Company: GGG
Filing Date: 2025-07-23
Form Type: 10-Q
Source: 0000042888-25-000025
Chunk: 41

Company: GRACO INC
Filing Date: 2025-07-23
Form: 10-Q
Item: Item 8
Chunk 41
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%12%1%14%Asia Pacific5%8%(1)%12%5%9%(2)%12%Consolidated(3)%6%0%3%0%6%(1)%5%

Gross Profit

The gross profit margin rate declined approximately 2 percentage points for both the second quarter and year to date from the comparable periods last year due to higher product costs, including $4 million of increased tariff costs, and the unfavorable effects of lower margin rates from acquired operations.

Operating Expenses

Total operating expenses increased $3 million (2 percent) for the second quarter and $3 million (1 percent) for the year to date, respectively, compared to last year. Incremental expenses from acquired operations of $9 million for the quarter and $19 million for the year to date were partially offset by decreases in product development spending, sales and earnings-

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based incentives and share-based compensation. The second quarter and year to date periods last year included $3 million of expenses associated with the relocation to a new distribution center.

Other (Income) Expense

Other non-operating income decreased $3 million for both the second quarter and year to date from the comparable periods last year and included exchange losses on net liabilities of certain foreign operations of $5 million for the quarter and $8 million for the year to date. Favorable market valuation changes on investments held to fund certain retirement benefits partially offset these exchange losses. Other income for the year to date included a $5 million gain in the first quarter from the sale of a former manufacturing and distribution facility in Switzerland. 

Income Taxes

The effective income tax rate was 19 percent for both the second quarter and the year to date. Adjusted to exclude the impacts of excess tax benefits from stock option exercises (see Financial Results Adjusted for Comparability below), the adjusted effective income tax rate of 20 percent for both the quarter and year to date was comparable to the respective periods 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   Six Months Ended June 27,2025June 28,2024June 27,2025June 28,2024Net SalesAmericas$201.4 $204.9 $377.3 $370.5 EMEA61.1 44.7 115.6