Graco Q3 earnings fall 12% as sales rise 8%

Valco Melton's post-acquisition results included $12 million in sales and $5 million in operating losses for the period ended September 25, 2026.

Rhea-AI Filing Summary

GRACO INC. (GGG) reported third-quarter net sales of $586.4 million, up 8% from $543.4 million a year earlier. Operating earnings fell 10% to $148.1 million; the prior-year quarter included a $14.1 million non-cash gain from a reduction in acquisition-related contingent consideration. Net earnings fell 12% to $121.6 million, related to lower operating earnings and a higher effective tax rate. Adjusted net earnings were $131.3 million, up 2% under the company’s updated non-GAAP method.

On August 31, 2026, Graco acquired Valco Cincinnati LLC and certain affiliated entities, collectively called Valco Melton, for approximately $462 million in cash consideration, subject to normal post-closing purchase price adjustments. Through September 25, Valco Melton contributed $12 million in sales and recorded operating losses of $5 million. Graco reported available liquidity of $808 million as of September 25, 2026, including $140 million in cash and $668 million in available credit.

For the fourth quarter, the company estimates total sales of $610 million to $640 million, including Valco Melton. Net cash provided by operating activities was $463.4 million for the first nine months of 2026, compared with $487.3 million a year earlier. Capital expenditures for 2026 are expected to be approximately $80 million.

1 point · 0 major

MixediHow this balance works

How this balance works

Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.

It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

How the balance worksHow Sentiment works

0 major · 1 point

How the balance works

Positive

• Moderate pointThird-quarter sales rose 8% to $586.4 million.

Negative

• Moderate pointThird-quarter net earnings fell 12% to $121.6 million.

Filing Explained

At September 25, 17,117,781 shares remained available under the repurchase plans; that is buying capacity, not a commitment to purchase them.

The 10-Q reports that Graco repurchased shares under its board-authorized programs in all three listed windows, including 401,000 shares from August 22, 2026 to September 25, 2026; both authorizations have no stated end date and remain in force unless terminated by the board.

The company’s adjusted earnings measures exclude acquisition costs and amortization of acquired intangible assets; prior-period figures were recast under the updated method introduced in the second quarter.

Key Figures

Net sales: $586.4 million Net earnings: $121.6 million Operating earnings: $148.1 million +5 more

8 metrics

Net sales $586.4 million Three months ended September 25, 2026; $543.4 million in the comparable 2025 period; up 8%

Net earnings $121.6 million Three months ended September 25, 2026; $137.6 million in the comparable 2025 period; down 12%

Operating earnings $148.1 million Three months ended September 25, 2026; $164.7 million in the comparable 2025 period; down 10%

Adjusted net earnings $131.3 million Third quarter 2026; adjusted non-GAAP measure; $129.1 million in the comparable 2025 period; up 2%

Valco Melton acquisition consideration Approximately $462 million Total cash consideration for the acquisition completed August 31, 2026, subject to normal post-closing purchase price adjustments

Valco Melton post-acquisition results $12 million sales; $5 million operating losses Period ended September 25, 2026

Available liquidity $808 million As of September 25, 2026; includes $140 million in cash and $668 million in available credit

Estimated fourth-quarter sales $610 million to $640 million Company estimate; includes the acquisition of Valco Melton

Key Terms

non-GAAP adjusted measurements, contingent consideration, purchase price allocation, revolving credit facility

4 terms

non-GAAP adjusted measurements financial

"updated its non-GAAP adjusted measurements to exclude acquisition costs"

contingent consideration financial

"reduction in fair value of acquisition-related contingent consideration"

Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.

purchase price allocation financial

"the purchase price allocation remains preliminary"

Purchase price allocation is the accounting process that breaks down the total amount paid for an acquired business into specific pieces—like tangible assets, identifiable intangible assets (brands, patents, customer lists) and goodwill—based on their estimated fair values. Investors care because this breakdown affects future earnings, tax costs and reported asset values: higher allocations to amortizable intangibles or goodwill can change profit volatility, depreciation and potential impairment charges, similar to splitting a restaurant bill to see what you actually bought versus what you paid extra for goodwill.

revolving credit facility financial

"borrowed $219 million under its $750 million revolving credit facility"

A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were GGG's third-quarter sales?

GRACO INC. reported net sales of $586.4 million for the three months ended September 25, 2026, compared with $543.4 million for the three months ended September 26, 2025. The reported sales increase was 8%.

How much did GGG earn in the third quarter?

Net earnings were $121.6 million for the three months ended September 25, 2026, compared with $137.6 million for the same period in 2025. Diluted net earnings per common share were $0.75, compared with $0.82.

How much did Graco pay for Valco Melton?

Graco acquired Valco Cincinnati LLC and certain affiliated entities, collectively called Valco Melton, on August 31, 2026, for approximately $462 million in total cash consideration, subject to normal post-closing purchase price adjustments.

What is GGG's fourth-quarter sales outlook?

Graco estimates fourth-quarter total company sales of $610 million to $640 million, including the acquisition of Valco Melton.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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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

For the quarterly period ended September 25, 2026

OR

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

For the transition period from to

Commission File Number:  001-09249

GRACO INC.

