# EDGAR Filing Document

**Accession Number:** 0000042888
**File Stem:** 0000042888-26-000098
**Filing Date:** 2026-4
**Character Count:** 82448
**Document Hash:** a3162e3e6b107687aaf42b918f3d138d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000042888-26-000098.hdr.sgml**: 20260422

**ACCESSION NUMBER**: 0000042888-26-000098

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 65

**CONFORMED PERIOD OF REPORT**: 20260327

**FILED AS OF DATE**: 20260422

**DATE AS OF CHANGE**: 20260422

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** GRACO INC
- **CENTRAL INDEX KEY:** 0000042888
- **STANDARD INDUSTRIAL CLASSIFICATION:** PUMPS & PUMPING EQUIPMENT [3561]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 410285640
- **STATE OF INCORPORATION:** MN
- **FISCAL YEAR END:** 1226

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-09249
- **FILM NUMBER:** 26883947

**BUSINESS ADDRESS:**
- **STREET 1:** 88 11TH AVENUE NE
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55413-1894
- **BUSINESS PHONE:** 6126236000

**MAIL ADDRESS:**
- **STREET 1:** CT CORPORATION SYSTEM, INC.
- **STREET 2:** 100 SOUTH FIFTH STREET, SUITE 1075
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55401

?xml version='1.0' encoding='ASCII'? ggg-20260327

**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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the quarterly period ended **March 27, 2026**

**OR** 

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the transition period from to

Commission File Number: <u>001-09249</u> 

---

| |
|:---|
| **GRACO INC.** |
| (Exact name of registrant as specified in its charter)&nbsp;&nbsp;&nbsp;&nbsp; |

---

Minnesota 41-0285640 <br> (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| 88 - 11th Avenue N.E. | 88 - 11th Avenue N.E. | |
| Minneapolis, | Minnesota | 55413 |
| (Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp; | (Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp; | (Zip Code)&nbsp;&nbsp;&nbsp;&nbsp; |

---

(612) <u>623-6000</u> <br> (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $1.00 per share | GGG | The New York Stock Exchange |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| &nbsp;&nbsp;&nbsp;Emerging growth company | ☐ | | | | | | |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes ☐ No ☒

165,968,177 shares of the Registrant's Common Stock, $1.00 par value, were outstanding as of April 8, 2026.

------

**TABLE OF CONTENTS** 

---

| | | |
|:---|:---|:---|
| | | Page |
| **PART I - FINANCIAL INFORMATION** | **PART I - FINANCIAL INFORMATION** |  |
| Item 1. | <u>[Financial Statements](#i57fd0335a79b49f0a47896028e0a622a_10)</u> |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Earnings](#i57fd0335a79b49f0a47896028e0a622a_13)</u> | [3](#i57fd0335a79b49f0a47896028e0a622a_13) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Comprehensive Income](#i57fd0335a79b49f0a47896028e0a622a_13)</u> | [3](#i57fd0335a79b49f0a47896028e0a622a_13) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Balance Sheets](#i57fd0335a79b49f0a47896028e0a622a_16)</u> | [4](#i57fd0335a79b49f0a47896028e0a622a_16) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Cash Flows](#i57fd0335a79b49f0a47896028e0a622a_19)</u> | [5](#i57fd0335a79b49f0a47896028e0a622a_19) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Shareholders' Equity](#i57fd0335a79b49f0a47896028e0a622a_22)</u> | [6](#i57fd0335a79b49f0a47896028e0a622a_22) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Notes to Consolidated Financial Statements](#i57fd0335a79b49f0a47896028e0a622a_25)</u> | [7](#i57fd0335a79b49f0a47896028e0a622a_25) |
| Item 2. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i57fd0335a79b49f0a47896028e0a622a_79)</u> | [14](#i57fd0335a79b49f0a47896028e0a622a_79) |
| Item 3. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i57fd0335a79b49f0a47896028e0a622a_160)</u> | [20](#i57fd0335a79b49f0a47896028e0a622a_160) |
| Item 4. | <u>[Controls and Procedures](#i57fd0335a79b49f0a47896028e0a622a_163)</u> | [20](#i57fd0335a79b49f0a47896028e0a622a_163) |
| **PART II - OTHER INFORMATION** | **PART II - OTHER INFORMATION** |  |
| Item 1A. | <u>[Risk Factors](#i57fd0335a79b49f0a47896028e0a622a_169)</u> | [21](#i57fd0335a79b49f0a47896028e0a622a_169) |
| Item 2. | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i57fd0335a79b49f0a47896028e0a622a_172)</u> | [22](#i57fd0335a79b49f0a47896028e0a622a_172) |
| Item 5. | <u>[Other Information](#i57fd0335a79b49f0a47896028e0a622a_175)</u> | [23](#i57fd0335a79b49f0a47896028e0a622a_175) |
| Item 6. | <u>[Exhibits](#i57fd0335a79b49f0a47896028e0a622a_178)</u> | [24](#i57fd0335a79b49f0a47896028e0a622a_178) |
| **<u>[SIGNATURES](#i57fd0335a79b49f0a47896028e0a622a_184)</u>** | **<u>[SIGNATURES](#i57fd0335a79b49f0a47896028e0a622a_184)</u>** |  |

---

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**PART I&nbsp;&nbsp;&nbsp;&nbsp; Item 1.**

**GRACO INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF EARNINGS**

(Unaudited) (In thousands except per share amounts)

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| &nbsp;&nbsp;&nbsp;Net Sales | $540144 | $528284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | 259503 | 250551 |
| &nbsp;&nbsp;&nbsp;Gross Profit | 280641 | 277733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product development | 19974 | 19375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, marketing and distribution | 70019 | 67211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 52873 | 47134 |
| &nbsp;&nbsp;&nbsp;Operating Earnings | 137775 | 144013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 836 | 713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | (3149) | (8174) |
| &nbsp;&nbsp;&nbsp;Earnings Before Income Taxes | 140088 | 151474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes | 21582 | 27373 |
| &nbsp;&nbsp;&nbsp;Net Earnings | $118506 | $124101 |
| Net Earnings per Common Share |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic  | $0.72 | $0.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted  | $0.70 | $0.72 |

---

See notes to consolidated financial statements.

