Graco(GGG) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q1 2022 and 2021, including earnings, balance sheets, cash flows, and notes Consolidated Statements of Earnings Summarizes the company's financial performance, including net sales, gross profit, operating earnings, and net earnings for the three-month periods Consolidated Statements of Earnings (Three Months Ended, in thousands) | Metric | April 1, 2022 | March 26, 2021 | Change (%) | | :----------------------------- | :--------------------------- | :-------------------------- | :--------- | | Net Sales | $494,285 | $454,129 | 8.8% | | Cost of products sold | $239,810 | $206,795 | 16.0% | | Gross Profit | $254,475 | $247,334 | 2.9% | | Operating Earnings | $128,363 | $128,286 | 0.1% | | Earnings Before Income Taxes | $122,923 | $125,737 | (2.2)% | | Net Earnings | $100,843 | $105,687 | (4.6)% | | Basic Net Earnings per Common Share | $0.59 | $0.63 | (6.3)% | | Diluted Net Earnings per Common Share | $0.58 | $0.61 | (4.9)% | Consolidated Statements of Comprehensive Income Details the components of comprehensive income, including net earnings and other comprehensive income adjustments Consolidated Statements of Comprehensive Income (Three Months Ended, in thousands) | Metric | April 1, 2022 | March 26, 2021 | Change (in thousands) | | :------------------------------------ | :--------------------------- | :-------------------------- | :-------------------- | | Net Earnings | $100,843 | $105,687 | $(4,844) | | Cumulative translation adjustment | $(2,960) | $(10,470) | $7,510 | | Pension and postretirement medical liability adjustment | $894 | $3,308 | $(2,414) | | Income taxes - pension and postretirement medical liability adjustment | $(194) | $(672) | $478 | | Other comprehensive income (loss) | $(2,260) | $(7,834) | $5,574 | | Comprehensive Income | $98,583 | $97,853 | $730 | Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and shareholders' equity at specific dates Consolidated Balance Sheets (As of, in thousands) | Metric | April 1, 2022 | December 31, 2021 | Change (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $380,487 | $624,302 | $(243,815) | | Accounts receivable, net | $339,407 | $325,132 | $14,275 | | Inventories | $436,741 | $382,301 | $54,440 | | Total current assets | $1,197,220 | $1,363,621 | $(166,401) | | Total Assets | $2,319,445 | $2,443,198 | $(123,753) | | Total current liabilities | $402,313 | $506,792 | $(104,479) | | Long-term Debt | $75,000 | $75,000 | $0 | | Total Shareholders' Equity | $1,690,256 | $1,709,343 | $(19,087) | | Total Liabilities and Shareholders' Equity | $2,319,445 | $2,443,198 | $(123,753) | Consolidated Statements of Cash Flows Outlines the cash inflows and outflows from operating, investing, and financing activities for the reporting periods Consolidated Statements of Cash Flows (Three Months Ended, in thousands) | Metric | April 1, 2022 | March 26, 2021 | Change (in thousands) | | :-------------------------------- | :--------------------------- | :-------------------------- | :-------------------- | | Net cash provided by operating activities | $31,325 | $101,669 | $(70,344) | | Net cash used in investing activities | $(72,243) | $(21,449) | $(50,794) | | Net cash used in financing activities | $(202,852) | $3,081 | $(205,933) | | Effect of exchange rate changes on cash | $(45) | $(1,594) | $1,549 | | Net increase (decrease) in cash and cash equivalents | $(243,815) | $81,707 | $(325,522) | | Cash and Cash Equivalents, End of period | $380,487 | $460,616 | $(79,129) | Consolidated Statements of Shareholders' Equity Details changes in shareholders' equity components, including common stock, retained earnings, and comprehensive income Consolidated Statements of Shareholders' Equity (Three Months Ended April 1, 2022, in thousands) | Metric | Common Stock (in thousands) | Additional Paid-In Capital (in thousands) | Retained Earnings (in thousands) | Accumulated Other Comprehensive Income (Loss) (in thousands) | Total (in thousands) | | :-------------------------------- | :-------------------------- | :---------------------------------------- | :------------------------------- | :------------------------------------------------------- | :------------------- | | Balance, December 31, 2021 | $170,308 | $742,288 | $876,916 | $(80,169) | $1,709,343 | | Shares issued | $437 | $19,638 | — | — | $20,075 | | Shares repurchased | $(1,522) | $(6,636) | $(100,548) | — | $(108,706) | | Stock compensation cost | — | $6,670 | — | — | $6,670 | | Net earnings | — | — | $100,843 | — | $100,843 | | Dividends declared ($0.210 per share) | — | — | $(35,708) | — | $(35,708) | | Other comprehensive income (loss) | — | — | — | $(2,260) | $(2,260) | | Balance, April 1, 2022 | $169,223 | $761,959 | $841,503 | $(82,429) | $1,690,256 | Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the consolidated financial statements 1. Basis of Presentation Explains the accounting principles and assumptions used in preparing the financial statements - The consolidated financial statements are unaudited and include all normal recurring adjustments necessary for fair presentation[26][27] - They should be read in conjunction with the 2021 Annual Report on Form 10-K, and interim results are not indicative of full fiscal year results[28] 2. Segment Information Details financial performance by the company's operating segments - Effective January 1, 2022, high performance coatings and foam product offerings were realigned from the Industrial segment's Applied Fluid Technologies division to the Contractor segment, with prior year segment information restated to reflect this change[29] Net Sales by Segment (Three Months Ended, in thousands) | Segment | April 1, 2022 | March 26, 2021 | Change (%) | | :-------- | :--------------------------- | :-------------------------- | :--------- | | Industrial | $144,669 | $129,864 | 11.4% | | Process | $115,024 | $91,373 | 25.9% | | Contractor | $234,592 | $232,892 | 0.7% | | Total | $494,285 | $454,129 | 8.8% | Operating Earnings by Segment (Three Months Ended, in thousands) | Segment | April 1, 2022 | March 26, 2021 | Change (%) | | :---------------------- | :--------------------------- | :-------------------------- | :--------- | | Industrial | $52,630 | $42,358 | 24.2% | | Process | $27,488 | $21,733 | 26.5% | | Contractor | $58,947 | $71,051 | (17.0)% | | Unallocated corporate (expense) | $(10,702) | $(6,856) | 56.1% | | Total | $128,363 | $128,286 | 0.1% | 3. Earnings per Share Provides calculations for basic and diluted earnings per common share Earnings per Share (Three Months Ended) | Metric | April 1, 2022 | March 26, 2021 | Change (%) | | :------------------------------------------ | :------------ | :------------- | :--------- | | Net earnings available to common shareholders | $100,843 | $105,687 | (4.6)% | | Weighted average shares outstanding for basic EPS | 169,809 | 168,948 | 0.5% | | Weighted average shares outstanding for diluted EPS | 174,678 | 173,848 | 0.5% | | Basic earnings per share | $0.59 | $0.63 | (6.3)% | | Diluted earnings per share | $0.58 | $0.61 | (4.9)% | - Stock options to purchase 1,250,000 shares (2022) and 700,000 shares (2021) were anti-dilutive and excluded from diluted EPS calculations[32] 4. Share-Based Awards Describes the company's share-based compensation plans and related activity Stock Option Activity (in thousands, except exercise prices) | Metric | Outstanding, Dec 31, 2021 | Granted | Exercised | Canceled | Outstanding, Apr 1, 2022 | | :-------------------------- | :------------------------ | :------ | :-------- | :------- | :----------------------- | | Option Shares | 9,575 | 831 | (162) | (19) | 10,225 | | Weighted Average Exercise Price | $39.31 | $71.73 | $22.90 | $43.06 | $42.20 | - The Company recognized $7.1 million in share-based compensation in 2022, up from $6.6 million in 2021[33] - Unrecognized compensation cost related to unvested options was $18.4 million as of April 1, 2022, to be recognized over 3.3 years[33] Black-Scholes Option-Pricing Model Assumptions (Weighted Average) | Assumption | April 1, 2022 | March 26, 2021 | | :------------------------ | :------------ | :------------- | | Expected life in years | 7.3 | 7.5 | | Interest rate | 1.9 % | 0.9 % | | Volatility | 25.5 % | 25.2 % | | Dividend yield | 1.2 % | 1.0 % | | Weighted average fair value per share | $19.06 | $17.66 | 5. Retirement Benefits Details the net periodic benefit cost for pension and postretirement medical plans Net Periodic Benefit Cost for Retirement Plans (Three Months Ended, in thousands) | Component | April 1, 2022 | March 26, 2021 | | :------------------------ | :------------ | :------------- | | Pension Benefits | | | | Service cost | $2,170 | $2,721 | | Interest cost | $2,738 | $2,981 | | Expected return on assets | $(4,802) | $(5,130) | | Amortization and other | $1,076 | $2,551 | | Net periodic benefit cost | $1,182 | $3,123 | | Postretirement Medical | | | | Service cost | $175 | $175 | | Interest cost | $225 | $250 | | Amortization | $175 | $250 | | Net periodic benefit cost | $575 | $675 | 6. Shareholders' Equity (Notes) Provides additional information on changes in accumulated other comprehensive income (loss) Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax (Three Months Ended April 1, 2022, in thousands) | Component | Pension and Postretirement Medical | Cumulative Translation