(Exact name of registrant as specified in its charter)     

Minnesota						41-0285640
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

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

(612)			623-6000
(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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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 ☒

160,375,132 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding as of October 7, 2026.

TABLE OF CONTENTS 

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Statements of Earnings

3

Consolidated Statements of Comprehensive Income

3

Consolidated Balance Sheets

4

Consolidated Statements of Cash Flows

5

Consolidated Statements of Shareholders' Equity

6

Notes to Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22

PART II - OTHER INFORMATION

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 5.

Other Information

25

Item 6.

Exhibits

26

SIGNATURES

2

Table of Contents

PART I     Item 1.

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited) (In thousands except per share amounts)

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales			$	586,385					$	543,358					$	1,717,081					$	1,643,448
Cost of products sold			290,162						254,133						823,273						776,960
Gross Profit			296,223						289,225						893,808						866,488
Product development			20,590						20,251						60,389						60,357
Selling, marketing and distribution			71,497						68,019						210,079						203,567
General and administrative			56,019						50,295						162,354						150,407
Contingent consideration			—						(14,061)						—						(14,061)
Operating Earnings			148,117						164,721						460,986						466,218
Interest expense			793						711						2,464						2,079
Other income, net			(5,062)						(4,450)						(15,407)						(14,003)
Earnings Before Income Taxes			152,386						168,460						473,929						478,142
Income taxes			30,825						30,832						88,935						88,790
Net Earnings			$	121,561					$	137,628					$	384,994					$	389,352
Net Earnings per Common Share
Basic			$	0.75					$	0.83					$	2.36					$	2.34
Diluted			$	0.75					$	0.82					$	2.32					$	2.30

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands)

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Earnings			$	121,561					$	137,628					$	384,994					$	389,352
Components of other comprehensive (loss) income
Cumulative translation adjustment			(4,736)						1,501						(29,747)						78,387
Pension and postretirement medical liability adjustment			311						808						464						534
Income taxes - pension and postretirement medical liability adjustment			(86)						(235)						(114)						(178)
Other comprehensive (loss) income			(4,511)						2,074						(29,397)						78,743
Comprehensive Income			$	117,050					$	139,702					$	355,597					$	468,095

See notes to consolidated financial statements.

3

Table of Contents

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands)

			September 25, 2026						December 26, 2025
ASSETS
Current Assets
Cash and cash equivalents			$	139,818					$	624,083
Accounts receivable, less allowances of $6,700 and $6,000			446,144						393,753
Inventories			463,829						401,138
Other current assets			63,813						52,907
Total current assets			1,113,604						1,471,881
Property, Plant and Equipment, net			769,584						755,064
Goodwill			793,764						585,304
Other Intangible Assets, net			434,292						303,851
Operating Lease Assets			29,688						26,073
Deferred Income Taxes			21,749						35,975
Other Assets			100,355						96,122
Total Assets			$	3,263,036					$	3,274,270
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable to banks			$	29,979					$	23,072
Current portion of long-term debt			677						1,624
Trade accounts payable			138,080						78,573
Salaries and incentives			65,809						73,420
Dividends payable			47,348						48,705
Other current liabilities			242,163						241,867
Total current liabilities			524,056						467,261
Long-term Debt			103,802						—
Retirement Benefits and Deferred Compensation			82,505						87,179
Operating Lease Liabilities			21,089						18,131
Deferred Income Taxes			48,087						36,708
Other Non-current Liabilities			13,642						11,060
Shareholders’ Equity
Common stock			160,368						165,150
Additional paid-in-capital			1,025,281						994,566
Retained earnings			1,276,098						1,456,710
Accumulated other comprehensive income			8,108						37,505
Total shareholders’ equity			2,469,855						2,653,931
Total Liabilities and Shareholders’ Equity			$	3,263,036					$	3,274,270

See notes to consolidated financial statements.

4

Table of Contents

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

			Nine Months Ended
			September 25, 2026						September 26, 2025
Cash Flows From Operating Activities
Net Earnings			$	384,994					$	389,352
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization			77,629						75,744
Deferred income taxes			13,839						4,692
Share-based compensation			23,553						24,495
Gain on sale of building			—						(4,737)
Contingent consideration			—						(14,061)
Change in
Accounts receivable			(27,112)						(6,470)
Inventories			2,955						19,671
Trade accounts payable			23,942						11,952
Salaries and incentives			(11,094)						2,146
Retirement benefits and deferred compensation			(3,383)						(769)
Other accrued liabilities			(12,149)						(14,024)
Other			(9,735)						(729)
Net cash provided by operating activities			463,439						487,262
Cash Flows From Investing Activities
Property, plant and equipment additions			(47,649)						(33,646)
Proceeds from sale of building			—						11,182
Acquisition of businesses, net of cash acquired			(436,313)						(70,107)
Other			(566)						(2,215)
Net cash used in investing activities			(484,528)						(94,786)
Cash Flows From Financing Activities
Borrowings on short-term lines of credit			5,818						5,912
Borrowings on long-term lines of credit			219,000						—
Payments on long-term debt and lines of credit			(118,808)						—
Common stock issued			52,614						35,618
Common stock repurchased			(462,902)						(360,952)
Taxes paid related to net share settlement of equity awards			(7,608)						(3,833)
Cash dividends paid			(145,346)						(137,764)
Net cash used in financing activities			(457,232)						(461,019)
Effect of exchange rate changes on cash			(5,944)						11,869
Net decrease in cash and cash equivalents			(484,265)						(56,674)
Cash and Cash Equivalents
Beginning of year			624,083						675,336
End of period			$	139,818					$	618,662

See notes to consolidated financial statements.