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

(Unaudited) (In thousands)

---

| | | |
|:---|:---|:---|
|  | Three Months Ended | Three Months Ended |
|  | March 27,<br>2026 | March 28,<br>2025 |
| &nbsp;&nbsp;&nbsp;Net Earnings | $118506 | $124101 |
| &nbsp;&nbsp;&nbsp;Components of other comprehensive (loss) income |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cumulative translation adjustment | (12142) | 19903 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension and postretirement medical <br>liability adjustment | 176 | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes - pension and postretirement<br>medical liability adjustment | (33) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive (loss) income | (11999) | 19966 |
| &nbsp;&nbsp;&nbsp;Comprehensive Income | $106507 | $144067 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**GRACO INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

(Unaudited) (In thousands)

---

| | | |
|:---|:---|:---|
| | March 27,<br>2026 | December 26,<br>2025 |
| **ASSETS** |  |  |
| &nbsp;&nbsp;Current Assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $712171 | $624083 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, less allowances of $6,500 and $6,000 | 390367 | 393753 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 407647 | 401138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 56380 | 52907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 1566565 | 1471881 |
| &nbsp;&nbsp;Property, Plant and Equipment, net | 745561 | 755064 |
| &nbsp;&nbsp;Goodwill | 580958 | 585304 |
| &nbsp;&nbsp;Other Intangible Assets, net | 292636 | 303851 |
| &nbsp;&nbsp;Operating Lease Assets | 24708 | 26073 |
| &nbsp;&nbsp;Deferred Income Taxes | 29001 | 35975 |
| &nbsp;&nbsp;Other Assets | 95339 | 96122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $3334768 | $3274270 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;Current Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable to banks | $26189 | $23072 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of long-term debt | 1122 | 1624 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable | 84807 | 78573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Salaries and incentives | 52589 | 73420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends payable | 48882 | 48705 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 226994 | 241867 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 440583 | 467261 |
| &nbsp;&nbsp;Retirement Benefits and Deferred Compensation | 86046 | 87179 |
| &nbsp;&nbsp;Operating Lease Liabilities | 17505 | 18131 |
| &nbsp;&nbsp;Deferred Income Taxes | 37481 | 36708 |
| &nbsp;&nbsp;Other Non-current Liabilities | 10755 | 11060 |
| &nbsp;&nbsp;Shareholders' Equity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock | 165907 | 165150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in-capital | 1039336 | 994566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 1511649 | 1456710 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | 25506 | 37505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 2742398 | 2653931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Shareholders' Equity | $3334768 | $3274270 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**GRACO INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

(Unaudited) (In thousands)

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| &nbsp;&nbsp;&nbsp;**Cash Flows From Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Earnings | $118506 | $124101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net earnings to net cash<br>provided by operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 28602 | 24708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 8324 | 3200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 7549 | 7353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of building |  | (4737) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 596 | (6258) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (7389) | (2789) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable | 4396 | 17673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Salaries and incentives | (21086) | (7997) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retirement benefits and deferred compensation | (612) | (648) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | (9692) | (23243) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (8946) | (5947) |
| &nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 120248 | 125416 |
| &nbsp;&nbsp;&nbsp;**Cash Flows From Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment additions | (12141) | (10597) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of building |  | 10749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of businesses, net of cash acquired |  | (10454) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 81 | (184) |
| &nbsp;&nbsp;&nbsp;Net cash used in investing activities | (12060) | (10486) |
| &nbsp;&nbsp;&nbsp;**Cash Flows From Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings (payments) on short-term lines of credit, net | 2792 | (1075) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments on long-term debt and lines of credit | (476) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued | 47350 | 31574 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock repurchased | (11755) | (238089) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes paid related to net share settlement of equity awards | (7492) | (3907) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash dividends paid | (48767) | (46586) |
| &nbsp;&nbsp;&nbsp;Net cash used in financing activities | (18348) | (258083) |
| &nbsp;&nbsp;&nbsp;Effect of exchange rate changes on cash | (1752) | 3955 |
| &nbsp;&nbsp;&nbsp;Net increase (decrease) in cash and cash equivalents | 88088 | (139198) |
| &nbsp;&nbsp;&nbsp;**Cash and Cash Equivalents** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of year | 624083 | 675336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period | $712171 | $536138 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**GRACO INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

(Unaudited) (In thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Common<br>Stock | Additional<br>Paid-In<br>Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
| **Three Months Ended March 27, 2026** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Balance, December 26, 2025** | $165150 | $994566 | $1456710 | $37505 | $2653931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares issued | 946 | 39454 |  |  | 40400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares repurchased | (189) | (1141) | (14625) |  | (15955) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation cost |  | 6999 |  |  | 6999 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted stock issued |  | (542) |  |  | (542) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net earnings |  |  | 118506 |  | 118506 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends declared ($0.295 per share) |  |  | (48942) |  | (48942) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss |  |  |  | (11999) | (11999) |
| &nbsp;&nbsp;&nbsp;**Balance, March 27, 2026** | $165907 | $1039336 | $1511649 | $25506 | $2742398 |
| **Three Months Ended March 28, 2025** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Balance, December 27, 2024** | $169394 | $955051 | $1509264 | $(49574) | $2584135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares issued | 622 | 27045 |  |  | 27667 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares repurchased | (2798) | (15774) | (219517) |  | (238089) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation cost |  | 6333 |  |  | 6333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net earnings |  |  | 124101 |  | 124101 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends declared ($0.275 per share) |  |  | (46393) |  | (46393) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  | 19966 | 19966 |
| &nbsp;&nbsp;&nbsp;**Balance, March 28, 2025** | $167218 | $972655 | $1367455 | $(29608) | $2477720 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**GRACO INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(Unaudited)

**1. Basis of Preparation**

The consolidated balance sheet of Graco Inc. and subsidiaries (the "Company") as of March 27, 2026 and the related statements of earnings, comprehensive income and shareholders' equity for the three months ended March 27, 2026 and March 28, 2025, and cash flows for the three months ended March 27, 2026 and March 28, 2025 have been prepared by the Company and have not been audited.

In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 27, 2026, and the results of operations and cash flows for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Therefore, these statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 26, 2025 (the "2025 Annual Report").

The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year.

**2. Segment Information**

The Company classifies its business into three reportable segments: Contractor, Industrial and Expansion Markets.

Segment information follows (in thousands):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Contractor |  |  |
| &nbsp;&nbsp;Net Sales | $259981 | $255032 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | 133643 | 131883 |
| &nbsp;&nbsp;Gross Profit | 126338 | 123149 |
| &nbsp;&nbsp;&nbsp;Operating expenses | 64103 | 61219 |
| Contractor Operating Earnings | $62235 | $61930 |
| Industrial |  |  |
| &nbsp;&nbsp;Net Sales | $240412 | $231653 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | 104637 | 96824 |
| &nbsp;&nbsp;Gross Profit | 135775 | 134829 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating expenses | 59968 | 55234 |
| &nbsp;&nbsp;Industrial Operating Earnings | $75807 | $79595 |

---

------

<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

---

| | | |
|:---|:---|:---|
| Expansion Markets |  |  |
| &nbsp;&nbsp;Net Sales | $39751 | $41599 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | 19172 | 20163 |
| &nbsp;&nbsp;Gross Profit | 20579 | 21436 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating expenses | 10935 | 11371 |
| &nbsp;&nbsp;Expansion Markets Operating Earnings | $9644 | $10065 |
| Reportable Segment Operating Earnings Total | $147686 | $151590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unallocated corporate expense | 9911 | 7577 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating Earnings | 137775 | 144013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 836 | 713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | (3149) | (8174) |
| &nbsp;&nbsp;&nbsp;Earnings Before Income Taxes | $140088 | $151474 |