Adjustment | Total | | :------------------------------------------ | :--------------------------------- | :------------------------------ | :------ | | Balance, December 31, 2021 | $(60,107) | $(20,062) | $(80,169) | | Other comprehensive income (loss) before reclassifications | — | $(2,960) | $(2,960) | | Reclassified to pension cost and deferred tax | $700 | — | $700 | | Balance, April 1, 2022 | $(59,407) | $(23,022) | $(82,429) | 7. Receivables and Credit Losses Details the composition of accounts receivable and activity in the allowance for credit losses Accounts Receivable (in thousands) | Type | April 1, 2022 | December 31, 2021 | | :--------------- | :------------ | :---------------- | | Trade receivables | $330,000 | $315,000 | | Other receivables | $9,000 | $10,000 | Allowance for Credit Losses Activity (Year to Date, in thousands) | Metric | April 1, 2022 | March 26, 2021 | | :-------------------------------------- | :------------ | :------------- | | Balance, beginning | $3,254 | $3,745 | | Additions (reversals) charged to costs and expenses | $3,220 | $158 | | Deductions from reserves | $(33) | $(104) | | Other additions (deductions) | $33 | $(75) | | Balance, ending | $6,474 | $3,724 | 8. Inventories Provides a breakdown of inventory components and valuation adjustments Major Components of Inventories (in thousands) | Component | April 1, 2022 | December 31, 2021 | | :-------------------------------------- | :------------ | :---------------- | | Finished products and components | $194,563 | $166,922 | | Products and components in various stages of completion | $126,214 | $117,063 | | Raw materials and purchased components | $205,893 | $185,291 | | Subtotal | $526,670 | $469,276 | | Reduction to LIFO cost | $(89,929) | $(86,975) | | Total | $436,741 | $382,301 | 9. Intangible Assets Details the company's intangible assets, including their cost, accumulated amortization, and book value Other Intangible Assets (As of April 1, 2022, in thousands) | Type | Customer Relationships | Patents and Proprietary Technology | Trademarks, Trade Names and Other (Finite Life) | Trade Names (Indefinite Life) | Total | | :------------------------ | :--------------------- | :--------------------------------- | :-------------------------------------------- | :---------------------------- | :------ | | Cost | $202,903 | $26,974 | $1,700 | $62,633 | $294,210 | | Accumulated amortization | $(112,499) | $(16,454) | $(503) | — | $(129,456) | | Foreign currency translation | $(8,410) | $(761) | — | $(1,577) | $(10,748) | | Book value | $81,994 | $9,759 | $1,197 | $61,056 | $154,006 | | Weighted average life in years | 13 | 10 | 5 | N/A | | - Amortization of intangibles for the quarter was $4.6 million in 2022, up from $4.3 million in 2021[41] - Estimated annual amortization expense for the remainder of 2022 is $14.5 million[41] Goodwill by Segment (in thousands) | Segment | Balance, Dec 31, 2021 | Additions from acquisitions | Foreign currency translation | Balance, Apr 1, 2022 | | :-------- | :-------------------- | :-------------------------- | :--------------------------- | :------------------- | | Industrial | $185,733 | — | $(1,246) | $184,487 | | Process | $141,304 | $16,862 | $(470) | $157,696 | | Contractor | $29,218 | — | — | $29,218 | | Total | $356,255 | $16,862 | $(1,716) | $371,401 | 10. Other Current Liabilities Lists the various components of current liabilities not separately presented on the balance sheet Components of Other Current Liabilities (in thousands) | Component | April 1, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Accrued self-insurance retentions | $11,576 | $9,303 | | Accrued warranty and service liabilities | $14,560 | $14,463 | | Accrued trade promotions | $10,141 | $15,872 | | Payable for employee stock purchases | $3,921 | $15,746 | | Customer advances and deferred revenue | $66,668 | $60,554 | | Income taxes payable | $12,481 | $5,200 | | Right of return refund liability | $18,713 | $18,614 | | Operating lease liabilities, current | $9,449 | $9,096 | | Other | $43,049 | $42,311 | | Total | $190,558 | $191,159 | - Deferred revenue and customer advances increased to $66.7 million as of April 1, 2022, from $60.6 million at December 31, 2021[44] - Net sales for the year-to-date included $22.5 million (2022) and $40.9 million (2021) related to deferred revenue from the beginning of each period[44] 11. Fair Value Discloses the fair value measurements of certain assets and liabilities Assets and Liabilities Measured at Fair Value (in thousands) | Item | Level | April 1, 2022 | December 31, 2021 | | :------------------------------ | :---- | :------------ | :---------------- | | Assets | | | | | Cash