5

Table of Contents

GRACO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited) (In thousands)

			Common Stock						Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total
Three Months Ended September 25, 2026
Balance, June 26, 2026			$	161,948					$	1,026,376					$	1,321,745					$	12,619					$	2,522,688
Shares issued			96						1,548						—						—						1,644
Shares repurchased			(1,676)						(10,094)						(119,999)						—						(131,769)
Stock compensation cost			—						7,451						—						—						7,451
Net earnings			—						—						121,561						—						121,561
Dividends declared ($0.295 per share)			—						—						(47,209)						—						(47,209)
Other comprehensive loss			—						—						—						(4,511)						(4,511)
Balance, September 25, 2026			$	160,368					$	1,025,281					$	1,276,098					$	8,108					$	2,469,855
Nine Months Ended September 25, 2026
Balance, December 26, 2025			$	165,150					$	994,566					$	1,456,710					$	37,505					$	2,653,931
Shares issued			1,097						45,862						—						—						46,959
Shares repurchased			(5,879)						(35,405)						(421,618)						—						(462,902)
Stock compensation cost			—						22,211						—						—						22,211
Restricted stock issued			—						(1,953)						—						—						(1,953)
Net earnings			—						—						384,994						—						384,994
Dividends declared ($0.885 per share)			—						—						(143,988)						—						(143,988)
Other comprehensive loss			—						—						—						(29,397)						(29,397)
Balance, September 25, 2026			$	160,368					$	1,025,281					$	1,276,098					$	8,108					$	2,469,855
Three Months Ended September 26, 2025
Balance, June 27, 2025			$	165,637					$	970,332					$	1,337,956					$	27,095					$	2,501,020
Shares issued			137						6,888						—						—						7,025
Stock compensation cost			—						7,542						—						—						7,542
Restricted stock issued			—						(724)						—						—						(724)
Net earnings			—						—						137,628						—						137,628
Dividends declared ($0.275 per share)			—						—						(45,565)						—						(45,565)
Other comprehensive income			—						—						—						2,074						2,074
Balance, September 26, 2025			$	165,774					$	984,038					$	1,430,019					$	29,169					$	2,609,000
Nine Months Ended September 26, 2025
Balance, December 27, 2024			$	169,394					$	955,051					$	1,509,264					$	(49,574)					$	2,584,135
Shares issued			764						31,745						—						—						32,509
Shares repurchased			(4,384)						(24,714)						(331,854)						—						(360,952)
Stock compensation cost			—						22,680						—						—						22,680
Restricted stock issued			—						(724)						—						—						(724)
Net earnings			—						—						389,352						—						389,352
Dividends declared ($0.825 per share)			—						—						(136,743)						—						(136,743)
Other comprehensive income			—						—						—						78,743						78,743
Balance, September 26, 2025			$	165,774					$	984,038					$	1,430,019					$	29,169					$	2,609,000

See notes to consolidated financial statements.

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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 September 25, 2026 and the related statements of earnings, comprehensive income and shareholders' equity for the three and nine months ended September 25, 2026 and September 26, 2025, and cash flows for the nine months ended September 25, 2026 and September 26, 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 September 25, 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												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Contractor
Net Sales			$	276,032					$	262,428					$	835,436					$	806,419
Cost of products sold			142,441						134,398						421,901						415,820
Gross Profit			133,591						128,030						413,535						390,599
Operating expenses			62,354						60,157						188,902						185,307
Contractor Operating Earnings			$	71,237					$	67,873					$	224,633					$	205,292
Industrial
Net Sales			$	264,623					$	238,591					$	754,272					$	712,521
Cost of products sold			123,428						98,121						332,840						295,996
Gross Profit			141,195						140,470						421,432						416,525
Operating expenses			66,743						59,737						186,827						173,825
Industrial Operating Earnings			$	74,452					$	80,733					$	234,605					$	242,700

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Expansion Markets
Net Sales			$	45,730					$	42,339					$	127,373					$	124,508
Cost of products sold			22,621						20,139						63,202						59,868
Gross Profit			23,109						22,200						64,171						64,640
Operating expenses			12,167						11,811						34,099						35,357
Expansion Markets Operating Earnings			$	10,942					$	10,389					$	30,072					$	29,283
Reportable Segment Operating Earnings Total			$	156,631					$	158,995					$	489,310					$	477,275
Unallocated corporate expense			8,514						8,335						28,324						25,118
Contingent consideration			—						(14,061)						—						(14,061)
Operating Earnings			148,117						164,721						460,986						466,218
Interest expense			793						711						2,464						2,079
Other income, net			(5,062)						(4,450)						(15,407)						(14,003)
Earnings Before Income Taxes			$	152,386					$	168,460					$	473,929					$	478,142