---

Geographic information follows (in thousands):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net Sales (based on customer location) |  |  |
| &nbsp;&nbsp;United States | $291197 | $282557 |
| &nbsp;&nbsp;Other countries | 248947 | 245727 |
| Total | $540144 | $528284 |

---

---

| | | |
|:---|:---|:---|
| | March 27,<br>2026 | December 26,<br>2025 |
| Long-lived Assets |  |  |
| &nbsp;&nbsp;United States | $592718 | $600011 |
| &nbsp;&nbsp;Other countries | 152843 | 155053 |
| Total | $745561 | $755064 |

---

**3. Inventories**

Major components of inventories were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | March 27,<br>2026 | December 26,<br>2025 |
| &nbsp;&nbsp;&nbsp;Finished products and components | $181081 | $175684 |
| &nbsp;&nbsp;&nbsp;Products and components in various stages of completion | 133070 | 123866 |
| &nbsp;&nbsp;&nbsp;Raw materials and purchased components | 211302 | 216559 |
| Subtotal | 525453 | 516109 |
| &nbsp;&nbsp;&nbsp;Reduction to LIFO cost | (117806) | (114971) |
| &nbsp;&nbsp;&nbsp;Total | $407647 | $401138 |

---

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**4. Share-Based Awards**

Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Option<br>Shares | Weighted Average<br>Exercise Price | Options<br>Exercisable | Weighted Average<br>Exercise Price |
| Outstanding, December 26, 2025 | 9786 | $61.38 | 7017 | $52.94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Granted | 921 | 93.43 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercised | (804) | 38.94 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Canceled | (37) | 82.49 |  |  |
| Outstanding, March 27, 2026 | 9866 | $66.07 | 7054 | $57.48 |

---

The Company recognized year-to-date share-based compensation of $8 million in 2026 and $7 million in 2025. As of March 27, 2026, there was $42 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 3.1 years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions and results:

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Expected life in years | 6.7 | 6.6 |
| Interest rate | 3.8% | 4.4% |
| Volatility | 24.8% | 26.2% |
| Dividend yield | 1.3% | 1.3% |
| Weighted average fair value per share | $27.20 | $26.80 |

---

Under the Company's Employee Stock Purchase Plan, the Company issued 235,000 shares in 2026 and 246,000 shares in 2025. The fair value of the employees' purchase rights under this plan was estimated on the date of grant. The benefit of the 15 percent discount from the lesser of the fair market value per common share on the first day and the last day of the plan year was added to the fair value of the employees' purchase rights determined using the Black-Scholes option pricing model with the following assumptions and results:

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Expected life in years | 1.0 | 1.0 |
| Interest rate | 3.5% | 4.1% |
| Volatility | 20.6% | 19.6% |
| Dividend yield | 1.2% | 1.3% |
| Weighted average fair value per share | $25.69 | $19.65 |

---

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**5. Earnings per Share**

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net earnings available to common shareholders | $118506 | $124101 |
| Weighted average shares outstanding for basic earnings per share | 165632 | 168560 |
| Dilutive effect of stock options computed using the treasury stock method and the average market price | 2702 | 3021 |
| Weighted average shares outstanding for diluted earnings per share | 168334 | 171581 |
| Basic earnings per share | $0.72 | $0.74 |
| Diluted earnings per share | $0.70 | $0.72 |
| Anti-dilutive shares not included in diluted earnings per share computation | 2591 | 1860 |

---

**6. Retirement Benefits**

The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Pension Benefits |  |  |
| &nbsp;&nbsp;Service cost | $1166 | $1253 |
| &nbsp;&nbsp;Interest cost | 2648 | 2143 |
| &nbsp;&nbsp;Expected return on assets | (3275) | (2903) |
| &nbsp;&nbsp;Amortization and other | (78) | 164 |
| Net periodic benefit cost | $461 | $657 |
| Postretirement Medical |  |  |
| &nbsp;&nbsp;Service cost | $75 | $75 |
| &nbsp;&nbsp;Interest cost | 225 | 200 |
| Net periodic benefit cost | $300 | $275 |

---

**7. Receivables and Credit Losses**

Accounts receivable includes trade receivables of $372 million and other receivables of $18 million as of March 27, 2026 and $376 million and $18 million of trade receivables and other receivables, respectively, as of December 26, 2025.

<u>Allowance for Credit Losses</u>

Following is a summary of activity for credit losses (in thousands):

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---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Balance, beginning | $5264 | $4973 |
| Additions charged to costs and expenses | 644 | 231 |
| Deductions from reserves <sup>(1)</sup> | (297) | (2) |
| Other (deductions) additions <sup>(2)</sup> | (6) | 158 |
| Balance, ending | $5605 | $5360 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Represents amounts determined to be uncollectible and charged against reserves, net of collections on accounts previously charged against reserves.

(2) Includes effects of foreign currency translation.

**8. Intangible Assets**

Components of other intangible assets were as follows (dollars in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Finite Life | Finite Life | Finite Life | Indefinite Life | |
| | Customer<br>Relationships | Patents and<br>Proprietary<br>Technology | Trademarks,<br>Trade Names<br>and Other | Trade <br>Names |<br>Total |
| As of March 27, 2026 |  |  |  |  |  |
| Cost | $201562 | $40271 | $4786 | $107034 | $353653 |
| &nbsp;&nbsp;Accumulated amortization | (60190) | (8109) | (2663) |  | (70962) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | 1745 | 1352 | 19 | 6829 | 9945 |
| Book value | $143117 | $33514 | $2142 | $113863 | $292636 |
| Weighted average life in years | 14 | 10 | 3 | N/A |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| As of December 26, 2025 |  |  |  |  |  |
| Cost | $316962 | $44304 | $4786 | $107034 | $473086 |
| &nbsp;&nbsp;Accumulated amortization | (165150) | (10649) | (2027) |  | (177826) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | (877) | 1464 | 54 | 7950 | 8591 |
| Book value | $150935 | $35119 | $2813 | $114984 | $303851 |
| Weighted average life in years | 13 | 10 | 2 | N/A |  |

---

Amortization of intangibles for the year to date was $8 million in 2026 and $7 million in 2025. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | 2026 (Remainder) | 2027 | 2028 | 2029 | 2030 | Thereafter |
| Estimated Amortization Expense | $17068 | $19671 | $17551 | $16954 | $16176 | $91353 |

---

Changes in the carrying amount of goodwill for each reportable segment were as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Contractor | Industrial | Expansion Markets | Total |
| Balance, December 26, 2025 | $238575 | $275263 | $71466 | $585304 |
| &nbsp;&nbsp;&nbsp;Adjustments from business acquisitions | (170) | 254 |  | 84 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | (2744) | (1686) |  | (4430) |
| Balance, March 27, 2026 | $235661 | $273831 | $71466 | $580958 |

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**9. Other Current Liabilities**

