/ / / / / / / / / / / / / / / / / / 3rd Quarter 2022 Earnings Conference Call October 27, 2022 Safe Harbor Factors that could cause actual results to differ from anticipated 2 ////////////////// Today's presentation includes forward-looking statements that reflect management's current expectations about the Company's future business and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ from anticipated results. | --- | --- | |--- ...

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 30, 2022 ☐ 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. UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 8 ...

Financial Data and Key Metrics Changes - Graco reported Q2 2022 sales of $549 million, an increase of 8% from the same quarter last year [7] - Reported net earnings were $117 million or $0.68 per diluted share, with currency translation rates negatively impacting sales by 4% or $15 million and net earnings by 8% or $7 million [7] - Gross margin rate decreased by 300 basis points year-over-year and 250 basis points from Q1 2022 due to rising material costs [8] - Operating expenses decreased by $10 million or 7% in the quarter [11] - Cash flows from operations were $135 million for the year, a decrease of $85 million from last year [12] Business Line Data and Key Metrics Changes - The Industrial segment achieved its sixth consecutive quarter of double-digit growth, with strong performance across all regions [23] - The Process segment grew sales by 27% for the quarter, resulting in record revenue and operating earnings [24] - The Contractor segment saw low single-digit growth, with challenges due to component shortages and declining order rates in EMEA and Asia Pacific [20][21] Market Data and Key Metrics Changes - Demand in the Americas remains firm across all segments, while EMEA shows caution due to economic conditions and geopolitical uncertainty [25] - Backlog reached $430 million, up $65 million from the end of last year and $190 million higher than the same period last year [16] Company Strategy and Development Direction - Graco plans to implement interim price increases across all segments and regions to offset rising input costs [9][19] - The company has invested $425 million since 2018 to expand global manufacturing capacity, increasing output by nearly 30% [18] - The company aims to confirm its 2022 revenue guidance of high single digits on an organic constant currency basis [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but noted improvements in material receipts from suppliers [16] - The company remains optimistic about demand in the Industrial segment despite potential economic slowdowns in Europe [46][51] - Management emphasized the importance of maintaining operational flexibility to adapt to changing market conditions [47] Other Important Information - The adjusted tax rate for the quarter was 20%, with expectations for the annual tax rate to be between 19% and 20% [11] - Graco repurchased 1.7 million shares for $120 million year-to-date, which will eliminate dilution in 2022 [13] Q&A Session Summary Question: Decision to implement intra-year price increase - Management noted that the decision was based on substantial increases in input costs and the need to be transparent with customers [30] Question: Free cash flow dynamics and buybacks - Management indicated that most buyback activity occurred in Q1, with some buybacks in Q2 totaling approximately $10 million [32] Question: Impact of gross margins and future pricing - Management acknowledged that gross margins were affected by cost pressures and currency translation rates, but pricing actions are expected to offset these pressures [35] Question: Segment performance and recession concerns - Management expressed confidence in the Industrial segment's performance despite potential economic challenges in Europe [46][51] Question: Demand in Contractor business - Management highlighted that professional contractors remain busy, but there are concerns about the DIY market due to lower consumer foot traffic [56] Question: Component shortages impact on sales - Management indicated that while component shortages have affected sales, improvements in supplier throughput are being observed [60]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Graco Inc.'s unaudited consolidated financial statements for the quarter ended July 1, 2022, highlighting an **8%** increase in H1 2022 net sales to **$1.04 billion**, alongside a significant decrease in operating cash flow [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) For Q2 2022, Net Sales grew **8%** to **$548.5 million** and Net Earnings rose to **$117.4 million**, with six-month Net Sales increasing to **$1.04 billion** and a slight rise in Net Earnings Consolidated Earnings Summary (In thousands) | Metric | Three Months Ended July 1, 2022 | Three Months Ended June 25, 2021 | Six Months Ended July 1, 2022 | Six Months Ended June 25, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $548,547 | $507,164 | $1,042,832 | $961,293 | | **Gross Profit** | $269,060 | $263,824 | $523,535 | $511,158 | | **Operating Earnings** | $148,680 | $133,843 | $277,043 | $262,129 | | **Net Earnings** | $117,378 | $110,118 | $218,221 | $215,805 | | **Diluted EPS** | $0.68 | $0.63 | $1.26 | $1.24 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased slightly to **$2.40 billion** as of July 1, 2022, driven by reduced cash and cash equivalents, partially offset by increased receivables and inventories, while total shareholders' equity rose Key Balance Sheet Items (In thousands) | Account | July 1, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $1,276,476 | $1,363,621 | | Cash and cash equivalents | $413,359 | $624,302 | | Inventories | $450,974 | $382,301 | | **Total Assets** | $2,404,278 | $2,443,198 | | **Total Current Liabilities** | $424,058 | $506,792 | | **Total Shareholders' Equity** | $1,757,274 | $1,709,343 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$135.0 million** for H1 2022 due to increased working capital, with substantial cash used in investing and financing for capital expenditures, stock repurchases, and dividends Cash Flow Summary - Six Months Ended (In thousands) | Cash Flow Activity | July 1, 2022 | June 25, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $134,985 | $220,047 | | **Net cash used in investing activities** | ($114,554) | ($74,193) | | **Net cash used in financing activities** | ($230,341) | ($40,972) | | **Net increase (decrease) in cash** | ($210,943) | $103,878 | - Significant uses of cash in the first six months of 2022 included **$120.0 million** for common stock repurchases, **$88.9 million** for property, plant and equipment additions, and **$71.3 million** for cash dividends[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail financial statements, including a segment realignment, strong Process segment sales growth, **$1.26** diluted EPS for H1, goodwill increase from an acquisition, and an **18%** rise in inventories to support demand - Effective January 1, 2022, high performance coatings and foam product offerings were realigned from the Industrial segment to the Contractor segment, with prior year segment information restated to conform[26](index=26&type=chunk) Net Sales by Segment - Six Months Ended (In thousands) | Segment | July 1, 2022 | June 25, 2021 | | :--- | :--- | :--- | | Industrial | $302,994 | $274,312 | | Process | $239,507 | $188,605 | | Contractor | $500,331 | $498,376 | | **Total** | **$1,042,832** | **$961,293** | Inventories (In thousands) | Date | Total Inventories | | :--- | :--- | | July 1, 2022 | $450,974 | | Dec 31, 2021 | $382,301 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses an **8%** sales increase for Q2 and H1 2022, driven by Industrial and Process segments, but highlights headwinds from supply chain constraints, inflation, unfavorable currency, and a **3 percentage point** gross profit margin compression [Overview](index=16&type=section&id=Overview) The company faces logistical and production constraints, including raw material availability, freight delays, and labor shortages, impacting profitability and demand fulfillment, and has suspended sales to Russia and Belarus, representing about **1.5%** of 2021 net sales - The company is facing ongoing logistical and production constraints due to raw material/component availability, freight capacity, shipping delays, and labor shortages, exacerbated by the COVID-19 pandemic and other disruptions[49](index=49&type=chunk) - In response to the invasion of Ukraine, the company suspended sales into Russia and Belarus in Q1 2022, with these sales representing approximately **1.5%** of 2021 net sales[50](index=50&type=chunk) [Consolidated Results](index=17&type=section&id=Consolidated%20Results) Consolidated net sales increased **8%** for both the quarter and year-to-date, driven by volume and price despite negative currency impacts, while gross profit margin decreased by **3 percentage points** due to rising costs outpacing price realization Consolidated Results Summary (In millions) | Metric | Q2 2022 | Q2 2021 | % Change | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $548.5 | $507.2 | 8% | $1,042.8 | $961.3 | 8% | | **Operating Earnings** | $148.7 | $133.8 | 11% | $277.0 | $262.1 | 6% | | **Net Earnings** | $117.4 | $110.1 | 7% | $218.2 | $215.8 | 1% | | **Diluted EPS** | $0.68 | $0.63 | 8% | $1.26 | $1.24 | 2% | - Changes in currency translation rates negatively impacted worldwide sales by **$15 million** (**4 percentage points**) for the quarter and **$23 million** (**3 percentage points**) for the year to date[54](index=54&type=chunk) - Gross profit margin rates decreased by **3 percentage points** for both the quarter and year-to-date, as realized pricing was insufficient to offset increased product costs from supply chain and inflationary pressures[55](index=55&type=chunk)[60](index=60&type=chunk) [Segment Results](index=20&type=section&id=Segment%20Results) The Industrial segment sales grew **10%** with a **35%** operating margin, the Process segment saw strong **28%** sales growth with a **25%** operating margin, while the Contractor segment's sales were flat, leading to a decreased operating margin - **Industrial Segment:** Sales increased **10%** for the quarter and year-to-date, with operating margin rate increasing due to strong pricing and expense leverage offsetting higher costs[64](index=64&type=chunk) - **Process Segment:** Sales grew **28%** for the quarter and **27%** year-to-date, with broad-based growth across all product applications, and operating margin increased as higher volume and expense leverage offset cost pressures[65](index=65&type=chunk) - **Contractor Segment:** Sales were flat for the quarter and year-to-date, with growth in the Americas offset by declines in Asia Pacific and EMEA, and operating margin decreased due to higher product costs and unfavorable currency rates[68](index=68&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operations decreased by **$85 million** to **$135 million** year-over-year due to increased working capital, with significant cash uses including **$120 million** in share repurchases, and the company maintains strong liquidity of **$929 million** - Net cash provided by operating activities decreased to **$135 million** from **$220 million** in the prior year, mainly due to increased inventory purchases and higher accounts receivable[69](index=69&type=chunk) - As of July 1, 2022, the company had available liquidity of **$929 million**, comprising **$413 million** in cash and **$516 million** in available credit facilities[71](index=71&type=chunk) - Capital expenditures for 2022 are projected to be approximately **$215 million**, with **$140 million** allocated to facility expansion projects[72](index=72&type=chunk) [Outlook](index=22&type=section&id=Outlook) The company targets high single-digit organic, constant currency sales growth for full-year 2022, despite slowing EMEA markets, and is implementing a second round of global price increases to offset rising commodity and component costs - The company continues to target high single-digit sales growth for full-year 2022 on an organic, constant currency basis[73](index=73&type=chunk) - To offset rising commodity and component costs, a second round of global price increases is being implemented starting in August 2022[73](index=73&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's market risk disclosures since its 2021 Annual Report on Form 10-K - There have been no material changes in market risk disclosures since the 2021 Annual Report on Form 10-K[78](index=78&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the fiscal quarter-end, with no material changes to internal control over financial reporting - The President and CEO, along with the CFO and Treasurer, concluded that the company's disclosure controls and procedures are effective as of the end of the quarter[79](index=79&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[80](index=80&type=chunk) [PART II - OTHER INFORMATION](index=23&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the adverse business impact of Russia's invasion of Ukraine and related sanctions, leading to suspended sales in the region and exacerbating risks like cybersecurity threats, unfavorable exchange rates, and supply chain disruptions - A key risk factor is the Russian invasion of Ukraine and related sanctions, which have led the company to suspend sales into Russia and Belarus[82](index=82&type=chunk) - The conflict could escalate other risks such as increased cybersecurity threats, unfavorable currency exchange rates, further supply chain shortages and inflation, and widespread reductions in end-user demand[82](index=82&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its stock repurchase activity, with **178,342** shares repurchased in Q2 2022 under a December 2018 authorization, leaving approximately **16.8 million** shares available for future purchases - The Board of Directors authorized the purchase of up to **18 million** shares in December 2018, with **16,822,292** shares remaining available for repurchase as of July 1, 2022[84](index=84&type=chunk)[86](index=86&type=chunk) Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2 - April 29, 2022 | 121,461 | $63.90 | | April 30 - May 27, 2022 | 56,881 | $62.50 | | May 28 - July 1, 2022 | 0 | $0.00 | [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications, the Q2 earnings press release, and interactive data files in iXBRL format - Key exhibits filed include CEO/CFO certifications, the Q2 earnings press release, and interactive data files (iXBRL)[88](index=88&type=chunk)

