What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-21 compared with 2022-02-22 · 58 added, 70 removed, 154 unchanged (45% of the section changed)

1 unchanged sentence

We supply technology and expertise for the management of fluids and coatings in industrial and commercial applications.

We design, manufacture and market systems and equipment used to move, measure, control, dispense and spray fluid and powder materials.

We design, manufacture and market systems and equipment used to move, measure, mix, control, dispense and spray fluid and powder materials.

Our equipment is used in manufacturing, processing, construction and maintenance industries.

2 unchanged sentences

We aim to serve niche markets, providing high customer value through product differentiation.

Our products enable customers to reduce their use of labor, material and energy, improve quality and achieve environmental compliance.

Our products enable customers to reduce their use of labor, material and energy, improve quality and environmental performance.

We make significant investments in developing innovative, high-quality products.

9 unchanged sentences

We classify our business into three reportable segments, each with a worldwide focus:

Industrial, Process and Contractor.

Contractor, Industrial and Process.

Each segment sells its products in North, Central and South America (the “Americas”), Europe, Middle East and Africa (“EMEA”), and Asia Pacific.

Sales in the Americas represent approximately 58 percent of our Company’s total sales.

Sales in EMEA represent approximately 23 percent.

Sales in Asia Pacific represent approximately 19 percent.

For 2022, sales in the Americas represented approximately 60 percent of our Company’s total sales.

Sales in EMEA represented approximately 21 percent.

Sales in Asia Pacific represented approximately 19 percent.

We provide marketing and product design in each of these geographic regions.

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Certain of our businesses sell their products directly to end-user customers and have direct relationships with customers.

Outside of the U.S., our subsidiaries located in Australia, Belgium, Japan, Italy, Korea, the P.R.C., the United Kingdom and Brazil distribute our Company’s products.

Outside of the U.S., our subsidiaries located in Australia, Belgium, Spain, Japan, Italy, Korea, India, the P.R.C., the United Kingdom and Brazil distribute our Company’s products.

Operations in Maasmechelen, Belgium;

Gallen, Switzerland;

Shanghai, P.R.C.;

and Porto Alegre, Brazil reinforce our commitment to their regions.

and Shanghai, P.R.C.

reinforce our commitment to their regions.

Our manufacturing capacity is sufficient for current business demand levels.

Production requirements in the immediate future are expected to be met through existing facilities, planned facility expansions, the installation of new automatic and semi-automatic machine tools, efficiency and productivity improvements, the use of leased space and available subcontract services.

Construction is in progress on a facility in Dayton, Minnesota that will contain manufacturing operations for our high performance coatings and foam business as well as a portion of our Process division.

In 2022, we expect to begin facility expansion projects in our Sioux Falls, South Dakota;

In 2022, we completed a construction project on a new facility in Dayton, Minnesota that contains manufacturing operations for portions of our Contractor segment and Process division.

We also began facility construction and expansion projects in our Sioux Falls, South Dakota;

Gallen, Switzerland;

and Sibiu, Romania manufacturing facilities.

and Sibiu, Romania manufacturing facilities in 2022, as well as the construction of a new worldwide distribution center in Dayton, Minnesota.

We are in the planning and design phases of additional projects to expand capacity in other manufacturing and distribution locations in 2023 and beyond.

4 unchanged sentences

Gallen, Switzerland;

Barcelona, Spain;

Suzhou and Shanghai, P.R.C.;

16 unchanged sentences

Business Segments

Effective January 1, 2022, our high performance coatings and foam product offerings previously included within the Applied Fluid Technologies division of the Industrial segment were realigned and are now managed under the Contractor segment.

This change aligns the types of products offered and markets served within the segments.

Prior year segment information has been restated to conform to the current organizational structure.

Contractor Segment

The Contractor segment represented approximately 47 percent of our total sales in 2022.

Through this segment, we offer sprayers that apply paint to walls and other structures, with product models for users ranging from do-it-yourself homeowners to professional contractors.

Contractor equipment also includes sprayers that apply texture to walls and ceilings, highly viscous coatings to roofs, and markings on roads, parking lots, athletic fields and floors.

This segment also manufactures two-component proportioning systems that are used to spray polyurethane foam (spray foam) and polyurea coatings.

