固瑞克第二季度淨銷售5.906億美元增3% 淨利潤升14%

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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 June 26, 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)     

 

Minnesota41-0285640
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification Number)     

 

88 - 11th Avenue N.E.
Minneapolis,Minnesota55413
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareGGGThe 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☒

161,953,824 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding as of July 8, 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
14

Item 3.Quantitative and Qualitative Disclosures About Market Risk
21

Item 4.Controls and Procedures
21

PART II - OTHER INFORMATION

Item 1A.Risk Factors
22

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
23

Item 5.Other Information
24

Item 6.Exhibits
25

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 EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales$590,552 $571,806 $1,130,696 $1,100,090 
Cost of products sold273,608 272,276 533,111 522,827 
Gross Profit316,944 299,530 597,585 577,263 
Product development19,825 20,731 39,799 40,106 
Selling, marketing and distribution68,564 68,337 138,582 135,548 
General and administrative53,462 52,978 106,335 100,112 

Operating Earnings175,093 157,484 312,869 301,497 

Interest expense835 655 1,671 1,368 
Other (income) expense, net(7,196)(1,379)(10,345)(9,553)
Earnings Before Income Taxes181,454 158,208 321,543 309,682 
Income taxes36,528 30,585 58,110 57,958 
Net Earnings$144,926 $127,623 $263,433 $251,724 
Net Earnings per Common Share

Basic 
$0.89 $0.77 $1.60 $1.51 
Diluted 
$0.87 $0.76 $1.58 $1.48 

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (In thousands)

 Three Months EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Earnings$144,926 $127,623 $263,433 $251,724 
Components of other comprehensive (loss) income
Cumulative translation adjustment
(12,869)56,983 (25,011)76,886 
Pension and postretirement medical 
liability adjustment(23)(358)153 (274)
Income taxes - pension and postretirement
medical liability adjustment5 78 (28)57 
Other comprehensive (loss) income(12,887)56,703 (24,886)76,669 
Comprehensive Income$132,039 $184,326 $238,547 $328,393 

See notes to consolidated financial statements.
3

Table of Contents

GRACO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)

June 26,
2026December 26,
2025
ASSETS
Current Assets
Cash and cash equivalents$507,575 $624,083 
Accounts receivable, less allowances of $7,300 and $6,000
424,220 393,753 
Inventories393,719 401,138 
Other current assets49,036 52,907 
Total current assets1,374,550 1,471,881 
Property, Plant and Equipment, net748,505 755,064 
Goodwill575,675 585,304 
Other Intangible Assets, net283,456 303,851 
Operating Lease Assets22,750 26,073 
Deferred Income Taxes26,849 35,975 
Other Assets98,668 96,122 
Total Assets$3,130,453 $3,274,270 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable to banks$28,128 $23,072 
Current portion of long-term debt1,104 1,624 
Trade accounts payable101,787 78,573 
Salaries and incentives56,660 73,420 
Dividends payable47,820 48,705 
Other current liabilities223,853 241,867 
Total current liabilities459,352 467,261 

Retirement Benefits and Deferred Compensation85,610 87,179 
Operating Lease Liabilities15,998 18,131 
Deferred Income Taxes36,237 36,708 
Other Non-current Liabilities10,568 11,060 

Shareholders’ Equity
Common stock161,948 165,150 
Additional paid-in-capital1,026,376 994,566 
Retained earnings1,321,745 1,456,710 
Accumulated other comprehensive income12,619 37,505 
Total shareholders’ equity2,522,688 2,653,931 
Total Liabilities and Shareholders’ Equity$3,130,453 $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)

 Six Months Ended
 June 26,
2026June 27,
2025
Cash Flows From Operating Activities
Net Earnings$263,433 $251,724 
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization51,643 51,844 
Deferred income taxes9,769 7,392 
Share-based compensation15,569 16,594 
Gain on sale of building— (4,737)

Change in
Accounts receivable(35,138)(9,377)
Inventories3,652 10,983 
Trade accounts payable19,256 17,480 
Salaries and incentives(16,925)(3,190)
Retirement benefits and deferred compensation(665)(983)
Other accrued liabilities(7,198)(36,362)
Other(5,431)6,735 
Net cash provided by operating activities297,965 308,103 
Cash Flows From Investing Activities
Property, plant and equipment additions(28,516)(30,187)
Proceeds from sale of building— 10,840 
Acquisition of businesses, net of cash acquired— (10,454)
Other(57)(881)
Net cash used in investing activities(28,573)(30,682)
Cash Flows From Financing Activities
Borrowings (payments) on short-term lines of credit, net4,344 (930)