Graco Inc. (NYSE:GGG) Q1 2022 Earnings Conference Call April 28, 2022 11:00 AM ET Company Participants Kathy Schoenrock - Executive Vice President, Corporate Controller & Information Systems Mark Sheahan - President & Chief Executive Officer David Lowe - Chief Financial Officer Conference Call Participants Deane Dray - RBC Capital Markets Mike Halloran - Baird Matt Summerville - D.A. Davidson Jeff Hammond - KeyBanc Capital Market Andrew Buscaglia - Berenberg Thomas Johnson - Morgan Stanley Operator Good mor ...

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 April 1, 2022 ☐ 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) (State or other jurisdiction of incorporation or organization) 88 - 1 ...

《 GRACO® 1 / / / / / / / / / / / / / / / / / / Company Overview Investor Presentation Fourth Quarter and Full Year 2021 Safe Harbor / / / / / / / / / / / / / / / / / / Today's presentation includes forward-looking statements that reflect management's current expectations about the Company's future business and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ from anticipated results. Factors that could cause actual results to di ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2021, 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 No. 001-09249 Graco Inc. (Exact name of Registrant as specified in its charter) Minnesota 41-0285640 (State or other jurisdiction of incorporation or or ...

Graco Inc. (NYSE:GGG) Q4 2021 Earnings Conference Call February 1, 2022 11:00 AM ET Company Participants Kathy Schoenrock - Executive Vice President and Corporate Controller Mark Sheahan - President and Chief Executive Officer David Lowe - Chief Financial Officer Conference Call Participants Deane Dray - RBC Capital Markets Mike Halloran - Robert W. Baird Joe Ritchie - Goldman Sachs Bryan Blair - Oppenheimer Matt Summerville - D.A. Davidson Jeff Hammond - KeyBanc Capital Markets Connor Lynagh - Morgan Stanl ...

() GRACO® / / / / / / / / / / / / / / / / / / 4th Quarter 2021 Earnings Conference Call February 1, 2022 Safe Harbor Factors that could cause actual results to differ from anticipated 2 ////////////////// Today's presentation includes forward-looking statements that reflect management's current expectations about the Company's future business and financial performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ from anticipated results. | --- | ...