Spray foam is commonly used for insulating building walls, roofs, water heaters, refrigerators, hot tubs and other items.

Polyurea coatings are applied on storage tanks, pipes, roofs, truck beds, concrete and other items.

We offer a complete line of pumps and proportioning equipment that sprays specialty coatings on a variety of surfaces for protection and fireproofing.

End users of this segment are primarily professional painters in the construction and maintenance industries, specialty contractors, tradesmen and do-it-yourselfers.

Contractor products are marketed and sold in all major geographic areas.

We continue to add distributors throughout the world that specialize in the sale of Contractor products.

Globally, we are pursuing a broad strategy of converting contractors accustomed to manually applying paint and other coatings to spray technology.

Our Contractor products are distributed primarily though distributor outlets whose main products are paint and other coatings.

Certain sprayers and accessories are distributed globally through the home center channel.

Contractor products are also sold through general equipment distributors outside of North America.

Industrial Segment

The Industrial segment is our largest segment and represents approximately 42 percent of our total sales in 2021.

It includes the Industrial Products and Applied Fluid Technologies divisions.

The Industrial segment represented approximately 30 percent of our total sales in 2022.

It includes the Industrial and Powder divisions.

The Industrial segment markets equipment and solutions for moving and applying paints, coatings, sealants, adhesives and other fluids.

1 unchanged sentence

End users often invest in our equipment to gain process efficiencies, improve quality or save on material or energy costs.

A majority of this segment's business is outside of North America.

Most Industrial segment equipment is sold worldwide through specialized third-party distributors, integrators, design centers, original equipment manufacturers and material suppliers.

1 unchanged sentence

We work with material suppliers to develop or adapt our equipment for use with specialized or hard-to-handle materials.

Distributors promote and sell the equipment, hold

inventory, provide product application expertise and offer on-site service, technical support and integration capabilities.

Distributors promote and sell the equipment, hold inventory, provide product application expertise and offer on-site service, technical support and integration capabilities.

Integrators implement large individual installations in manufacturing plants where products and services from a number of different manufacturers are aggregated into a single system.

1 unchanged sentence

Original equipment manufacturers incorporate our Company’s Industrial segment products into systems and assemblies that they then supply to their customers.

Applied Fluid Technologies

The Applied Fluid Technologies division designs and sells equipment for use by industrial customers and specialty contractors.

This equipment includes two-component proportioning systems that are used to spray polyurethane foam (spray foam) and polyurea coatings.

Spray foam is commonly used for insulating building walls, roofs, water heaters, refrigerators, hot tubs and other items.

Polyurea coatings are applied on storage tanks, pipes, roofs, truck beds, concrete and other items.

We offer a complete line of pumps and proportioning equipment that sprays specialty coatings on a variety of surfaces for protection and fireproofing.

This division also manufactures equipment that pumps, meters, mixes and dispenses sealant, adhesive and composite materials.

Our advanced composite equipment includes gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators and precision dispensing solutions.

This equipment bonds, molds, seals, vacuum encapsulates and laminates parts and devices in a wide variety of industrial applications.

Industrial Products

The Industrial Products division makes finishing equipment that applies paint and other coatings to products such as motor vehicles, appliances, furniture and other industrial and consumer products.

A majority of this division’s business is outside of North America.

The Industrial division makes liquid finishing and advanced fluid dispense equipment primarily for use in industrial applications.

This division’s products include liquid finishing equipment that applies liquids on metals, wood and plastics, with emphasis on solutions that provide easy integration to paint monitoring and control systems.

Products include paint circulating and paint supply pumps, paint circulating advanced control systems, plural component coating proportioners, various accessories to filter, transport, agitate and regulate fluid, and spare parts such as spray tips, seals and filter screens.

We also offer a variety of applicators that use different methods of atomizing and spraying the paint or other coatings depending on the viscosity of the fluid, the type of finish desired and the need to maximize transfer efficiency, minimize overspray and minimize the release of volatile organic compounds into the air.

The Industrial division also offers a variety of applicators that use different methods of atomizing and spraying liquid materials, paint or other coatings depending on the viscosity of the fluid, the type of finish desired and the need to maximize transfer efficiency, minimize overspray and minimize the release of volatile organic compounds into the air.