surrender value of life insurance | 2 | $22,052 | $23,147 | | Liabilities | | | | | Contingent consideration | 3 | $15,924 | $12,274 | | Deferred compensation | 2 | $5,795 | $5,962 | | Forward exchange contracts | 2 | $173 | $111 | | Total liabilities at fair value | | $21,892 | $18,347 | - Long-term notes payable with fixed interest rates had a carrying amount of $75 million and an estimated fair value of $80 million as of April 1, 2022[47] - The fair value of variable rate borrowings approximates carrying value[47] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Graco Inc.'s financial performance, liquidity, and capital resources, addressing global event impacts Overview Introduces Graco Inc.'s business model, strategic priorities, and the current operating environment challenges - Graco Inc. supplies technology and expertise for fluid and coating management, operating in Industrial, Process, and Contractor segments[50] - Key strategies include new product development, market expansion, global distribution, and strategic acquisitions[50] - The company continues to face operational challenges from the COVID-19 pandemic, including logistical and production constraints due to raw material shortages, reduced freight capacity, shipping delays, and labor shortages[51] - Price inflation for raw materials, components, and freight has adversely impacted profitability and limited the ability to meet customer demand, particularly in the Contractor segment, with these challenges expected to continue into at least the first half of 2022[52] - In response to Russia's invasion of Ukraine and subsequent sanctions, Graco has suspended sales into Russia and Belarus[53] - Sales to these countries accounted for approximately 1.5% of 2021 net sales and were not material for Q1 2022[53] Consolidated Results Presents a summary of the company's overall financial performance for the quarter Consolidated Financial Results (Three Months Ended, in millions except per share amounts) | Metric | Apr 1, 2022 | Mar 26, 2021 | % Change | | :------------------------------------ | :---------- | :----------- | :------- | | Net Sales | $494.3 | $454.1 | 9 % | | Operating Earnings | $128.4 | $128.3 | — % | | Net Earnings | $100.8 | $105.7 | (5)% | | Diluted Net Earnings per Common Share | $0.58 | $0.61 | (5)% | | Net Earnings, adjusted (non-GAAP) | $99.3 | $101.6 | (2)% | | Diluted Net Earnings per Common Share, adjusted (non-GAAP) | $0.57 | $0.58 | (2)% | - Sales increased 9% year-over-year, driven by double-digit growth in the Industrial and Process segments[56] - Currency translation rates reduced worldwide sales by $7 million (2 percentage points), while acquired operations contributed approximately $2 million (1 percentage point)[56] - Gross profit margin rate weakened due to higher product costs[57] - Total operating expenses increased by $7 million (6%), but decreased by approximately one percentage point as a percentage of sales[57] Components of Net Earnings as a Percentage of Net Sales (Three Months Ended) | Metric | April 1, 2022 | March 26, 2021 | | :-------------------------- | :------------ | :------------- | | Net Sales | 100.0 % | 100.0 % | | Cost of products sold | 48.5 % | 45.5 % | | Gross Profit | 51.5 % | 54.5 % | | Operating Earnings | 26.0 % | 28.2 % | | Net Earnings | 20.4 % | 23.3 % | Net Sales Analyzes net sales performance by geographic region and the factors contributing to changes Net Sales by Geographic Region (Three Months Ended, in millions) | Region | April 1, 2022 | March 26, 2021 | | :----------- | :------------ | :------------- | | Americas | $293.2 | $264.9 | | EMEA | $106.2 | $110.2 | | Asia Pacific | $94.9 | $79.0 | | Consolidated | $494.3 | $454.1 | Components of Net Sales Change by Geographic Region (Three Months) | Region | Volume and Price | Acquisitions | Currency | Total | | :----------- | :--------------- | :----------- | :------- | :---- | | Americas | 11% | 0% | 0% | 11% | | EMEA | 0% | 2% | (6)% | (4)% | | Asia Pacific | 22% | 0% | (2)% | 20% | | Consolidated | 10% | 1% | (2)% | 9% | Gross Profit Discusses the factors influencing the company's gross profit margin - Gross profit margin rate decreased by 3 percentage points year-over-year, primarily due to higher product costs from ongoing supply chain and inflationary challenges, and adverse impacts from currency translation rates[60] - The full effect of Q1 price changes is expected to be realized later in the year[60] Operating Expenses Examines changes in operating expenses and their impact on profitability - Total operating expenses increased by $7 million (6%) compared to the prior year, including a $3 million (3 percentage points) increase due to