Geographic information follows (in thousands):

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales (based on customer location)
United States			$	307,924					$	293,517					$	922,362					$	881,101
Other countries			278,461						249,841						794,719						762,347
Total			$	586,385					$	543,358					$	1,717,081					$	1,643,448

			September 25, 2026						December 26, 2025
Long-lived Assets
United States			$	605,487					$	600,011
Other countries			164,097						155,053
Total			$	769,584					$	755,064

3. Inventories

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

			September 25, 2026						December 26, 2025
Finished products and components			$	215,171					$	175,684
Products and components in various stages of completion			110,494						123,866
Raw materials and purchased components			261,477						216,559
Subtotal			587,142						516,109
Reduction to LIFO cost			(123,313)						(114,971)
Total			$	463,829					$	401,138

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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 Shares						Weighted Average Exercise Price						Options Exercisable						Weighted Average Exercise Price
Outstanding, December 26, 2025			9,786						$	61.38					7,017						$	52.94
Granted			1,003						92.81
Exercised			(930)						41.39
Canceled			(239)						83.59
Outstanding, September 25, 2026			9,620						$	66.00					7,002						$	57.92

The Company recognized year-to-date share-based compensation of $24 million in 2026 and $25 million in 2025. As of September 25, 2026, there was $29 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 2.6 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:

			Nine Months Ended
			September 25, 2026						September 26, 2025
Expected life in years			6.7						6.6
Interest rate			3.9		%				4.4		%
Volatility			24.9		%				26.2		%
Dividend yield			1.3		%				1.3		%
Weighted average fair value per share			$	27.16					$	26.80

Under the Company’s Employee Stock Purchase Plan, the Company issued 235,000 shares in 2026 and 257,000 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:

			Nine Months Ended
			September 25, 2026						September 26, 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												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net earnings available to common shareholders			$	121,561					$	137,628					$	384,994					$	389,352
Weighted average shares outstanding for basic earnings per share			161,075						165,733						163,473						166,693
Dilutive effect of stock options computed using the treasury stock method and the average market price			1,946						2,890						2,220						2,896
Weighted average shares outstanding for diluted earnings per share			163,021						168,623						165,693						169,589
Basic earnings per share			$	0.75					$	0.83					$	2.36					$	2.34
Diluted earnings per share			$	0.75					$	0.82					$	2.32					$	2.30
Anti-dilutive shares not included in diluted earnings per share computation			3,102						1,825						3,101						1,827

6. Retirement Benefits

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

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Pension Benefits
Service cost			$	726					$	1,162					$	3,058					$	3,454
Interest cost			1,910						2,375						7,205						7,086
Expected return on assets			(3,419)						(2,917)						(9,967)						(8,724)
Amortization and other			(82)						(218)						(234)						148
Net periodic benefit (credit) cost			$	(865)					$	402					$	62					$	1,964
Postretirement Medical
Service cost			$	60					$	76					$	210					$	229
Interest cost			323						285						773						854
Amortization			(395)						(68)						(395)						(204)
Net periodic benefit (credit) cost			$	(12)					$	293					$	588					$	879

7. Receivables and Credit Losses

Accounts receivable includes trade receivables of $428 million and other receivables of $18 million as of September 25, 2026, and $376 million and $18 million of trade receivables and other receivables as of December 26, 2025.

Allowance for Credit Losses

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

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			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Balance, beginning			$	6,372					$	5,331					$	5,264					$	4,973
(Reversals) additions charged to costs and expenses			(379)						(47)						1,092						46
Deductions from reserves (1)			(74)						(152)						(393)						(157)
Other (deductions) additions (2)			(8)						5						(52)						275
Balance, ending			$	5,911					$	5,137					$	5,911					$	5,137

(1)    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																		Indefinite Life
			Customer Relationships						Patents and Proprietary Technology						Trademarks, Trade Names and Other						Trade Names						Total
As of September 25, 2026
Cost			$	300,762					$	62,071					$	9,086					$	140,334					$	512,253
Accumulated amortization			(68,734)						(10,473)						(4,638)						—						(83,845)
Foreign currency translation			446						1,025						13						4,400						5,884
Book value			$	232,474					$	52,623					$	4,461					$	144,734					$	434,292
Weighted average life in years			14						10						2						N/A

As of December 26, 2025
Cost			$	316,962					$	44,304					$	4,786					$	107,034					$	473,086
Accumulated amortization			(165,150)						(10,649)						(2,027)						—						(177,826)
Foreign currency translation			(877)						1,464						54						7,950						8,591
Book value			$	150,935					$	35,119					$	2,813					$	114,984					$	303,851
Weighted average life in years			13						10						2						N/A

Amortization of acquired and other intangible assets for the year to date was $20 million in both 2025 and 2026. 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			$	10,002					$	29,668					$	26,188					$	25,584					$	24,815					$	173,301

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			$	238,575					$	275,263					$	71,466					$	585,304
Additions, adjustments from business acquisitions			(397)						219,701						—						219,304
Foreign currency translation			(4,738)						(6,106)						—						(10,844)
Balance, September 25, 2026			$	233,440					$	488,858					$	71,466					$	793,764