Components of other current liabilities were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | March 27,<br>2026 | December 26,<br>2025 |
| Accrued self-insurance retentions | $8044 | $8013 |
| Accrued warranty and service liabilities | 20954 | 21103 |
| Accrued trade promotions | 6522 | 7511 |
| Payable for employee stock purchases | 4471 | 15546 |
| Customer advances and deferred revenue | 91669 | 93995 |
| Income taxes payable | 21554 | 15493 |
| Tax payable, other | 17563 | 14693 |
| Right of return refund liability | 14440 | 15055 |
| Operating lease liabilities, current | 8074 | 8769 |
| Other | 33703 | 41689 |
| Total | $226994 | $241867 |

---

A liability is established for estimated future warranty and service claims that relate to current and prior period sales. The Company estimates warranty costs based on historical claim experience and other factors, including evaluating specific product warranty issues. Following is a summary of activity in accrued warranty and service liabilities (in thousands):

---

| | |
|:---|:---|
| Balance, December 26, 2025 | $21103 |
| Charged to expense | 2273 |
| Margin on parts sales reversed | 962 |
| Reductions for claims settled | (3384) |
| Balance, March 27, 2026 | $20954 |

---

<u>Customer Advances and Deferred Revenue</u>

Revenue is deferred when cash payments are received or due in advance of performance, including amounts which are refundable. This is also the case for services associated with certain product sales. During the three months ended March 27, 2026, we recognized $35 million that was included in deferred revenue at December 26, 2025. During the three months ended March 28, 2025, we recognized $30 million that was included in deferred revenue at December 27, 2024.

**10. Fair Value**

Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | Level | March 27,<br>2026 | December 26,<br>2025 |
| &nbsp;&nbsp;&nbsp;Assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash surrender value of life insurance | 2 | $27682 | $28893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward exchange contracts | 2 | 118 |  |
| &nbsp;&nbsp;&nbsp;Total assets at fair value |  | $27800 | $28893 |
| &nbsp;&nbsp;&nbsp;Liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration | 3 | $1617 | $1649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation | 2 | 8357 | 8336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward exchange contracts | 2 |  | 268 |
| &nbsp;&nbsp;&nbsp;Total liabilities at fair value |  | $9974 | $10253 |

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.

Contingent consideration liabilities represent the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of certain acquired businesses based on future revenues.

The fair value of variable rate borrowings approximates carrying value. The Company uses significant other observable inputs to estimate fair value (level 2 of the fair value hierarchy) based on the present value of future cash flows and rates that would be available for issuance of debt with similar terms and remaining maturities.

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**Item 2. GRACO INC. AND SUBSIDIARIES**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF**

 **FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**<u>Overview</u>**

The Company supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and coating materials. Management classifies the Company's business into three reportable segments: Contractor, Industrial and Expansion Markets. Key strategies include developing and marketing new products, leveraging products and technologies into additional, growing end-user markets, expanding distribution globally and completing strategic acquisitions that provide additional channels and technologies.

The following Management's Discussion and Analysis reviews significant factors affecting the Company's results of operations and financial condition. This discussion should be read in conjunction with the financial statements and the accompanying notes to the financial statements.

**<u>Consolidated Results</u>**

A summary of financial results follows (in millions except per share amounts):

---

| | | | |
|:---|:---|:---|:---|
| | Three Months Ended | Three Months Ended | Three Months Ended |
| | Mar 27,<br>2026 | Mar 28,<br>2025 | %<br> Change |
| Net Sales | $540.1 | $528.3 | 2% |
| Operating Earnings | 137.8 | 144.0 | (4)% |
| Net Earnings | 118.5 | 124.1 | (5)% |
| Net Earnings, adjusted <sup>(1)</sup> | 111.8 | 120.5 | (7)% |
| Diluted Net Earnings per Common Share | $0.70 | $0.72 | (3)% |
| Diluted Net Earnings per Common Share, adjusted <sup>(1)</sup> | $0.66 | $0.70 | (6)% |

---

(1) See below for a reconciliation of adjusted non-GAAP financial measures to GAAP.

Net sales for the first quarter increased 2 percent, with 5 percentage points of sales growth from acquired operations and 3 percentage points of sales growth from the effects of changes in currency translation rates. Sales growth for the quarter was partially offset by a 6 percentage point organic decline.

The gross margin rate was lower than the first quarter last year, primarily due to unfavorable product and channel mix and lower margin rates of acquired operations. Price realization was able to mostly offset the impact of incremental tariffs of $7 million.

Operating expenses increased 7 percent, including 4 percentage points from acquired operations and 3 percentage points from the effects of currency translation.

Operating earnings decreased 4 percent, due to a lower gross margin rate and increased expenses.

Net earnings decreased 5 percent for the first quarter. Adjusted net earnings decreased 7 percent, driven by lower operating earnings and a prior year gain from the sale of a former manufacturing and distribution facility in Switzerland that did not repeat.

Excluding the impact 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 earnings before income taxes, income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):

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---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Earnings before income taxes | $140.1 | $151.5 |
| Income taxes, as reported | $21.6 | $27.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Excess tax benefit from option exercises | 6.7 | 3.6 |
| Income taxes, adjusted | $28.3 | $31.0 |
| Effective income tax rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;As reported | 15.4% | 18.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted | 20.2% | 20.5% |
| Net Earnings, as reported | $118.5 | $124.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Excess tax benefit from option exercises | (6.7) | (3.6) |
| Net Earnings, adjusted | $111.8 | $120.5 |
| Weighted Average Diluted Shares | 168.3 | 171.6 |
| Diluted Earnings per Share |  |  |
| &nbsp;&nbsp;&nbsp; As reported | $0.70 | $0.72 |
| &nbsp;&nbsp;&nbsp; Adjusted | $0.66 | $0.70 |

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

The following table presents an overview of components of net earnings as a percentage of net sales:

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net Sales | 100.0% | 100.0% |
| &nbsp;&nbsp;&nbsp;Cost of products sold | 48.0 | 47.4 |
| Gross Profit | 52.0 | 52.6 |
| &nbsp;&nbsp;&nbsp;Product development | 3.7 | 3.7 |
| &nbsp;&nbsp;&nbsp;Selling, marketing and distribution | 13.0 | 12.7 |
| &nbsp;&nbsp;&nbsp;General and administrative | 9.8 | 8.9 |
| Operating Earnings | 25.5 | 27.3 |
| &nbsp;&nbsp;&nbsp;Interest expense | 0.2 | 0.1 |
| &nbsp;&nbsp;&nbsp;Other (income) expense, net | (0.6) | (1.5) |
| &nbsp;&nbsp;Earnings Before Income Taxes | 25.9 | 28.7 |
| &nbsp;&nbsp;&nbsp;Income taxes | 4.0 | 5.2 |
| Net Earnings | 21.9% | 23.5% |

---

<u>Net Sales</u>

The following table presents net sales by geographic region (in millions):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Americas<sup>(1)</sup> | $334.4 | $323.2 |
| EMEA<sup>(2)</sup> | 125.6 | 121.0 |
| Asia Pacific | 80.1 | 84.1 |
| &nbsp;&nbsp;&nbsp;Consolidated | $540.1 | $528.3 |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;North, South and Central America, including the United States

(2)<sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup>Europe, Middle East and Africa

The following table presents the components of net sales change by geographic region:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | (1)% | 4% | 0% | 3% |
| EMEA | (14)% | 9% | 9% | 4% |
| Asia Pacific | (8)% | 0% | 3% | (5)% |
| Consolidated | (6)% | 5% | 3% | 2% |

---

<u>Gross Profit</u>

The first quarter gross margin rate was lower than the first quarter last year, primarily due to unfavorable product and channel mix and lower margin rates of acquired operations. Price realization was able to mostly offset the impact of incremental tariffs of $7 million.