Payments on long-term debt and lines of credit(476)— 

Common stock issued50,854 29,318 
Common stock repurchased(331,134)(360,952)
Taxes paid related to net share settlement of equity awards(7,492)(3,833)
Cash dividends paid(97,665)(92,195)
Net cash used in financing activities(381,569)(428,592)
Effect of exchange rate changes on cash(4,331)10,756 
Net decrease in cash and cash equivalents(116,508)(140,415)
Cash and Cash Equivalents
Beginning of year624,083 675,336 
End of period$507,575 $534,921 

See notes to consolidated financial statements.
5

Table of Contents

GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited) (In thousands)

Common
StockAdditional
Paid-In
CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Three Months Ended June 26, 2026

Balance, March 27, 2026$165,907 $1,039,336 $1,511,649 $25,506 $2,742,398 
Shares issued55 4,859 — — 4,914 
Shares repurchased(4,014)(24,171)(286,994)— (315,179)
Stock compensation cost— 7,762 — — 7,762 
Restricted stock issued— (1,410)— — (1,410)
Net earnings— — 144,926 — 144,926 
Dividends declared ($0.295 per share)
— — (47,836)— (47,836)
Other comprehensive loss— — — (12,887)(12,887)
Balance, June 26, 2026$161,948 $1,026,376 $1,321,745 $12,619 $2,522,688 

Six Months Ended June 26, 2026

Balance, December 26, 2025$165,150 $994,566 $1,456,710 $37,505 $2,653,931 
Shares issued1,001 44,314 — — 45,315 
Shares repurchased(4,203)(25,312)(301,619)— (331,134)
Stock compensation cost— 14,761 — — 14,761 
Restricted stock issued— (1,953)— — (1,953)
Net earnings— — 263,433 — 263,433 
Dividends declared ($0.590 per share)
— — (96,779)— (96,779)
Other comprehensive loss— — — (24,886)(24,886)
Balance, June 26, 2026$161,948 $1,026,376 $1,321,745 $12,619 $2,522,688 

Three Months Ended June 27, 2025

Balance, March 28, 2025$167,218 $972,655 $1,367,455 $(29,608)$2,477,720 
Shares issued5 (2,187)— — (2,182)
Shares repurchased(1,586)(8,940)(112,337)— (122,863)
Stock compensation cost— 8,804 — — 8,804 
Net earnings— — 127,623 — 127,623 
Dividends declared ($0.275 per share)
— — (44,785)— (44,785)
Other comprehensive income— — — 56,703 56,703 
Balance, June 27, 2025$165,637 $970,332 $1,337,956 $27,095 $2,501,020 

Six Months Ended June 27, 2025

Balance, December 27, 2024$169,394 $955,051 $1,509,264 $(49,574)$2,584,135 
Shares issued627 24,858 — — 25,485 
Shares repurchased(4,384)(24,714)(331,854)— (360,952)
Stock compensation cost— 15,137 — — 15,137 
Net earnings— — 251,724 — 251,724 
Dividends declared ($0.550 per share)
— — (91,178)— (91,178)
Other comprehensive income— — — 76,669 76,669 
Balance, June 27, 2025$165,637 $970,332 $1,337,956 $27,095 $2,501,020 

See notes to consolidated financial statements.
6

Table of Contents

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 June 26, 2026 and the related statements of earnings, comprehensive income and shareholders' equity for the three and six months ended June 26, 2026 and June 27, 2025, and cash flows for the six months ended June 26, 2026 and June 27, 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 June 26, 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 EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Contractor
Net Sales$299,421 $288,959 $559,403 $543,991 
Cost of products sold145,817 149,539 279,460 281,422 
Gross Profit153,604 139,420 279,943 262,569 
Operating expenses62,443 63,931 126,547 125,150 
Contractor Operating Earnings$91,161 $75,489 $153,396 $137,419 

Industrial
Net Sales$249,237 $242,277 $489,649 $473,930 
Cost of products sold104,775 101,051 209,412 197,875 
Gross Profit144,462 141,226 280,237 276,055 
Operating expenses60,116 58,854 120,084 114,088 
Industrial Operating Earnings$84,346 $82,372 $160,153 $161,967 

7

Table of Contents

Expansion Markets
Net Sales$41,894 $40,570 $81,644 $82,169 
Cost of products sold21,409 19,566 40,581 39,729 
Gross Profit20,485 21,004 41,063 42,440 
Operating expenses10,997 12,175 21,932 23,546 
Expansion Markets Operating Earnings$9,488 $8,829 $19,131 $18,894 