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9. Other Current Liabilities

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

			September 25, 2026						December 26, 2025
Accrued self-insurance retentions			$	8,011					$	8,013
Accrued warranty and service liabilities			20,404						21,103
Accrued trade promotions			10,650						7,511
Payable for employee stock purchases			11,444						15,546
Customer advances and deferred revenue			98,414						93,995
Income taxes payable			13,191						15,493
Tax payable, other			13,967						14,693
Right of return refund liability			13,003						15,055
Operating lease liabilities, current			9,126						8,769
Other			43,953						41,689
Total			$	242,163					$	241,867

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			$	21,103
Charged to expense			8,302
Margin on parts sales reversed			3,651
Reductions for claims settled			(12,652)
Balance, September 25, 2026			$	20,404

Customer Advances and Deferred Revenue

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 and nine months ended September 25, 2026, the Company recognized $18 million and $81 million, respectively, that was included in deferred revenue at December 26, 2025. During the three and nine months ended September 26, 2025, the Company recognized $4 million and $50 million, respectively, 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						September 25, 2026						December 26, 2025
Assets
Cash surrender value of life insurance			2						$	31,600					$	28,893
Forward exchange contracts			2						6						—
Total assets at fair value									$	31,606					$	28,893
Liabilities
Contingent consideration			3						$	1,593					$	1,649
Deferred compensation			2						8,970						8,336
Forward exchange contracts			2						—						268
Total liabilities at fair value									$	10,563					$	10,253

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

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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.

11. Acquisitions

On August 31, 2026, the Company acquired Valco Cincinnati LLC and certain affiliated entities (collectively "Valco Melton"). Under the terms of the purchase agreement, the purchase price of $447 million was adjusted for cash acquired, estimated unpaid pre-close liabilities of the selling shareholders and estimated excess working capital. The acquisition was completed for the total cash consideration of approximately $462 million, subject to normal post-closing purchase price adjustments. The purchase price was funded with cash on hand and borrowings under the Company's revolving credit facility. Valco Melton is a global provider of adhesive application and quality assurance systems. The acquired business expands and complements the Company’s Industrial segment.

Results of operations for Valco Melton have been included in the Company's Industrial segment since the acquisition date and included sales of $12 million and operating losses of $5 million for the period ended September 25, 2026. As of September 25, 2026, the purchase price allocation remains preliminary as the Company completes its assessment of certain acquired assets and assumed liabilities, principally related to the valuation of intangible assets, income taxes and the finalization of post-closing purchase price adjustments. Based on the preliminary purchase price allocation, the Company recorded goodwill of $220 million and intangible assets of $159 million. Identifiable intangible assets include $33 million related to indefinite-lived trade names and $126 million related to amortizable intangible assets with estimated useful lives ranging from 0.5 to 15 years. The preliminary amounts recognized are subject to adjustment during the measurement period as additional information becomes available and valuations are finalized. Such adjustments may be material to the amounts allocated to acquired assets and liabilities, including goodwill. The purchase price allocation is expected to be finalized as soon as practicable, but no later than one year from the acquisition date.

Consideration transferred was preliminarily allocated to assets acquired and liabilities assumed based on estimated fair values as follows (in thousands):

Cash and cash equivalents			$	25,445
Accounts receivable			29,842
Inventories			69,839
Other current assets			2,715
Property, plant and equipment			13,664
Other non-current assets			7,936
Identifiable intangible assets			158,600
Goodwill			219,771
Current liabilities			(43,831)
Deferred income taxes, net			(12,944)
Other non-current liabilities			(9,052)
Total net assets acquired			$	461,985

Goodwill recognized from the Valco Melton acquisition primarily reflects an intangible asset that does not qualify for separate recognition. Approximately $150 million of goodwill acquired with Valco Melton is deductible for tax purposes.

The following unaudited pro forma information provides the results of operations for the periods ended September 25, 2026 and September 26, 2025, as if the acquisition of Valco Melton had been completed at the beginning of fiscal year 2025 (in thousands, except per share amounts):

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			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net sales			$	611,271					$	581,294					$	1,824,031					$	1,749,917
Net earnings			125,913						139,246						395,192						375,132
Earnings per share
Basic			$	0.78					$	0.84					$	2.42					$	2.26
Diluted			$	0.77					$	0.83					$	2.39					$	2.21

The unaudited pro forma information includes the impact of intangible asset amortization of approximately $6 million in 2026 and $9 million in 2025. The nine months ended September 25, 2026, excludes the impact of $6 million of transaction-related expenses and non-recurring expense, related to the fair value adjustment to acquisition-date inventory. The nine months ended September 26, 2025 was adjusted to include transaction-related expenses and nonrecurring expenses related to the fair value adjustment to acquisition-date inventory. The information also reflects the pro forma cost of foregone interest income but does not reflect the effect of any synergies or integration costs that may result from the acquisition.

Unaudited pro forma information has been provided for comparative purposes only and the information does not necessarily reflect what the combined Company's results of operations would have been had the Valco Melton acquisition occurred at the beginning of fiscal year 2025. It also may not be useful in predicting the future results of operations of the combined company.

