	52,126		35,070
Total current assets	1,612,495		1,365,809



Property, Plant and Equipment, net	766,698		741,713
Goodwill	374,462		370,228
Other Intangible Assets, net	116,964		126,258
Operating Lease Assets	16,310		18,768
Deferred Income Taxes	45,173		61,381
Other Assets	43,541		37,850
Total Assets	$	2,975,643	$	2,722,007
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable to banks	$	30,178	$	30,036

Trade accounts payable	61,777		72,214
Salaries and incentives	56,650		64,802
Dividends payable	43,044		42,789
Other current liabilities	168,724		185,359
Total current liabilities	360,373		395,200

Retirement Benefits and Deferred Compensation	82,858		80,347
Operating Lease Liabilities	9,494		11,785
Deferred Income Taxes	7,115		8,215
Other Non-current Liabilities	2,509		2,235

Shareholders’ Equity
Common stock	168,829		167,946
Additional paid-in-capital	930,924		863,336
Retained earnings	1,447,131		1,227,938
Accumulated other comprehensive loss	(33,590)		(34,995)
Total shareholders’ equity	2,513,294		2,224,225
Total Liabilities and Shareholders’ Equity	$	2,975,643	$	2,722,007

See notes to consolidated financial statements.

Table of Contents

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


	Nine Months Ended
	September 27, 2024		September 29, 2023
Cash Flows From Operating Activities
Net Earnings	$	377,376	$	396,557
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	62,054		54,179
Deferred income taxes	14,646		14,910
Share-based compensation	27,312		25,456
Contingent consideration	—		(8,600)
Impairment	—		7,800
Change in
Accounts receivable	(460)		(7,229)
Inventories	(1,871)		19,227
Trade accounts payable	(2,133)		(8,411)
Salaries and incentives	(9,901)		(2,993)
Retirement benefits and deferred compensation	4,525		2,955
Other accrued liabilities	(27,977)		(1,840)
Other	(7,085)		(641)
Net cash provided by operating activities	436,486		491,370
Cash Flows From Investing Activities
Property, plant and equipment additions	(92,788)		(145,626)
Acquisition of businesses, net of cash acquired	(7,750)		—
Other	5,322		(694)
Net cash used in investing activities	(95,216)		(146,320)
Cash Flows From Financing Activities
Borrowings on short-term lines of credit, net	(338)		9,125

Payments on long-term debt	—		(75,000)
Payments of debt issuance costs	—		(1,025)
Common stock issued	50,002		55,492
Common stock repurchased	(31,350)		(27,057)
Taxes paid related to net share settlement of equity awards	(4,612)		(1,225)
Cash dividends paid	(129,026)		(118,710)
Net cash used in financing activities	(115,324)		(158,400)
Effect of exchange rate changes on cash	556		(61)
Net increase in cash and cash equivalents	226,502		186,589
Cash and Cash Equivalents
Beginning of year	537,951		339,196
End of period	$	764,453	$	525,785

See notes to consolidated financial statements.

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 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 (loss)	—		—		—		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 (loss)	—		—		—		1,405		1,405
Balance, September 27, 2024	$	168,829	$	930,924	$	1,447,131	$	(33,590)	$	2,513,294



Three Months Ended September 29, 2023
Balance, June 30, 2023	$	168,985	$	850,900	$	1,154,453	$	(58,031)	$	2,116,307

Shares issued	101		3,338		—		—		3,439
Shares repurchased	(311)		(1,459)		(21,184)		—		(22,954)
Stock compensation cost	—		6,528		—		—		6,528


Net earnings	—		—		133,123		—		133,123
Dividends declared ($0.235 per share)	—		—		(39,743)		—		(39,743)

Other comprehensive income (loss)	—		—		—		(8,174)		(8,174)
Balance, September 29, 2023	$	168,775	$	859,307	$	1,226,649	$	(66,205)	$	2,188,526



Nine Months Ended September 29, 2023
Balance, December 30, 2022	$	167,702	$	784,477	$	976,851	$	(69,378)	$	1,859,652

Shares issued	1,500		52,767

SEC Form 10-Q filed by Graco Inc.