<u>Operating Expenses</u>

Total operating expenses for the first quarter increased $9 million (7 percent) compared to the same period last year, including approximately $5 million (4 percentage points) from acquired operations and $4 million (3 percentage points) from the effects of currency translation.

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<u>Other (Income) Expense</u>

Other non-operating income for the first quarter decreased $5 million compared to the same period last year due to a prior year gain from the sale of a former manufacturing and distribution facility in Switzerland that did not repeat.

<u>Income Taxes</u>

The effective income tax rate was 15 percent for the quarter, down approximately 3 percentage points from the first quarter last year. The decrease was due primarily to an increase in excess tax benefits related to stock option exercises.

**<u>Segment Results</u>**

Certain measurements of segment operations compared to last year are summarized below:

<u>Contractor Segment</u>

The following table presents net sales and operating earnings as a percentage of sales for the Contractor segment

(dollars in millions):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net Sales |  |  |
| &nbsp;&nbsp;Americas | $180.9 | $175.9 |
| &nbsp;&nbsp;EMEA | 56.2 | 54.5 |
| &nbsp;&nbsp;Asia Pacific | 22.9 | 24.6 |
| Total | $260.0 | $255.0 |
| Operating earnings as a percentage of net sales | 24% | 24% |

---

The following table presents the components of net sales change by geographic region for the Contractor segment:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | (2)% | 4% | 1% | 3% |
| EMEA | (6)% | 0% | 9% | 3% |
| Asia Pacific | (12)% | 0% | 5% | (7)% |
| Segment Total | (4)% | 3% | 3% | 2% |

---

Contractor segment net sales increased 2 percent for the first quarter compared to the same period last year. Incremental sales from acquired operations and favorable changes in currency translation rates were partially offset by continued weakness in the worldwide construction markets. The operating margin rate was flat as price realization offset higher product costs, including increased tariff costs of $4 million.

<u>Industrial Segment</u>

The following table presents net sales and operating earnings as a percentage of sales for the Industrial segment

(dollars in millions):

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net Sales |  |  |
| &nbsp;&nbsp;Americas | $131.4 | $121.2 |
| &nbsp;&nbsp;EMEA | 62.7 | 59.4 |
| &nbsp;&nbsp;Asia Pacific | 46.3 | 51.1 |
| Total | $240.4 | $231.7 |
| Operating earnings as a percentage of net sales | 32% | 34% |

---

The following table presents the components of net sales change by geographic region for the Industrial segment:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | 1% | 6% | 1% | 8% |
| EMEA | (22)% | 18% | 10% | 6% |
| Asia Pacific | (12)% | 1% | 2% | (9)% |
| Segment Total | (8)% | 8% | 4% | 4% |

---

Industrial segment sales growth for the first quarter included $20 million (8 percentage points) from acquired operations, which more than offset the impact of the timing of finishing system sales and other project activity compared to the first quarter last year. Higher product costs, including increased tariff costs of $3 million, and unfavorable product and channel mix drove a 2 percentage point decline in the operating margin rate for the quarter.

<u>Expansion Markets Segment</u>

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

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | March 27,<br>2026 | March 28,<br>2025 |
| Net Sales |  |  |
| &nbsp;&nbsp;Americas | $22.1 | $26.0 |
| &nbsp;&nbsp;EMEA | 6.8 | 7.1 |
| &nbsp;&nbsp;Asia Pacific | 10.8 | 8.5 |
| Total | $39.7 | $41.6 |
| Operating earnings as a percentage of net sales | 24% | 24% |

---

The following table presents the components of net sales change by geographic region for the Expansion Markets segment:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | (15)% | 0% | 0% | (15)% |
| EMEA | (6)% | 0% | 2% | (4)% |
| Asia Pacific | 28% | 0% | 0% | 28% |
| Segment Total | (5)% | 0% | 1% | (4)% |

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

Net sales for the first quarter in the Expansion Markets segment decreased 4 percent, primarily due to lower semiconductor application sales in the Americas. The decline in sales volume was offset by lower expenses and an improved gross margin rate, resulting in an operating margin rate that was comparable to the same period last year.

**<u>Liquidity and Capital Resources</u>**

Net cash provided by operating activities of $120 million in the first quarter of 2026 decreased $5 million compared to the same period last year, mostly due to higher performance-based incentive payouts. Significant uses of cash in the first three months of 2026 included dividend payments of $49 million and plant and equipment additions of $12 million. Net proceeds from shares issued in 2026 totaled $40 million, which was partially offset by share repurchases of $12 million.

For the first three months of 2025, significant uses of cash included share repurchases of $238 million (partially offset by $28 million from shares issued) and dividend payments of $47 million.

As of March 27, 2026, the Company had available liquidity of $1,485 million, including cash and cash equivalents of $712 million, of which $223 million was held outside of the U.S., and available credit under existing committed credit facilities of $773 million.

Cash balances and unused financing sources are expected to provide the Company with the flexibility to meet its liquidity needs for the next 12 months and beyond, including its capital expenditure plan, planned dividends, share repurchases, potential future acquisitions and operating requirements. Capital expenditures for 2026 are expected to be approximately $100 million. The Company may make opportunistic share repurchases going forward.

**<u>Outlook</u>**

Incoming order activity and end market demand trends support the Company's 2026 outlook of low single-digit sales growth on an organic constant-currency basis and mid-single-digit growth including the expected incremental sales from acquisitions.

**<u>Cautionary Statement Regarding Forward-Looking Statements</u>**

The Company desires to take advantage of the "safe harbor" provisions regarding forward-looking statements of the Private Securities Litigation Reform Act of 1995 and is filing this Cautionary Statement in order to do so. From time to time various forms filed by our Company with the Securities and Exchange Commission, including our Form 10-K, Form 10-Qs and Form 8-Ks, and other disclosures, including our 2025 Overview report, press releases, earnings releases, analyst briefings, conference calls and other written documents or oral statements released by our Company, may contain forward-looking statements. Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," and similar expressions, and reflect our Company's expectations concerning the future. All forecasts and projections are forward-looking statements. Forward-looking statements are based upon currently available information, but various risks and uncertainties may cause our Company's actual results to differ materially from those expressed in these statements. The Company undertakes no obligation to update these statements in light of new information or future events.