Subsequent to the end of the third quarter, the Company completed the acquisition of a business that is not material to the consolidated financial statements.

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Item 2. GRACO INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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 consolidated financial statements and the accompanying notes to the consolidated financial statements.

Tariffs

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). The U.S. Court of International Trade subsequently issued orders directing the U.S. Customs and Border Protection to refund previously collected IEEPA tariffs. Given the significant uncertainty involved, the Company determined to only recognize IEEPA tariff refunds upon receipt. The Company began receiving IEEPA tariff refunds during the second quarter of 2026. Through the nine months ended September 25, 2026, the Company received $9 million in refunds, net of related surcharges.

Consolidated Results

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

			Three Months Ended																		Nine Months Ended
			Sep 25, 2026						Sep 26, 2025						%  Change						Sep 25, 2026						Sep 26, 2025						%  Change
Net Sales			$	586.4					$	543.4					8		%				$	1,717.1					$	1,643.4					4		%
Operating Earnings			148.1						164.7						(10)		%				461.0						466.2						(1)		%
Operating Earnings, adjusted (1)			160.9						158.7						1		%				490.2						474.5						3		%
Net Earnings			121.6						137.6						(12)		%				385.0						389.4						(1)		%
Net Earnings, adjusted (1)			131.3						129.1						2		%				400.6						387.2						3		%
Diluted Net Earnings per Common Share			$	0.75					$	0.82					(9)		%				$	2.32					$	2.30					1		%
Diluted Net Earnings per Common Share, adjusted (1)			$	0.81					$	0.77					5		%				$	2.42					$	2.28					6		%

(1) The adjusted measures of operating earnings, net earnings and diluted net earnings per common share reflect the Company's updated non-GAAP methodology introduced in the second quarter of 2026. See below for a reconciliation of GAAP to non-GAAP measurements.

Net sales for the third quarter increased by 8 percent, with 4 percentage points of organic sales growth and 4 percentage points of sales growth from acquired operations.

Operating earnings decreased 10 percent for the third quarter, primarily due to a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration in the prior year that did not repeat. Adjusted operating earnings increased 1 percent, as price realization offset higher product costs in the quarter.

Net earnings decreased 12 percent for the third quarter, related to lower operating earnings and a higher effective tax rate. Adjusted net earnings increased 2 percent.

Beginning in the second quarter of 2026, the Company updated its non-GAAP adjusted measurements to exclude acquisition costs and amortization of acquired intangible assets. The Company excludes acquisition costs and

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amortization of acquired intangible assets to provide a consistent comparison of operating results across reporting periods. While the Company has a history of acquisition activity, the Company's acquisitions do not occur on a predictable cycle, and transactions vary in complexity, timing, size and nature. Acquisition costs include third-party legal, valuation, consulting and other incremental costs incurred in connection with acquisition activities as well as purchase accounting adjustments. Management uses these adjusted measures to evaluate operating performance and, for acquisition costs, in determining incentive compensation. These excluded items to the non-GAAP adjusted measurements provide supplemental information useful in evaluating the Company's underlying operating performance. Prior-period amounts have been recast to conform to the current presentation.

Excluding the impact of acquisition costs, amortization of acquired intangible assets, the related income tax effects of these items and 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 operating earnings, 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												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Operating earnings			$	148.1					$	164.7					$	461.0					$	466.2
Acquisition costs			5.8						1.0						8.9						2.0
Amortization of acquired intangible assets			7.0						7.1						20.3						20.4
Contingent consideration			—						(14.1)						—						(14.1)
Operating earnings, adjusted			$	160.9					$	158.7					$	490.2					$	474.5
Earnings before income taxes, as reported			$	152.4					$	168.5					$	473.9					$	478.1
Acquisition costs			5.8						1.0						8.9						2.0
Amortization of acquired intangible assets			7.0						7.1						20.3						20.4
Contingent consideration			—						(14.1)						—						(14.1)
Earnings before income taxes, adjusted			$	165.2					$	162.5					$	503.1					$	486.4
Income taxes, as reported			$	30.8					$	30.8					$	88.9					$	88.8
Tax impact of acquisition costs			1.3						0.2						1.9						0.4
Tax impact of amortization of acquired intangible assets			1.7						1.6						4.9						5.0
Excess tax benefit from option exercises			0.1						0.7						6.8						5.1
Income taxes, adjusted			$	33.9					$	33.3					$	102.5					$	99.3
Effective income tax rate
As reported			20.2		%				18.3		%				18.8		%				18.6		%
Adjusted			20.5		%				20.6		%				20.4		%				20.4		%
Net Earnings, as reported			$	121.6					$	137.6					$	385.0					$	389.4
Acquisition costs, net of tax			4.5						0.8						7.0						1.6
Amortization of acquired intangible assets, net of tax			5.3						5.5						15.4						15.4
Contingent consideration			—						(14.1)						—						(14.1)
Excess tax benefit from option exercises			(0.1)						(0.7)						(6.8)						(5.1)
Net Earnings, adjusted			$	131.3					$	129.1					$	400.6					$	387.2
Weighted Average Diluted Shares			163.0						168.6						165.7						169.6
Diluted Earnings per Share
As reported			$	0.75					$	0.82					$	2.32					$	2.30
Adjusted			$	0.81					$	0.77					$	2.42					$	2.28