Reportable Segment Operating Earnings Total$184,995 $166,690 $332,680 $318,280 
Unallocated corporate expense9,902 9,206 19,811 16,783 

Operating Earnings175,093 157,484 312,869 301,497 
Interest expense835 655 1,671 1,368 
Other (income) expense, net(7,196)(1,379)(10,345)(9,553)
Earnings Before Income Taxes$181,454 $158,208 $321,543 $309,682 

Geographic information follows (in thousands):

 Three Months EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales (based on customer location)
United States
$323,241 $305,027 $614,438 $587,584 
Other countries
267,311 266,779 516,258 512,506 
Total
$590,552 $571,806 $1,130,696 $1,100,090 

 June 26,
2026December 26,
2025
Long-lived Assets

United States
$591,145 $600,011 
Other countries
157,360 155,053 
Total
$748,505 $755,064 

3. Inventories

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

June 26,
2026December 26,
2025
Finished products and components$177,656 $175,684 
Products and components in various stages of completion116,181 123,866 
Raw materials and purchased components217,796 216,559 
Subtotal511,633 516,109 
Reduction to LIFO cost(117,914)(114,971)
Total$393,719 $401,138 

8

Table of Contents

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
SharesWeighted Average
Exercise PriceOptions
ExercisableWeighted Average
Exercise Price
Outstanding, December 26, 20259,786 $61.38 7,017 $52.94 
Granted1,000 92.86 
Exercised(839)39.71 
Canceled(170)81.40 
Outstanding, June 26, 20269,777 $66.06 7,066 $57.80 

The Company recognized year-to-date share-based compensation of $16 million in 2026 and $17 million in 2025. As of June 26, 2026, there was $36 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 2.8 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:

 Six Months Ended
 June 26,
2026June 27,
2025
Expected life in years
6.76.6
Interest rate
3.9 %4.4 %
Volatility
24.9 %26.2 %
Dividend yield
1.3 %1.3 %
Weighted average fair value per share
$27.17 $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:

 Six Months Ended
 June 26,
2026June 27,
2025
Expected life in years
1.01.0
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 EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net earnings available to common shareholders
$144,926 $127,623 $263,433 $251,724 
Weighted average shares outstanding for basic earnings per share163,711 165,785 164,671 167,173 
Dilutive effect of stock options computed using the treasury stock method and the average market price2,013 2,776 2,358 2,899 
Weighted average shares outstanding for diluted earnings per share165,724 168,561 167,029 170,072 
Basic earnings per share
$0.89 $0.77 $1.60 $1.51 
Diluted earnings per share
$0.87 $0.76 $1.58 $1.48 

Anti-dilutive shares not included in diluted earnings per share computation3,159 1,837 3,050 3,697 

6. Retirement Benefits

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

 Three Months EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Pension Benefits

Service cost
$1,166 $1,039 $2,332 $2,292 
Interest cost
2,647 2,568 5,295 4,711 
Expected return on assets
(3,273)(2,904)(6,548)(5,807)
Amortization and other
(74)202 (152)366 
Net periodic benefit cost
$466 $905 $927 $1,562 
Postretirement Medical

Service cost
$75 $78 $150 $153 
Interest cost
225 369 450 569 
Amortization
— (136)— (136)
Net periodic benefit cost
$300 $311 $600 $586 

7. Receivables and Credit Losses

Accounts receivable includes trade receivables of $409 million and other receivables of $15 million as of June 26, 2026 and $376 million and $18 million of trade receivables and other receivables, respectively, 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 EndedSix Months Ended
June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Balance, beginning$5,605 $5,360 $5,264 $4,973 
Additions (reversals) charged to costs and expenses827 (138)1,471 93 
Deductions from reserves (1)
(22)(3)(319)(5)
Other (deductions) additions (2)
(38)112 (44)270 
Balance, ending$6,372 $5,331 $6,372 $5,331 

(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 LifeIndefinite Life
Customer
RelationshipsPatents and
Proprietary
TechnologyTrademarks,
Trade Names
and OtherTrade 
NamesTotal
As of June 26, 2026
Cost
$201,562 $40,271 $4,786 $107,034 $353,653 
Accumulated amortization
(64,181)(9,202)(3,295)— (76,678)
Foreign currency translation326 994 5 5,156 6,481 
Book value
$137,707 $32,063 $1,496 $112,190 $283,456 
Weighted average life in years
14103N/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
13102N/A