Manufacturers in the automotive, automotive feeder, commercial and recreational vehicle, military and utility vehicle, aerospace, farm, construction, wood and general metals industries use our liquid finishing products.

This division also makes powder finishing products and systems that coat powder finishing on metals.

The Industrial division also manufactures equipment for industrial customers that pumps, meters, mixes and dispenses sealant, adhesive and composite materials.

Advanced fluid dispense equipment includes gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators and precision dispensing solutions.

This precision dispense equipment bonds, molds, seals, vacuum encapsulates and laminates parts and devices in a wide variety of industrial applications.

The Powder division makes powder finishing products and complete powder finishing systems that coat powder on metals.

These products are sold under the Gema® and SAT™ brands.

Gema powder systems coat window frames, metallic furniture, automotive components and sheet metal.

Primary end users of our powder finishing products include manufacturers in the construction, home appliance, automotive component and custom coater industries.

Gema powder systems coat window frames,

metallic furniture, automotive components and sheet metal.

Primary end users of our powder finishing products include manufacturers in the construction, home appliance, automotive component and custom project coater industries.

We strive to provide innovative solutions in powder coating for end users in emerging and developed markets.

1 unchanged sentence

The Process segment represented approximately 23 percent of our total sales in 2022.

It includes our Process, Oil and Natural Gas, and Lubrication divisions.

It includes the Process and Lubrication divisions.

The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food, lubricants and other fluids.

2 unchanged sentences

Some products are sold directly to end users, particularly in the oil and natural gas and semiconductor industries.

Our Process division makes pumps of various technologies that move chemicals, water, wastewater, petroleum, food and other fluids.

The Process division makes pumps of various technologies that move chemicals, water, wastewater, petroleum, food and other fluids.

Manufacturers and processors in the food and beverage, dairy, pharmaceutical, cosmetic, oil and natural gas, semiconductor, electronics, wastewater, mining and ceramics industries use these pumps.

This division makes environmental monitoring and remediation equipment that is used to conduct ground water sampling and ground water remediation, and for landfill liquid and gas management.

Oil and Natural Gas

Our Oil and Natural Gas division makes high pressure and ultra-high pressure valves used in the oil and natural gas industry, other industrial processes and research facilities.

Our high and ultra-high pressure valves are sold directly to end-user customers as well as through distribution worldwide.

The division also has a line of chemical injection pumping solutions for precise injection of chemicals into producing oil wells and pipelines and is sold through third-party distributors.

The Lubrication division designs and sells equipment for use in vehicle servicing.

The Lubrication division primarily designs and sells equipment for use in equipment maintenance and vehicle servicing.

We supply pumps, hose reels, meters, valves and accessories for use by fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders and heavy equipment service centers.

The Lubrication division also offers systems, components and accessories for the automatic lubrication of bearings, gears and generators in industrial and commercial equipment, compressors, turbines and on- and off-road vehicles.

Automatic lubrication systems reduce maintenance needs and down time and extend the life of the equipment.

Industries served include gas transmission, petrochemical, pulp and paper, mining, construction, agricultural equipment, food and beverage, material handling, metal manufacturing, wind energy and oil and natural gas.

Contractor Segment

The Contractor segment represented approximately 38 percent of our total sales in 2021.

Through this segment, we offer sprayers that apply paint to walls and other structures, with product models for users ranging from do-it-yourself homeowners to professional painting contractors.

Contractor equipment also includes sprayers that apply texture to walls and ceilings, highly viscous coatings to roofs, and markings on roads, parking lots, athletic fields and floors.

This segment’s end users are primarily professional painters in the construction and maintenance industries, tradesmen and do-it-yourselfers.

Contractor products are marketed and sold in all major geographic areas.

We continue to add distributors throughout the world that specialize in the sale of Contractor products.

Globally, we are pursuing a broad strategy of converting contractors accustomed to manually applying paint and other coatings by brush-and-roller to spray technology.

Our Contractor products are distributed primarily though distributor outlets whose main products are paint and other coatings.

Certain sprayers and accessories are distributed globally through the home center channel.

Contractor products are also sold through general equipment distributors outside of North America.

2022 Change in Organizational Structure

As previously announced, effective January 1, 2022, our high performance coatings and foam product offerings within the Applied Fluid Technologies division of the Industrial segment were realigned and are now managed under the Contractor segment.