Future results could differ materially from those expressed, due to the impact of changes in various factors. These risk factors include, but are not limited to, risks relating to the demand for our products and the level of commercial, industrial and construction activity worldwide; changes in currency translation rates; international and domestic instability; interest rate fluctuations and changes in credit markets; global sourcing of materials; inflationary cost pressures and our ability to raise prices without decreasing demand for our products; interruptions of or intrusions into our information systems; intellectual property rights; the use of generative artificial intelligence and other emerging technologies; conducting business internationally; catastrophic events; our ability to attract, develop and retain qualified personnel; public health crises; our growth strategies and acquisitions; potential goodwill impairment; our ability to compete effectively; our dependence on a few large customers; our dependence on cyclical industries; changes in laws and regulations; climate-related laws, regulations and accords; environmental, social and governance-related expectations and requirements; compliance with anti-corruption and trade laws; changes in tax or tariff rates or the adoption of new tax or tariff legislation; and costs associated with legal proceedings. Please refer to Item 1A of our 2025 Annual Report on Form 10-K and Item 1A of this Form 10-Q for a more comprehensive discussion of these and other risk factors. These reports are available on the Company's website at <u>www.graco.com</u> and the Securities and Exchange Commission's website at <u>www.sec.gov</u>. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

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Investors should realize that factors other than those identified above and in Item 1A might prove important to the Company's future results. It is not possible for management to identify each and every factor that may have an impact on the Company's operations in the future as new factors can develop from time to time.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

There have been no material changes related to market risk from the disclosures made in the 2025 Annual Report on Form 10-K.

**Item 4. Controls and Procedures**

**<u>Evaluation of disclosure controls and procedures</u>**

As of the end of the fiscal quarter covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures. This evaluation was done under the supervision and with the participation of the Company's President and Chief Executive Officer and the Chief Financial Officer and Treasurer. Based upon that evaluation, the Company's President and Chief Executive Officer and the Chief Financial Officer and Treasurer concluded that the Company's disclosure controls and procedures are effective.

**<u>Changes in internal controls</u>**

During the quarter, there was no change in the Company's internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.

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<u>[**Table of Contents**](#i57fd0335a79b49f0a47896028e0a622a_7)</u>

**PART IIOTHER INFORMATION**

**Item 1A. Risk Factors**

There have been no material changes to the Company's risk factors from those disclosed in the Company's 2025 Annual Report on Form 10-K.

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**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

**<u>Issuer Purchases of Equity Securities</u>**

On December 7, 2018, the Board of Directors authorized the purchase of up to 18 million shares of common stock, primarily through open market transactions. On December 5, 2025, the Board of Directors authorized the Company to purchase up to an additional 15 million shares of its outstanding stock, primarily through open-market transactions. The authorization is for an indefinite period of time or until terminated by the Board.

In addition to shares purchased under the Board authorization, the Company purchases shares of common stock held by employees who wish to tender owned shares to satisfy the exercise price or tax due upon exercise of options or vesting of restricted stock.

Information on issuer purchases of equity securities follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Period | Total Number<br>of Shares Purchased | Average Price<br>Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be<br>Purchased Under the Plans or Programs<br>(at end of period) |
| December 28, 2025 - January 23, 2026 | 4692 | $81.99 | 4692 | 22992246 |
| January 24, 2026 - February 20, 2026 |  | $— |  | 22992246 |
| February 21, 2026 - March 27, 2026 | 184728 | $84.29 | 184728 | 22807518 |

---

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**Item 5. Other Information**

During the three months ended March 27, 2026, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

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**Item 6. Exhibits**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 3.1 | Restated Articles of Incorporation as amended December 8, 2017. (<u>[Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K filed December 8, 2017.](https://www.sec.gov/Archives/edgar/data/42888/000004288817000035/a31restatedarticlesofincor.htm)</u>) |
| 3.2 | Restated Bylaws as amended February 17, 2023. <u>[(Incorporated by reference to Exhibit 3.2 to the Company's 2024 Annual Report on Form 10-K.](https://www.sec.gov/Archives/edgar/data/42888/000004288825000011/ggg12272024exhibit32.htm)</u>) |
| 10.1 | Form of Executive Officer Restricted Stock Until Agreement. (<u>[Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K filed March](https://www.sec.gov/Archives/edgar/data/42888/000119312526085816/d104194dex101.htm)[2, 2026](https://www.sec.gov/Archives/edgar/data/42888/000119312526085816/d104194dex101.htm)</u>.) |
| <u>[31.1](ggg2026q1ex311-quarteronly.htm)</u> | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a). |
| <u>[31.2](ggg2026q1ex312-quarteronly.htm)</u> | Certification of Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a). |
| <u>[32](ggg2026q1ex32-quarteronly.htm)</u> | Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C. |
| <u>[99.1](ggg04222026exhibit991q1.htm)</u> | Press Release Reporting First Quarter Earnings dated April 22, 2026. |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language). |
| 104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). |

---

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

**GRACO INC.**

---

| | | | |
|:---|:---|:---|:---|
| Date: | &nbsp;&nbsp;&nbsp;April 22, 2026 | By: | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Mark W. Sheahan |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;Mark W. Sheahan |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;President and Chief Executive Officer |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;*(Principal Executive Officer)* |
| Date: | &nbsp;&nbsp;&nbsp;April 22, 2026 | By: | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Sanjiv Gupta |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;Sanjiv Gupta |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer and Treasurer |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;*(Principal Financial Officer)* |
| Date: | &nbsp;&nbsp;&nbsp;April 22, 2026 | By: | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Christopher D. Knutson |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;Christopher D. Knutson |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;Vice President, Controller and Chief Accounting Officer |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;*(Principal Accounting Officer)* |

---

## Exhibit 31.1

 Exhibit 31.1

**CERTIFICATION**

I, Mark W. Sheahan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Graco Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | April 22, 2026 | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Mark W. Sheahan |
| | | &nbsp;&nbsp;&nbsp;&nbsp;Mark W. Sheahan |
| | | &nbsp;&nbsp;&nbsp;&nbsp;President and Chief Executive Officer |

---

## Exhibit 31.2

 Exhibit 31.2

**CERTIFICATION**

I, Sanjiv Gupta, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Graco Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | April 22, 2026 | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Sanjiv Gupta |
| | | &nbsp;&nbsp;&nbsp;&nbsp;Sanjiv Gupta |
| | | &nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer and Treasurer |

---

## Ex-32

 Exhibit 32

CERTIFICATION UNDER SECTION 1350

Pursuant to Section 1350 of Title 18 of the United States Code, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Graco Inc.