Amortization of acquired and other intangible assets for the year to date was $14 million in 2026 and $13 million in 2025. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):

2026 (Remainder)2027202820292030Thereafter
Estimated Amortization Expense$11,277 $19,473 $17,384 $16,783 $16,010 $90,339 

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

ContractorIndustrialExpansion MarketsTotal
Balance, December 26, 2025$238,575 $275,263 $71,466 $585,304 
Adjustments from business acquisitions(397)254 — (143)

Foreign currency translation(4,897)(4,589)— (9,486)
Balance, June 26, 2026$233,281 $270,928 $71,466 $575,675 

On May 20, 2026, the Company entered into a definitive agreement to acquire Valco Melton for $447 million, subject to customary adjustments. Valco Melton is a global provider of adhesive application and quality assurance systems. The acquisition is expected to be completed during the third quarter of fiscal 2026 and funded with cash on hand.

9. Other Current Liabilities
Components of other current liabilities were as follows (in thousands):
June 26,
2026December 26,
2025
Accrued self-insurance retentions
$7,799 $8,013 
Accrued warranty and service liabilities
20,725 21,103 
Accrued trade promotions
8,402 7,511 
Payable for employee stock purchases
7,623 15,546 
Customer advances and deferred revenue
98,406 93,995 
Income taxes payable
13,495 15,493 
Tax payable, other11,774 14,693 
Right of return refund liability13,373 15,055 
Operating lease liabilities, current 6,982 8,769 

Other
35,274 41,689 
Total
$223,853 $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 expense5,554 
Margin on parts sales reversed1,927 
Reductions for claims settled(7,859)
Balance, June 26, 2026$20,725 

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 six months ended June 26, 2026, The Company recognized $27 million and $62 million, respectively, that was included in deferred revenue at December 26, 2025. During the three and six months ended June 27, 2025, the Company recognized $17 million and $46 million, respectively, that was included in deferred revenue at December 27, 2024.

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10. Fair Value

Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
LevelJune 26,
2026December 26,
2025
Assets
Cash surrender value of life insurance2$31,076 $28,893 
Forward exchange contracts216 — 
Total assets at fair value$31,092 $28,893 
Liabilities
Contingent consideration3$1,591 $1,649 
Deferred compensation28,840 8,336 
Forward exchange contracts2— 268 
Total liabilities at fair value$10,431 $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 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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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. The situation continues to evolve, and further legislative, regulatory, or judicial developments may affect the ultimate outcome and the availability or timing of any refunds. 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 three and six months ended June 26, 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 EndedSix Months Ended
 Jun 26,
2026Jun 27,
2025%
 ChangeJun 26,
2026Jun 27,
2025%
 Change
Net Sales
$590.6 $571.8 3 %$1,130.7 $1,100.1 3 %
Operating Earnings
175.1 157.5 11 %312.9 301.5 4 %
Operating Earnings, adjusted (1)
183.2 164.4 11 %329.3 315.8 4 %
Net Earnings
144.9 127.6 14 %263.4 251.7 5 %
Net Earnings, adjusted (1)
151.0 131.9 15 %269.2 258.0 4 %
Diluted Net Earnings per Common Share
$0.87 $0.76 14 %$1.58 $1.48 7 %
Diluted Net Earnings per Common Share, adjusted (1)
$0.91 $0.78 17 %$1.61 $1.52 6 %

(1) Adjusted operating earnings, adjusted net earnings and adjusted diluted net earnings per common share reflect the Company's updated non-GAAP methodology. See below for additional information.

Net sales for the second quarter increased 3 percent, with 3 percentage points of sales growth from acquired operations and 1 percentage point of sales growth from the effects of favorable changes in currency translation rates. Sales growth for the quarter was partially offset by a 1 percentage point organic decline related to the timing of finishing system sales and other project activity in the Industrial segment.
Operating earnings increased 11 percent for the second quarter. Adjusted operating earnings increased 11 percent, due primarily to a higher gross margin rate driven by lower operating expenses and the receipt of $9 million in tariff refunds, net of related surcharges.
Net earnings increased 14 percent for the second quarter. Adjusted net earnings increased 15 percent, driven by higher operating earnings and $5 million in lower exchange losses on net assets of foreign operations.
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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 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 EndedSix Months Ended
June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Operating earnings$175.1 $157.5 $312.9 $301.5 
Acquisition costs2.5 0.3 3.1 1.0 
Amortization of acquired intangible assets
5.6 6.6 13.3 13.3 

