c39f0810796a39fbc358342b1c82f023792482614cab403d0fd4c93193f1feb8

Net Sales (USD, thousands)

Cost of products sold (USD, thousands)

Gross Profit (USD, thousands)

Product development (USD, thousands)

Selling, marketing and distribution (USD, thousands)

General and administrative (USD, thousands)

Operating Earnings (USD, thousands)

Interest expense (USD, thousands)

Other income, net (USD, thousands)

Earnings Before Income Taxes (USD, thousands)

Income taxes (USD, thousands)

Net Earnings (USD, thousands)

Basic Net Earnings per Common Share (USD)

Diluted Net Earnings per Common Share (USD)

ddfc7b721b960ca05a57cbeb43e7d7c54412fd675d8c1f245dfada8be804c014

Cash and cash equivalents were notably lower in Q4 2022 because the company experienced several negative cash flow impacts. **Net cash provided by operating activities** decreased by **$80 million**, reflecting higher working capital requirements, while **investing activities** used significantly more cash due to increased **capital additions** (rising from **$134 million** to **$201 million**) and higher ex-penditures on **business acquisitions** (increasing from **$19 million** to **$25 million**). In addition, **financing activities** saw a pronounced outflow, largely because of **share repurchases** amounting to **$233 million**, increased **dividends** to **$142 million**, and higher **debt payments**, all of which contributed to a net reduction of **$285.1 million** in cash and cash equivalents.  **[0000042888-23-000003_ggg12302022exhibit991q4.htm:6]** **[0000042888-23-000008_ggg-20221230.htm:41]** 

Why was Cash and cash equivalents notably lower in Q4 2022?

The significant increase in **Total Assets** in Q2 2023 was driven by several factors. Firstly, there was a notable rise in **Cash and Cash Equivalents**, which increased from **$339,196 thousand** to **$520,633 thousand**, primarily due to higher net earnings and a decrease in inventory purchases.  **[0000042888-23-000044_ggg-20230630.htm:1]** **[GGG_3385901_0]**  Additionally, **Accounts Receivable** grew from **$346,010 thousand** to **$365,818 thousand**, reflecting higher sales activity.  **[0000042888-23-000044_ggg-20230630.htm:1]**  The company also experienced an increase in **Property, Plant, and Equipment (PPE)**, with net PPE rising from **$607,609 thousand** to **$680,040 thousand** owing to capital expenditures on facility expansions.  **[0000042888-23-000044_ggg-20230630.htm:1]** **[GGG_3385901_0]**  Lastly, **Goodwill** increased from **$368,171 thousand** to **$371,880 thousand**, influenced by foreign currency translation adjustments.  **[0000042888-23-000044_ggg-20230630.htm:7]** 

What factors contributed to the significant increase in Total Assets in Q2 2023?

The jump in **Notes payable to banks** in Q1 2023 was primarily due to **borrowings on short-term lines of credit, net**, which amounted to **$20,721 thousand** during that quarter.  **[0000042888-23-000016_ggg-20230331.htm:2]** 

What prompted the jump in Notes payable to banks in Q1 2023?

**Long-term Debt is not reported in Q2 2023 because Graco Inc. repaid its long-term debt, resulting in no debt remaining on its balance sheet during that period. The repayment of **$75,000 thousand** of private placement debt (including a prepayment fee of **$700,000**) led to this change.**  **[0000042888-23-000044_ggg-20230630.htm:1]** **[GGG_3385901_0]** **[0000042888-23-000044_ggg-20230630.htm:2]** 

Why is Long-term Debt not reported in Q2 2023?

The spike in **Total Current Liabilities** in Q2 2023 was primarily driven by two factors. First, there was the introduction of a new entry for **Current Portion of Long-Term Debt** amounting to **$75,000 thousand** that was not present at the end of FY 2022. Second, the **Notes Payable to Banks** increased significantly by **$28,125 thousand** (from **$20,974 thousand** at the end of FY 2022 to **$49,099 thousand** in Q2 2023).  **[0000042888-23-000044_ggg-20230630.htm:1]** 

What drove the spike in Total current liabilities in Q2 2023?

882f273147a1a21d6998b28b1bc1a9fb95cd93b98310549ec09dddffd918de0c

The **operating cash flow** increased to **651,017 thousand USD in FY 2023** primarily due to **higher net earnings**, a significant **reduction in inventory purchases**, and favorable **other changes in working capital** such as adjustments in accounts receivable and trade accounts payable.  **[0000042888-24-000010_ggg-20231229.htm:50]** **[0000042888-24-000010_ggg-20231229.htm:41]** 

What drove operating cash flow up to 651,017 in FY 2023?

The Q1 2024 operating cash flow was reported at **$118,923 thousand**, which actually represents an **increase** compared to Q1 2023’s **$90,829 thousand**. This improvement was driven primarily by a **decrease in accounts receivable** (showing a reduction of **$28,828 thousand** versus an increase in the prior period), **lower cash outflows for inventories** (with a smaller rise in inventory levels compared to Q1 2023), and **improved trade accounts payable** (which rose by **$8,038 thousand**, in contrast to a decline previously). These factors collectively contributed to the net operating cash flow result in Q1 2024.  **[0000042888-24-000014_ggg-20240329.htm:2]** **[0000042888-24-000014_ggg-20240329.htm:9]** 

Why did operating cash flow fall to 118,923 in Q1 2024?