---

| | | |
|:---|:---|:---|
| Date: | &nbsp;&nbsp;&nbsp;April 22, 2026 | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Mark W. Sheahan |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;Mark W. Sheahan |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;President and Chief Executive Officer |
| Date: | &nbsp;&nbsp;&nbsp;April 22, 2026 | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Sanjiv Gupta |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;Sanjiv Gupta |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer and Treasurer |

---

## Exhibit 99.1

---

| | | |
|:---|:---|:---|
| Exhibit 99.1 | GRACO INC. | ![image0a02.jpg](image0a02.jpg) |
| | P.O. Box 1441 | ![image0a02.jpg](image0a02.jpg) |
| ![image1a02.jpg](image1a02.jpg) | Minneapolis, MN | ![image0a02.jpg](image0a02.jpg) |
| ![image1a02.jpg](image1a02.jpg) | 55440-1441 | ![image0a02.jpg](image0a02.jpg) |
| ![image1a02.jpg](image1a02.jpg) | NYSE: GGG | ![image0a02.jpg](image0a02.jpg) |

---

---

| | |
|:---|:---|
| **FOR IMMEDIATE RELEASE:** | **FOR FURTHER INFORMATION:** |
| Wednesday, April 22, 2026 | Financial Contact: Sanjiv Gupta, 612-623-6129<br>Media Contact: Kirstie L. Foster, 612-623-6249<br><u>Kirstie_L_Foster@graco.com</u>  |

---

**Acquisitions Drive Sales Growth**

**MINNEAPOLIS (April 22, 2026)** – Graco Inc. **(NYSE: GGG)** today announced results for the first quarter ended March 27, 2026.

**Summary&nbsp;&nbsp;&nbsp;&nbsp;**

$ in millions except per share amounts

---

| | | | |
|:---|:---|:---|:---|
| | Three Months Ended | Three Months Ended | Three Months Ended |
| | Mar 27,<br>2026 | Mar 28,<br>2025 | %<br>Change |
| Net Sales | $540.1 | $528.3 | 2% |
| Operating Earnings | 137.8 | 144.0 | (4)% |
| Net Earnings | 118.5 | 124.1 | (5)% |
| Diluted Net Earnings per Common Share | $0.70 | $0.72 | (3)% |
| Adjusted (non-GAAP): <sup>(1)</sup> |  |  |  |
| Net Earnings, adjusted | $111.8 | $120.5 | (7)% |
| Diluted Net Earnings per Common Share, adjusted | $0.66 | $0.70 | (6)% |

---

(1) Excludes the impact of excess tax benefits from stock option exercises. See Financial Results Adjusted for Comparability below for a reconciliation of adjusted non-GAAP financial measures to GAAP.

• Net sales for the first quarter increased 2 percent, with 5 percentage points of sales growth from acquired operations and 3 percentage points of sales growth from the effects of changes in currency translation rates. Sales growth for the quarter was partially offset by a 6 percentage point organic decline.

• The gross margin rate was lower than the first quarter last year, primarily due to unfavorable product and channel mix and lower margin rates of acquired operations. Price realization was able to mostly offset the impact of incremental tariffs of $7 million.

• Operating expenses increased 7 percent, including 4 percentage points from acquired operations and 3 percentage points from the effects of currency translation.

• Operating earnings decreased 4 percent, due to a lower gross margin rate and increased expenses.

• Net earnings decreased 5 percent for the first quarter. Adjusted net earnings decreased 7 percent, driven by lower operating earnings and a prior year gain from the sale of a former manufacturing and distribution facility in Switzerland that did not repeat.

"Sales increased 2 percent in the quarter, with contributions from acquired businesses offsetting organic revenue declines," said Mark Sheahan, Graco's President and Chief Executive Officer. "In the Contractor segment, demand in infrastructure-related markets continued to be strong and resilient while residential construction activity remained soft. Industrial segment results were impacted by the timing of completion of

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**Page 2 GRACO**

powder finishing systems and other project activity. Despite a slower start to the year, incoming order rates improved as we progressed throughout the quarter."

**Consolidated Results**

Net sales for the first quarter increased 2 percent from the comparable period last year. First quarter net sales increased 3 percent in the Americas (3 percent at consistent translation rates), increased 4 percent in EMEA (decreased 5 percent at consistent translation rates), and decreased 5 percent in Asia Pacific (8 percent at consistent translation rates). Changes in currency translation rates increased net sales by approximately $17 million for the first quarter. Acquired operations contributed $26 million of sales growth for the first quarter.

The first quarter gross margin rate was lower than the first quarter last year, primarily due to unfavorable product and channel mix and lower margin rates of acquired operations. Price realization was able to mostly offset the impact of incremental tariffs of $7 million.

Total operating expenses for the first quarter increased $9 million (7 percent), including approximately $5 million (4 percentage points) from acquired operations and $4 million (3 percentage points) from the effects of currency translation.

Other non-operating income for the first quarter decreased $5 million compared to the same period last year due to a prior year gain from the sale of a former manufacturing and distribution facility in Switzerland that did not repeat.

The effective income tax rate was 15 percent for the quarter, down approximately 3 percentage points from the first quarter last year. The decrease was due primarily to an increase in excess tax benefits related to stock option exercises. 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 was comparable to the same period last year.

**Segment Results**

Management assesses performance of segments by reference to operating earnings excluding unallocated corporate expenses. For a reconciliation of segment operating earnings to consolidated operating earnings, refer to the segment information table included in the financial statement section of this release. Certain measurements of segment operations are summarized below:

---

| | | | |
|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months |
| | Contractor | Industrial | Expansion Markets |
| Net Sales (in millions) | $260.0 | $240.4 | $39.7 |
| Percentage change from last year |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales | 2% | 4% | (4)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating earnings | 0% | (5)% | (4)% |
| Operating earnings as a percentage of sales |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;2026 | 24% | 32% | 24% |
| &nbsp;&nbsp;&nbsp;&nbsp;2025 | 24% | 34% | 24% |

---

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**Page 3 GRACO**

Components of net sales change by geographic region for the Contractor segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | (2)% | 4% | 1% | 3% |
| EMEA | (6)% | 0% | 9% | 3% |
| Asia Pacific | (12)% | 0% | 5% | (7)% |
| Consolidated | (4)% | 3% | 3% | 2% |

---

Contractor segment net sales increased 2 percent for the first quarter compared to the same period last year. Incremental sales from acquired operations and favorable changes in currency translation rates were partially offset by continued weakness in the worldwide construction markets. The operating margin rate was flat as price realization offset higher product costs, including increased tariff costs of $4 million.

Components of net sales change by geographic region for the Industrial segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | 1% | 6% | 1% | 8% |
| EMEA | (22)% | 18% | 10% | 6% |
| Asia Pacific | (12)% | 1% | 2% | (9)% |
| Consolidated | (8)% | 8% | 4% | 4% |

---

Industrial segment sales growth for the first quarter included $20 million (8 percentage points) from acquired operations, which more than offset the impact of the timing of finishing system sales and other project activity compared to the first quarter last year. Higher product costs, including increased tariff costs of $3 million, and unfavorable product and channel mix drove a 2 percentage point decline in the operating margin rate for the quarter.

Components of net sales change by geographic region for the Expansion Markets segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | Three Months | Three Months | Three Months | Three Months |
| | Volume and Price | Acquisitions | Currency | Total |
| Americas | (15)% | 0% | 0% | (15)% |
| EMEA | (6)% | 0% | 2% | (4)% |
| Asia Pacific | 28% | 0% | 0% | 28% |
| Consolidated | (5)% | 0% | 1% | (4)% |

---

Net sales for the first quarter in the Expansion Markets segment decreased 4 percent, primarily due to lower semiconductor application sales in the Americas. The decline in sales volume was offset by lower expenses and an improved gross margin rate, resulting in an operating margin rate that was comparable to the same period last year.