Operating earnings, adjusted$183.2 $164.4 $329.3 $315.8 

Earnings before income taxes, as reported$181.5 $158.2 $321.5 $309.7 
Acquisition costs2.5 0.3 3.1 1.0 
Amortization of acquired intangible assets5.6 6.6 13.3 13.3 

Earnings before income taxes, adjusted$189.6 $165.1 $337.9 $324.0 

Income taxes, as reported$36.5 $30.6 $58.1 $58.0 
Tax impact of acquisition costs0.5 0.1 0.7 0.2 
Tax impact of amortization of acquired intangible assets1.4 1.8 3.2 3.4 

Excess tax benefit from option exercises0.1 0.7 6.7 4.4 
Income taxes, adjusted$38.5 $33.2 $68.7 $66.0 

Effective income tax rate
   As reported20.1 %19.3 %18.1 %18.7 %
   Adjusted20.4 %20.1 %20.3 %20.4 %

Net Earnings, as reported$144.9 $127.6 $263.4 $251.7 
Acquisition costs, net of tax2.0 0.2 2.4 0.8 
Amortization of acquired intangible assets, net of tax4.2 4.8 10.1 9.9 

Excess tax benefit from option exercises(0.1)(0.7)(6.7)(4.4)
Net Earnings, adjusted$151.0 $131.9 $269.2 $258.0 

Weighted Average Diluted Shares165.7 168.6 167.0 170.1 
Diluted Earnings per Share
   As reported$0.87 $0.76 $1.58 $1.48 
   Adjusted$0.91 $0.78 $1.61 $1.52 

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

Three Months EndedSix Months Ended
June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales100.0 %100.0 %100.0 %100.0 %
Cost of products sold46.3 47.6 47.1 47.5 
Gross Profit53.7 52.4 52.9 52.5 
Product development3.4 3.6 3.5 3.6 
Selling, marketing and distribution11.6 12.0 12.3 12.3 
General and administrative9.1 9.3 9.4 9.2 

Operating Earnings29.6 27.5 27.7 27.4 
Interest expense0.1 0.1 0.1 0.1 

Other (income) expense, net(1.2)(0.2)(0.9)(0.9)
Earnings Before Income Taxes30.7 27.6 28.5 28.2 
Income taxes6.2 5.3 5.1 5.3 
Net Earnings24.5 %22.3 %23.4 %22.9 %

Net Sales

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

 Three Months EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Americas(1)
$371.4 $351.9 $705.8 $675.1 
EMEA(2)
127.8 129.9 253.4 250.9 
Asia Pacific91.4 90.0 171.5 174.1 
Consolidated$590.6 $571.8 $1,130.7 $1,100.1 

(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 MonthsSix Months
Volume and PriceAcquisitions CurrencyTotalVolume and PriceAcquisitions CurrencyTotal
Americas1%5%0%6%(1)%5%1%5%
EMEA(4)%0%2%(2)%(9)%5%5%1%
Asia Pacific(2)%2%2%2%(5)%1%2%(2)%
Consolidated(1)%3%1%3%(3)%4%2%3%

Gross Profit

The gross profit margin rate increased approximately 1 percentage point for the second quarter and was flat for the year to date from the comparable periods last year. For the quarter, price realization and the receipt of $9 million in tariff refunds, net of related surcharges, more than offset the unfavorable effects of lower margin rates from acquired operations. For the year to date, price realization and $9 million in tariff refunds, net of related surcharges, more than offset $6 million of incremental tariff costs, unfavorable product and channel mix and lower margin rates of acquired operations.

Operating Expenses

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Total operating expenses decreased modestly for the second quarter and increased $9 million (3 percentage points) year to date compared to the same periods last year. Incremental expenses from acquired operations of $5 million for the quarter and $11 million for the year to date were partially offset by decreases in stock compensation, product development spending and selling, marketing and distribution expenses.