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

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales			100.0		%				100.0		%				100.0		%				100.0		%
Cost of products sold			49.5						46.8						47.9						47.3
Gross Profit			50.5						53.2						52.1						52.7
Product development			3.5						3.7						3.5						3.7
Selling, marketing and distribution			12.2						12.5						12.2						12.4
General and administrative			9.5						9.3						9.6						9.2
Contingent consideration			—						(2.6)						—						(0.9)
Operating Earnings			25.3						30.3						26.8						28.4
Interest expense			0.1						0.1						0.1						0.1
Other income, net			(0.8)						(0.8)						(0.9)						(0.9)
Earnings Before Income Taxes			26.0						31.0						27.6						29.2
Income taxes			5.3						5.7						5.2						5.4
Net Earnings			20.7		%				25.3		%				22.4		%				23.8		%

Net Sales

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

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Americas(1)			$	360.5					$	341.0					$	1,066.3					$	1,016.1
EMEA(2)			129.3						117.8						382.7						368.6
Asia Pacific			96.6						84.6						268.1						258.7
Consolidated			$	586.4					$	543.4					$	1,717.1					$	1,643.4

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

(2)    Europe, Middle East and Africa

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

			Three Months																								Nine Months
			Volume and Price						Acquisitions						Currency						Total						Volume and Price						Acquisitions						Currency						Total
Americas			1%						5%						0%						6%						0%						5%						0%						5%
EMEA			11%						0%						(1)%						10%						(3)%						3%						4%						4%
Asia Pacific			13%						0%						1%						14%						1%						1%						2%						4%
Consolidated			4%						4%						0%						8%						(1)%						4%						1%						4%

Gross Profit

The gross profit margin rate decreased approximately 3 percentage points for the third quarter compared to the same period last year, primarily driven by higher product costs, the unfavorable effects of lower margin rates of acquired operations and unfavorable product and channel mix. Tariff refunds and changes in tariff costs were not significant for the third quarter. The gross profit margin rate decreased 1 percentage point for the year to date, as the unfavorable effects of lower margin rates of acquired operations and unfavorable product and channel mix were partially offset by tariff refunds, net of related surcharges.

Operating Expenses

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Total operating expenses increased $24 million (19 percent) for the third quarter and increased $32 million (8 percent) year to date compared to the same periods last year and included a non-cash gain of $14 million from the reduction in fair value of acquisition-related contingent consideration in the prior year that did not repeat. Other increases in operating expenses primarily related to incremental expenses from acquired operations of $7 million for the quarter and $18 million for the year to date and incremental acquisition costs of $2 million for the quarter and $3 million for the year to date.

Other Income, net

Other non-operating income increased by $1 million in both the third quarter and the year to date from the comparable periods last year, primarily due to lower foreign exchange losses on net assets of foreign operations. The year to date increase in other non-operating income was partially offset by a prior year gain of $5 million from the sale of a former manufacturing and distribution facility in Switzerland that did not repeat.

Income Taxes

The effective income tax rate was 20 percent for the third quarter and 19 percent for the year to date. Adjusted to exclude the impacts of certain non-GAAP adjustments (see reconciliation of GAAP to non-GAAP measurements), the adjusted effective income tax rate of 20 percent for both the third 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												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales
Americas			$	196.2					$	186.1					$	592.1					$	563.4
EMEA			54.6						52.6						170.7						168.2
Asia Pacific			25.2						23.7						72.6						74.8
Total			$	276.0					$	262.4					$	835.4					$	806.4
Operating earnings as a percentage of net sales			26		%				26		%				27		%				25		%

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

			Three Months																								Nine Months
			Volume and Price						Acquisitions						Currency						Total						Volume and Price						Acquisitions						Currency						Total
Americas			2%						3%						0%						5%						1%						3%						1%						5%
EMEA			5%						0%						(1)%						4%						(2)%						0%						4%						2%
Asia Pacific			5%						0%						1%						6%						(6)%						0%						3%						(3)%
Segment Total			2%						3%						0%						5%						1%						2%						1%						4%

Contractor segment incremental sales from acquired operations for the third quarter and year to date included $7 million and $20 million, respectively. Organic sales growth in the Americas for the third quarter was primarily driven by growth within the professional paint channel. For the year to date, sales growth was broad-based with growth in the protective coating and spray foam product categories as well as within the professional paint and home center channels. The operating margin rate for this segment was flat for the quarter and increased 2 percentage points for the year to date, primarily driven by the net impact of tariff refunds and related surcharges.