allowances for credit losses on customer receivables in Russia and Belarus[61] - As a percentage of sales, operating expenses decreased by approximately one percentage point[61] Other Expense Analyzes non-operating expenses, including interest and other financial costs - Other non-operating expenses increased by $3 million for the quarter, primarily due to interest expense, which included a $3.5 million fee related to the prepayment of private placement debt[62] Income Taxes Discusses the effective income tax rate and factors influencing it - The effective income tax rate for the quarter was 18%, a 2 percentage point increase from the prior year, mainly due to decreases in excess tax benefits from stock option exercises[63] Segment Results Provides a detailed analysis of the financial performance of each operating segment Industrial Segment Analyzes the net sales and operating earnings performance of the Industrial segment Industrial Segment Net Sales and Operating Earnings % of Sales (Three Months Ended, in millions) | Metric | April 1, 2022 | March 26, 2021 | | :------------------------------------ | :------------ | :------------- | | Net Sales | $144.7 | $129.9 | | Operating earnings as a percentage of net sales | 36 % | 33 % | Industrial Segment Net Sales Change by Geographic Region (Three Months) | Region | Volume and Price | Acquisitions | Currency | Total | | :----------- | :--------------- | :----------- | :------- | :---- | | Americas | 17% | 0% | 0% | 17% | | EMEA | 13% | 0% | (7)% | 6% | | Asia Pacific | 11% | 0% | 0% | 11% | | Segment Total | 14% | 0% | (3)% | 11% | - Industrial segment sales increased due to economic strength in the Americas, project activity in EMEA, and increased economic activity in Asia Pacific[64] - The operating margin rate improved by 3 percentage points, as realized pricing and expense leverage offset higher product costs and adverse currency impacts[64] Process Segment Analyzes the net sales and operating earnings performance of the Process segment Process Segment Net Sales and Operating Earnings % of Sales (Three Months Ended, in millions) | Metric | April 1, 2022 | March 26, 2021 | | :------------------------------------ | :------------ | :------------- | | Net Sales | $115.0 | $91.4 | | Operating earnings as a percentage of net sales | 24 % | 24 % | Process Segment Net Sales Change by Geographic Region (Three Months) | Region | Volume and Price | Acquisitions | Currency | Total | | :----------- | :--------------- | :----------- | :------- | :---- | | Americas | 20% | 0% | 0% | 20% | | EMEA | 19% | 0% | (3)% | 16% | | Asia Pacific | 51% | 0% | (2)% | 49% | | Segment Total | 26% | 0% | 0% | 26% | - The Process segment experienced sales growth across all product applications[65] - The operating margin rate remained flat, as expense leverage compensated for higher product costs, unfavorable product and channel mix, and adverse currency translation impacts[66] Contractor Segment Analyzes the net sales and operating earnings performance of the Contractor segment Contractor Segment Net Sales and Operating Earnings % of Sales (Three Months Ended, in millions) | Metric | April 1, 2022 | March 26, 2021 | | :------------------------------------ | :------------ | :------------- | | Net Sales | $234.6 | $232.8 | | Operating earnings as a percentage of net sales | 25 % | 31 % | Contractor Segment Net Sales Change by Geographic Region (Three Months) | Region | Volume and Price | Acquisitions | Currency | Total | | :----------- | :--------------- | :----------- | :------- | :---- | | Americas | 5% | 0% | 0% | 5% | | EMEA | (17)% | 4% | (5)% | (18)% | | Asia Pacific | 14% | 0% | (3)% | 11% | | Segment Total | 1% | 1% | (1)% | 1% | - Contractor segment sales saw modest growth, driven by stable North American construction markets and improved demand in Asia Pacific, offsetting weakness in EMEA due to product availability[67] - The operating margin rate decreased by 6 percentage points due to higher product costs, unfavorable product and channel mix, and adverse currency translation impacts[67] Liquidity and Capital Resources Discusses the company's cash flow, available liquidity, and capital allocation strategies - Net cash provided by operating activities decreased by $70 million year-over-year to $31 million, primarily due to increased salary and incentive payments and inventory purchases[68] - Significant cash uses in 2022 included $109 million for share repurchases, $75 million for long-term debt payments, $47 million for property, plant, and equipment additions, $36 million for dividends, and $25 million for business acquisitions[68] - As of April 1, 2022, the Company had $908 million in available