The documents do not provide a specific explanation for the drop in **Property, plant and equipment additions** to **(19,339.00)** in Q3 2024. However, they do show that over a nine‐month period, the total additions decreased from **$145,626 thousand** (nine months ended September 29, 2023) to **$92,788 thousand** (nine months ended September 27, 2024), indicating an overall reduced investment in these assets during this time frame.  **[0000042888-24-000029_ggg-20240927.htm:2]** 

What explains the steep drop in PPE additions to (19,339.00) in Q3 2024?

How did the strong operating cash flow in FY 2023 impact free cash flow levels?

410e59998a672324cc0f214e132e8b021be1eb18859e345bd47d14be191b6f1c

In Q4 2023, the notable spike in **Other income, net** was primarily driven by a **non-cash pension settlement loss of $42 million**. This was due to Graco Inc. transferring **$147 million of its pension obligations** to an insurance company via the purchase of an annuity contract, with the loss recorded as part of **Other non-operating expense**.  **[GGG_3371323_0]** **[0000042888-24-000003_ggg12292023exhibit991q4.htm:0]** 

What drove the spike in Other income, net in Q4 2023?

The dip in Basic EPS in Q4 2023 was primarily due to a **$42 million non-cash pension settlement loss**, which significantly reduced net earnings, combined with **increased operating expenses (up 8%)** driven by volume and rate-related increases. Additionally, lower net earnings overall—**$110 million compared to $126.2 million** in the previous year—along with an adjusted effective tax rate of **19%**, further contributed to the decrease in EPS.  **[0000042888-24-000003_ggg12292023exhibit991q4.htm:0]** **[GGG_3371323_0]** 

Why did Basic EPS dip in Q4 2023?

Graco’s Q4 2023 net earnings dropped primarily due to a **non-cash pension settlement loss of approximately $42 million** that significantly impacted the results. This was compounded by **an 8% increase in operating expenses** and certain **tax adjustments and excess tax benefits from stock option exercises**. Although currency translation provided a slight offset by increasing sales by about **$6 million**, it was not enough to counterbalance these negative factors.  **[GGG_3371323_0]** **[0000042888-24-000003_ggg12292023exhibit991q4.htm:0]** 

What caused the drop in Net Earnings in Q4 2023?

Operating Earnings were lower in Q1 2024 compared to Q1 2023 because they decreased by **15%**, dropping from **$156,668 thousand** to **$132,996 thousand**. This decline was driven by several factors including a **7% decrease in net sales** due to lower sales volumes across most regions, **increased operating expenses** (an additional **$5 million or 4% increase** driven by higher share-based compensation and product development spending), an **unfavorable product and channel mix**, and specific **challenges in segments** such as declines in the Contractor (6% decline in sales), Industrial (5% decline), and Process (10% decline) segments.  **[0000042888-24-000014_ggg-20240329.htm:1]** **[0000042888-24-000014_ggg4242024exhibit991q1.htm:0]** **[0000042888-24-000014_ggg-20240329.htm:3]** **[GGG_3381082_1]** 

Why were Operating Earnings lower in Q1 2024 compared to the prior year?

84d699354e129939ce05b611abe90959cee23546e927aa5e3cd5f5ddd668238d

Contractor

Industrial

Process

Expansion Markets

Total Revenue

76dd5ac6fb2cd189761cc2dcc3bfa5b91845ef2f543595d38a26cecc068b3dc4

Net Earnings [USD, thousands]

Depreciation and amortization [USD, thousands]

Share-based compensation [USD, thousands]

Salaries and incentives [USD, thousands]

Other operating activities [USD, thousands]

Net cash provided by operating activities [USD, thousands]

Property, plant and equipment additions [USD, thousands]

Acquisition of businesses, net of cash acquired [USD, thousands]

Other investing activities [USD, thousands]

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Common stock issued [USD, thousands]

Common stock repurchased [USD, thousands]

Taxes paid related to net share settlement of equity awards [USD, thousands]

Cash dividends paid [USD, thousands]

Net cash used in financing activities [USD, thousands]

Effect of exchange rate changes on cash [USD, thousands]

Net increase (decrease) in cash and cash equivalents [USD, thousands]

Deferred income taxes [USD, thousands]

Accounts receivable [USD, thousands]

Inventories [USD, thousands]

Trade accounts payable [USD, thousands]

Retirement benefits and deferred compensation [USD, thousands]

Other accrued liabilities [USD, thousands]

Borrowings on short-term lines of credit, net [USD, thousands]

Beginning of year cash and cash equivalents [USD, thousands]

End of period cash and cash equivalents [USD, thousands]

fa6e12b116d6950ff4ca46e9e1e931a5ad368df5270f651b91db7987ca88f80f

Graco Inc (GGG)

Financials