Company: GGG
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000042888-25-000011
Chunk: 54

Company: GRACO INC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 54
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 new product development in 2024 was $87 million, approximately 4 percent of sales.  

Operating Earnings

Sales declines and increased operating expenses led to a 12 percent decrease in operating earnings. Operating earnings expressed as a percentage of sales in 2024 decreased approximately 3 percentage points compared to 2023 as lower sales, higher product costs and higher expenses impacted profitability for the year.  

Interest & Other Expense

Interest expense was $2 million lower for 2024 compared to 2023 as private placement debt was repaid in the third quarter of 2023. Excluding a prior year pension settlement loss of $42 million, other income increased $13 million for 2024, largely due to increased interest income.

Income Taxes

The effective income tax rate for 2024 was 18 percent, up 1 percentage point from 2023. The increase in 2024 was largely due to non-recurring tax benefits in 2023, variations in excess tax benefits from stock option exercises and the unfavorable effects of foreign earnings taxed at higher rates than the U.S.

Segment Results

The Company has five operating segments which are aggregated into three reportable segments: Contractor, Industrial and Process. Refer to Part I Item 1. Business, for a description of the Company’s three reportable segments. Management assesses the performance of segments by reference to operating earnings excluding unallocated corporate expenses and asset impairments. 

The following table presents net sales and operating earnings by reporting segment (in millions):

20242023SalesContractor$988.9 $985.7 Industrial619.6 662.8 Process504.8 547.1 Total$2,113.3 $2,195.6 Operating EarningsContractor$270.1 $285.3 Industrial201.5 234.1 Process141.7 165.3 Unallocated corporate (expense) (1)(43.2)(38.7)Contingent consideration— 8.6 Impairment— (7.8)Total$570.1 $646.8 

(1)    Unallocated corporate (expense) includes such items as stock compensation, certain acquisition transaction items, bad debt expense, charitable contributions, and certain facility expenses.

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Contractor Segment

The following table presents net sales and operating earnings as a percentage of sales for the Contractor segment (dollars in millions):

20242023SalesAmericas$721.6