liquidity, comprising $380 million in cash and cash equivalents (with $152 million held outside the U.S.) and $528 million in available credit facilities[70] - The Company expects current liquidity to meet 2022 needs, including $190 million in capital expenditures (with $140 million for facility expansion), planned dividends, share repurchases, acquisitions, and operating requirements[71] - Opportunistic share repurchases may continue[71] Outlook Provides the company's forward-looking expectations for sales growth and key influencing factors - For the full-year 2022, Graco targets high single-digit sales growth on an organic, constant currency basis, supported by solid underlying demand in key markets[72] - The outlook is contingent on economic and geopolitical conditions, successful new product launches, expanded distribution, realized price increases, and stable foreign currency exchange rates[72] Cautionary Statement Regarding Forward-Looking Statements Warns investors about the inherent risks and uncertainties associated with forward-looking statements - The company's forward-looking statements are subject to various risks and uncertainties, including the impact of the COVID-19 pandemic, the Russia-Ukraine conflict and sanctions, economic conditions, growth strategies, currency rates, supply chain disruptions, security breaches, intellectual property infringement, international business risks, and changes in laws and regulations[73][74] - Investors are cautioned not to place undue reliance on these statements[74] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that there have been no material changes to the company's market risk disclosures since its 2021 Annual Report - No material changes related to market risk from the disclosures made in the Company's 2021 Annual Report on Form 10-K[76] Item 4. Controls and Procedures Details the evaluation of disclosure controls and procedures and any changes in internal controls over financial reporting Evaluation of disclosure controls and procedures Reports on the effectiveness of the company's disclosure controls and procedures - The Company's President and CEO, and CFO and Treasurer, concluded that the disclosure controls and procedures were effective as of the end of the fiscal quarter[77] Changes in internal controls Reports on any changes in internal control over financial reporting during the quarter - There were no changes in the Company's internal control over financial reporting during the quarter that materially affected or are reasonably likely to materially affect it[78] PART II - OTHER INFORMATION Item 1A. Risk Factors Updates the company's risk factors, specifically addressing new risks from the Russian invasion of Ukraine Russian Invasion of Ukraine Highlights the business impacts and potential exacerbation of risks due to the conflict and sanctions - The Russian invasion of Ukraine and associated sanctions have significantly depressed demand and restricted sales in Russia and Belarus, leading the company to suspend sales in these regions[80] - While sales to these countries were not material (1.5% of 2021 net sales), an escalation of the conflict could materially adversely affect the business, exacerbating risks like cybersecurity threats, unfavorable exchange rates, supply chain disruptions, reduced demand, and logistical challenges[80] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Provides information on the company's share repurchase programs and other equity transactions - The Board of Directors authorized the purchase of up to 18 million shares of common stock on April 24, 2015, and an additional 18 million shares on December 7, 2018[82][84] - Approximately 17 million shares remained under authorization as of April 1, 2022[84] Issuer Purchases of Equity Securities (January 1, 2022 - April 1, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------------- | :----------------------------- | :--------------------------- | | January 1, 2022 - January 28, 2022 | 17,200 | $69.69 | | January 29, 2022 - February 25, 2022 | 1,117,639 | $71.44 | | February 26, 2022 - April 1, 2022 | 382,361 | $71.37 | Item 6. Exhibits Lists all documents filed as exhibits to the Form 10-Q - Exhibits include Restated Articles of Incorporation, Restated Bylaws, Certifications of CEO, CFO, and Corporate Controller, Press Release Reporting First Quarter Earnings, and Interactive Data Files (iXBRL)[86] SIGNATURES - The report is duly signed on April 27, 2022, by Mark W. Sheahan (President and Chief Executive Officer), David M. Lowe (Chief Financial Officer and Treasurer), and Kathryn L. Schoenrock (Executive Vice President, Corporate Controller and Information Systems)[90]