Industrial Segment

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

(dollars in millions):

			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales
Americas			$	139.8					$	129.4					$	402.8					$	377.4
EMEA			68.6						58.6						193.3						179.1
Asia Pacific			56.2						50.6						158.1						156.0
Total			$	264.6					$	238.6					$	754.2					$	712.5
Operating earnings as a percentage of net sales			28		%				34		%				31		%				34		%

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

			Three Months																								Nine Months
			Volume and Price						Acquisitions						Currency						Total						Volume and Price						Acquisitions						Currency						Total
Americas			(1)%						9%						0%						8%						(1)%						7%						1%						7%
EMEA			19%						0%						(2)%						17%						(2)%						6%						4%						8%
Asia Pacific			9%						1%						1%						11%						(2)%						1%						2%						1%
Segment Total			6%						5%						0%						11%						(2)%						6%						2%						6%

Industrial segment sales growth included incremental sales from acquired operations of $13 million for the third quarter and $43 million for the year to date. The timing of finishing system sales and other project-related activity contributed to an increase of 6 percentage points in sales for the third quarter, while resulting in a decrease of 2 percentage points in sales for the year to date. The operating margin rate for this segment decreased 6 percentage points for the third quarter and 3 percentage points for the year to date, primarily due to unfavorable product and channel mix and the impact of acquired operations. Tariff refunds, net of related surcharges, partially offset the year-to-date decrease.

Expansion Markets Segment

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

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			Three Months Ended												Nine Months Ended
			September 25, 2026						September 26, 2025						September 25, 2026						September 26, 2025
Net Sales
Americas			$	24.4					$	25.5					$	71.3					$	75.3
EMEA			6.0						6.6						18.6						21.3
Asia Pacific			15.3						10.3						37.5						27.9
Total			$	45.7					$	42.4					$	127.4					$	124.5
Operating earnings as a percentage of net sales			24		%				25		%				24		%				24		%

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

			Three Months																								Nine Months
			Volume and Price						Acquisitions						Currency						Total						Volume and Price						Acquisitions						Currency						Total
Americas			(4)%						0%						0%						(4)%						(5)%						0%						0%						(5)%
EMEA			(9)%						0%						0%						(9)%						(13)%						0%						0%						(13)%
Asia Pacific			50%						0%						0%						50%						34%						0%						0%						34%
Segment Total			8%						0%						0%						8%						2%						0%						0%						2%

Expansion Markets net sales increased $3 million for both the third quarter and year to date compared to the same periods last year due to improved sales volume in the semiconductor and environmental product applications. The segment's operating margin rate for the third quarter decreased 1 percentage point, primarily due to upfront license fees related to the electric motor product application in the prior year that did not recur. The year to date operating margin rate was flat.

Liquidity and Capital Resources

Net cash provided by operating activities of $463 million in the first nine months of 2026 decreased by $24 million compared to the same period last year. Increases in accounts receivable and accounts payable reflect growth in business activity in the third quarter of 2026. Significant uses of cash in the first nine months of 2026 included business acquisitions of $436 million, share repurchases of $463 million (partially offset by $45 million of net proceeds from shares issued), dividend payments of $145 million and plant and equipment additions of $48 million.

In the third quarter of 2026, the Company borrowed $219 million under its $750 million revolving credit facility in order to fund previously announced business acquisitions. In the third quarter of 2026, the Company made payments of $119 million against the revolving credit facility.

For the first nine months of 2025, significant uses of cash included share repurchases of $361 million (partially offset by $32 million from shares issued) and dividend payments of $138 million, business acquisitions totaling $70 million and plant and equipment additions of $34 million.

As of September 25, 2026, the Company had available liquidity of $808 million, including cash and cash equivalents of $140 million, of which $122 million was held outside of the U.S., and available credit under existing committed credit facilities of $668 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 $80 million. The Company may make opportunistic share repurchases going forward.

Outlook

While end market conditions remain mixed, we have confidence in the position of our businesses and the opportunities ahead. We remain focused on executing our strategy and delivering sustainable long-term growth and shareholder value.

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The Company estimates fourth quarter total company sales of $610 million to $640 million, including the acquisition of Valco Melton.

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 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 www.graco.com and the Securities and Exchange Commission’s website at www.sec.gov. 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 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

Evaluation of disclosure controls and procedures

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.

Changes in internal controls

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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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

Issuer Purchases of Equity Securities

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 of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (at end of period)
June 27, 2026 - July 24, 2026						514,108						$	73.93					514,108						18,279,781
July 25, 2026 - August 21, 2026						761,000						$	81.75					761,000						17,518,781
August 22, 2026 - September 25, 2026						401,000						$	78.67					401,000						17,117,781

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Item 5.Other Information

During the three months ended September 25, 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

3.1						Restated Articles of Incorporation as amended December 8, 2017. (Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K filed December 8, 2017.)
3.2						Restated Bylaws as amended February 17, 2023. (Incorporated by reference to Exhibit 3.2 to the Company’s 2024 Annual Report on Form 10-K.)
31.1						Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a).
31.2						Certification of Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a).
32						Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C.
99.1						Press Release Reporting Third Quarter Earnings dated October 21, 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:

October 21, 2026

By:

/s/ Mark W. Sheahan

Mark W. Sheahan

President and Chief Executive Officer

(Principal Executive Officer)

Date:

October 21, 2026

By:

/s/ Sanjiv Gupta

Sanjiv Gupta

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date:

October 21, 2026

By:

/s/ Christopher D. Knutson

Christopher D. Knutson

Vice President, Controller and Chief Accounting Officer

(Principal Accounting Officer)