Company: GGG
Filing Date: 2025-07-23
Form Type: 10-Q
Source: 0000042888-25-000025
Chunk: 39

Company: GRACO INC
Filing Date: 2025-07-23
Form: 10-Q
Item: Item 8
Chunk 39
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 second quarter due to higher product costs, including $4 million of increased tariff costs, and the unfavorable effects of lower margin rates from acquired operations.

Total operating expenses for the second quarter increased 2 percentage points but were flat as a percentage of sales. 

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Other non-operating income decreased $3 million for the second quarter, primarily due to $5 million of exchange losses on net liabilities of certain foreign operations and lower interest income.

Net earnings decreased 4 percent for the second quarter due to a lower gross margin rate and lower non-operating income.

Excluding the impacts of excess tax benefits from stock option exercises presents a more consistent basis for comparison of financial results. A calculation of the non-GAAP adjusted measurements of income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):

Three Months EndedSix Months EndedJune 27,2025June 28,2024June 27,2025June 28,2024Earnings before income taxes$158.2 $165.2 $309.7 $305.5 Income taxes, as reported$30.6 $32.2 $58.0 $50.3 Excess tax benefit from option exercises0.7 0.8 4.4 10.4 Income taxes, adjusted$31.3 $33.0 $62.4 $60.7 Effective income tax rate   As reported19.3 %19.5 %18.7 %16.5 %   Adjusted19.8 %20.0 %20.1 %19.9 %Net Earnings, as reported$127.6 $133.0 $251.7 $255.2 Excess tax benefit from option exercises(0.7)(0.8)(4.4)(10.4)Net Earnings, adjusted$126.9 $132.2 $247.3 $244.8 Weighted Average Diluted Shares168.6 172.5 170.1 172.5 Diluted Earnings per Share   As reported$0.76 $0.77 $1.48 $1.48    Adjusted$0.75 $0.77 $1.45 $1.42 

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The following table presents an overview of components of net earnings as