High performance coatings and foam equipment includes two-component proportioning systems to spray foam and polyurea coatings, equipment that sprays specialty coatings for protection and fireproofing and vapor-abrasive blasting equipment.

Also effective January 1, 2022, our Oil and Natural Gas division is now combined into our Lubrication division, with no impact to Process segment reporting.

These changes will allow leadership to address overlap of markets, products, end users and distributors between the businesses.

Segment operating results will be reported under the new organizational structure commencing with the first quarter of 2022, in connection with the effective date of the realignment.

Historic segment information restated to conform to the new organizational structure is available as supplemental financial information on the Company’s website at www.graco.com.

This division also offers systems, components and accessories for the automatic lubrication of bearings, gears and generators in industrial and commercial equipment, compressors, turbines and on- and off-road vehicles.

Automatic lubrication systems reduce maintenance costs, downtime and extend equipment life.

These systems are utilized across a variety of industries including construction, mining, industrial manufacturing, transportation, wind energy and oil and natural gas.

The Lubrication division also manufactures high pressure and ultra-high pressure valves used in the oil and natural gas industry, hydrogen refueling infrastructure, other industrial processes and research facilities.

The division also has a line of chemical injection pumping solutions for precise injection of chemicals into producing oil wells and pipelines.

Raw Materials

6 unchanged sentences

electronic components and high performance plastics, such as polytetrafluoroethylene (PTFE).

The materials and components that we use are generally adequately available through multiple sources of supply.

The materials and components that we use are generally available through multiple sources of supply.

To manage cost, we source significant amounts of materials and components from outside the U.S., primarily in the Asia Pacific region.

In 2021, we experienced logistical and production constraints associated with raw materials and purchased components.

In 2022, we continued to experience logistical and production constraints associated with raw materials and purchased components.

These constraints were due to limited component availability, reduced freight capacity, shipping delays, and labor shortages.

While we were generally able to find alternative suppliers to source raw materials and components for our products as interruptions persisted, these constraints reduced our ability to meet strengthening demand and increased lead times across many of our product lines.

While we were generally able to find alternative suppliers to source raw materials and components for our products as interruptions persisted, these constraints reduced our ability to meet demand and increased lead times across many of our product lines.

Additionally, we experienced price inflation related to raw materials and purchased components.

31 unchanged sentences

allows us to flex employee resources as needed to respond to changes in demand of our business.

Our manufacturing, product development, warehouse and

administrative employees are generally located in the same or adjacent facilities, which we believe contributes to our culture of strong manufacturing, engineering and customer service capabilities.

Our manufacturing, product development, warehouse and administrative employees are generally located in the same or adjacent facilities, which we believe contributes to our culture of strong manufacturing, engineering and customer service capabilities.

Health, Wellness & Safety

2 unchanged sentences

Our Health, Wellness and Safety program is designed to increase engagement, reduce absenteeism due to illness or injury, provide healthier lifestyle choices, and reduce health risk factors for our employees.

Our experience with – and ongoing commitment to – workplace health and safety has enabled us to remain operational throughout the COVID-19 pandemic while at the same time protecting the health and safety of our employees and workplace visitors.

We have implemented a variety of comprehensive protocols, practices, operational changes, workplace modifications and arrangements.

Employees have adapted to evolving conditions and continue to adapt as processes and procedures are adjusted and aligned with public health authority recommendations and requirements.

Total Rewards

7 unchanged sentences

This approach has helped create among our employees an in-depth understanding of our business, products, competition and customers, while also adding new employee ideas and perspectives in support of our continuous improvement initiatives.

Our executive officers responsible for setting overall strategy average nearly 21 years of tenure with us.

As of December 30, 2022, our executive officers responsible for setting overall strategy average nearly 21 years of tenure with us.

Tenure of all employees averages nearly 10 years, reflective of our positive workplace culture.

3 unchanged sentences

All employees are encouraged, under a continuous improvement program with financial incentives, to submit ideas to improve profitability, quality, safety and environmental practices.

New employee orientations and regular ethics training are required for all employees.

New employee orientation and regular ethics training are required for all employees.

We complete a biennial survey of our employees to assess our culture, benchmark us against industry leaders, and to make improvements as necessary.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business