Other (Income) Expense

Other non-operating income increased by $6 million in the second quarter and $1 million for the year to date from the comparable periods last year, primarily due to lower foreign exchange losses on net assets of foreign operations of $5 million and $6 million, respectively. 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 second quarter and 18 percent for the year to date. Adjusted to exclude the impacts of certain non-recurring items (see Consolidated Results for Comparability), the adjusted effective income tax rate of 20 percent for both the 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 EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales

Americas
$215.0 $201.4 $395.9 $377.3 
EMEA
59.9 61.1 116.1 115.6 
Asia Pacific
24.5 26.5 47.4 51.1 
Total
$299.4 $289.0 $559.4 $544.0 
Operating earnings as a percentage of net sales
30 %26 %27 %25 %

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

Three MonthsSix Months
Volume and PriceAcquisitionsCurrencyTotalVolume and PriceAcquisitions CurrencyTotal
Americas3%4%0%7%1%4%0%5%
EMEA(4)%0%2%(2)%(5)%0%5%0%
Asia Pacific(10)%0%2%(8)%(10)%0%3%(7)%
Segment Total0%3%1%4%(2)%3%2%3%

Contractor segment net sales growth for the second quarter and year to date included $7 million and $14 million, respectively, from acquired operations. Organic sales growth in the Americas for the second quarter and year to date was broad-based, and included growth in 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 increased 4 percentage points for the quarter and 2 percentage points for the year to date, primarily due to lower operating expenses and the net impact of tariff refunds and related surcharges of $5 million. 

Industrial Segment

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

 Three Months EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales

Americas
$131.6 $126.8 $263.0 $248.0 
EMEA
62.0 61.1 124.7 120.5 
Asia Pacific
55.6 54.3 101.9 105.4 
Total
$249.2 $242.2 $489.6 $473.9 
Operating earnings as a percentage of net sales
34 %34 %33 %34 %

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

Three MonthsSix Months
Volume and PriceAcquisitionsCurrencyTotalVolume and PriceAcquisitions CurrencyTotal
Americas(4)%7%1%4%(2)%7%1%6%
EMEA(2)%1%2%1%(12)%9%6%3%
Asia Pacific(2)%2%2%2%(7)%2%2%(3)%
Segment Total(3)%5%1%3%(5)%6%2%3%

Industrial segment incremental sales from acquired operations of $11 million in the second quarter and $31 million for the year to date more than offset an organic sales decline, which was primarily attributable to the timing of finishing system sales and other project-related activity compared to the respective periods last year. The operating margin rate for this segment was flat for the second quarter compared to the same period last year as an improved gross margin rate, primarily due to the second quarter net impact of tariff refunds and related surcharges of $4 million, offset the unfavorable effects of lower margin rates of acquired operations. For the year to date, the operating margin rate decreased 1 percentage point as lower operating expenses and the net impact of tariff refunds and related surcharges were unable to offset the unfavorable effects of lower margin rates of acquired operations. 

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 EndedSix Months Ended
 June 26,
2026June 27,
2025June 26,
2026June 27,
2025
Net Sales

Americas
$24.8 $23.8 $46.9 $49.8 
EMEA
5.8 7.6 12.6 14.7 
Asia Pacific
11.4 9.2 22.2 17.7 
Total
$42.0 $40.6 $81.7 $82.2 
Operating earnings as a percentage of net sales
23 %22 %23 %23 %

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

Three MonthsSix Months
Volume and PriceAcquisitions CurrencyTotalVolume and PriceAcquisitions CurrencyTotal
Americas4%0%0%4%(6)%0%0%(6)%
EMEA(24)%0%0%(24)%(15)%0%1%(14)%
Asia Pacific23%0%0%23%25%0%0%25%
Segment Total3%0%0%3%(1)%0%0%(1)%

Expansion Markets net sales increased 3% for the second quarter and decreased 1% year to date compared to the same periods last year. Improved order rates in the semiconductor product application drove most of the second quarter sales growth. The segment's operating margin rate increased 1 percentage point for the quarter due primarily to lower expenses. The year to date operating margin rate was flat, as lower expenses offset the impact of lower sales volume.

Liquidity and Capital Resources

Net cash provided by operating activities of $298 million in the first six months of 2026 decreased by $10 million compared to the same period last year. Increases in accounts receivable and accounts payable reflect growth in business activity in the second quarter of 2026. Significant uses of cash in the first half of 2026 included share repurchases of $331 million (partially offset by $43 million of net proceeds from shares issued), dividend payments of $98 million and plant and equipment additions of $29 million. 

For the first half of 2025, significant uses of cash included share repurchases of $361 million (partially offset by $25 million from shares issued) and dividend payments of $92 million and plant and equipment additions of $30 million.

As of June 26, 2026, the Company had available liquidity of $1,279 million, including cash and cash equivalents of $508 million, of which $174 million was held outside of the U.S., and available credit under existing committed credit facilities of $771 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.

Outlook
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. The Company estimates third quarter total company sales of $580 million to $600 million, excluding the impact of the Company's announced acquisition of Valco Melton, which is expected to close in the third quarter.

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 
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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; o