**Outlook**

"We are maintaining our 2026 revenue guidance of low single-digit organic growth on a constant-currency basis and mid-single-digit growth including the expected sales from acquisitions," said Sheahan. "Housing related markets remain challenged, especially in the Americas, but we are seeing pockets of growth across a range of industrial applications. While organic sales declined in the quarter due to timing of powder equipment

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**Page 4 GRACO**

project activity, organic order backlog increased 13% from the end of 2025, driven by strong order cadence as we exited the quarter. This momentum reinforces our confidence in maintaining our full-year outlook."

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**Page 5 GRACO**

**Financial Results Adjusted for Comparability**

Excluding the impact 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 earnings before income taxes, income taxes, effective income tax rate, net earnings and diluted earnings per share follows (in millions except per share amounts):

---

| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | Mar 27,<br>2026 | Mar 28,<br>2025 |
| Earnings before income taxes | $140.1 | $151.5 |
| Income taxes, as reported | $21.6 | $27.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Excess tax benefit from option exercises | 6.7 | 3.6 |
| Income taxes, adjusted | $28.3 | $31.0 |
| Effective income tax rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;As reported | 15.4% | 18.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted | 20.2% | 20.5% |
| Net Earnings, as reported | $118.5 | $124.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Excess tax benefit from option exercises | (6.7) | (3.6) |
| Net Earnings, adjusted | $111.8 | $120.5 |
| Weighted Average Diluted Shares | 168.3 | 171.6 |
| Diluted Earnings per Share |  |  |
| &nbsp;&nbsp; As reported | $0.70 | $0.72 |
| &nbsp;&nbsp; Adjusted | $0.66 | $0.70 |

---

**Cautionary Statement Regarding Forward-Looking Statements**

The Company desires to take advantage of the "safe harbor" provisions regarding forward-looking statements of the Private Securities Litigation Reform Act of 1995 and is filing this Cautionary Statement in order to do so. From time to time various forms filed by our Company with the Securities and Exchange Commission, including our Form 10-K, Form 10-Qs and Form 8-Ks, and other disclosures, including our 2025 Overview report, press releases, earnings releases, analyst briefings, conference calls and other written documents or oral statements released by our Company, may contain forward-looking statements. Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," and similar expressions, and reflect our Company's expectations concerning the future. All forecasts and projections are forward-looking statements. Forward-looking statements are based upon currently available information, but various risks and uncertainties may cause our Company's actual results to differ materially from those expressed in these statements. The Company undertakes no obligation to update these statements in light of new information or future events.

Future results could differ materially from those expressed, due to the impact of changes in various factors. These risk factors include, but are not limited to, risks relating to the demand for our products and the level of commercial, industrial and construction activity worldwide; changes in currency translation rates; international and domestic instability; interest rate fluctuations and changes in credit markets; global sourcing of materials; inflationary cost pressures and our ability to raise prices without decreasing demand for our products; interruptions of or intrusions into our information systems; intellectual property rights; the use of generative artificial intelligence and other emerging technologies; conducting business internationally; catastrophic events; our ability to attract, develop and retain qualified personnel; public health crises; our growth strategies and

------

**Page 6 GRACO**

acquisitions; potential goodwill impairment; our ability to compete effectively; our dependence on a few large customers; our dependence on cyclical industries; changes in laws and regulations; climate-related laws, regulations and accords; environmental, social and governance-related expectations and requirements; compliance with anti-corruption and trade laws; changes in tax or tariff rates or the adoption of new tax or tariff legislation; and costs associated with legal proceedings. Please refer to Item 1A of our Annual Report on Form 10-K for fiscal year 2025 (and the most recent Form 10-Q) for a more comprehensive discussion of these and other risk factors. These reports are available on the Company's website at <u>www.graco.com</u> and the Securities and Exchange Commission's website at <u>www.sec.gov</u>. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

Investors should realize that factors other than those identified above and in Item 1A of our Annual Report on Form 10-K for fiscal year 2025 might prove important to the Company's future results. It is not possible for management to identify each and every factor that may have an impact on the Company's operations in the future as new factors can develop from time to time.

**Conference Call** 

Graco management will hold a conference call, including slides via webcast, with analysts and institutional investors on Thursday, April 23, 2026, at 11 a.m. ET, 10 a.m. CT, to discuss Graco's first quarter results.

A real-time listen-only webcast of the conference call will be broadcast by Nasdaq. Individuals can access the call and view the slides on the Company's website at <u>www.graco.com</u>. Listeners should go to the website at least 15 minutes prior to the live conference call to install any necessary audio software.

**About Graco**

Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and powder materials. A recognized leader in its specialties, Minneapolis-based Graco serves customers around the world in the manufacturing, processing, construction and maintenance industries. For additional information about Graco Inc., please visit us at <u>www.graco.com</u>.

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**Page 7 GRACO**

**GRACO INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)**

(In thousands except per share amounts)

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| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | Mar 27,<br>2026 | Mar 28,<br>2025 |
| &nbsp;&nbsp;&nbsp;Net Sales | $540144 | $528284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | 259503 | 250551 |
| &nbsp;&nbsp;&nbsp;Gross Profit | 280641 | 277733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product development | 19974 | 19375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, marketing and distribution | 70019 | 67211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 52873 | 47134 |
| &nbsp;&nbsp;&nbsp;Operating Earnings | 137775 | 144013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 836 | 713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | (3149) | (8174) |
| &nbsp;&nbsp;&nbsp;Earnings Before Income Taxes | 140088 | 151474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes | 21582 | 27373 |
| &nbsp;&nbsp;&nbsp;Net Earnings | $118506 | $124101 |
| Net Earnings per Common Share |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.72 | $0.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.70 | $0.72 |
| Weighted Average Number of Shares |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 165632 | 168560 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 168334 | 171581 |

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**SEGMENT INFORMATION (Unaudited)**

(In thousands)

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| | | |
|:---|:---|:---|
| | Three Months Ended | Three Months Ended |
| | Mar 27,<br>2026 | Mar 28,<br>2025 |
| Net Sales |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Contractor | $259981 | $255032 |
| &nbsp;&nbsp;&nbsp;&nbsp; Industrial | 240412 | 231653 |
| &nbsp;&nbsp;&nbsp;&nbsp; Expansion Markets | 39751 | 41599 |
| Total | $540144 | $528284 |
| Operating Earnings |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Contractor | $62235 | $61930 |
| &nbsp;&nbsp;&nbsp;&nbsp; Industrial | 75807 | 79595 |
| &nbsp;&nbsp;&nbsp;&nbsp; Expansion Markets | 9644 | 10065 |
| &nbsp;&nbsp;&nbsp;&nbsp; Unallocated corporate (expense) | (9911) | (7577) |
| Total | $137775 | $144013 |

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