What changed in this filing

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Item 1. Business

2025-02-18 compared with 2024-02-20 · 39 added, 31 removed, 175 unchanged (29% of the section changed)

13 unchanged sentences

These acquisitions may be integrated into existing Graco operations or may be managed as stand-alone operations.

We completed business acquisitions in 2022 and 2021 that were not material to our consolidated financial statements.

In 2024, we completed acquisitions in the Contractor and Process segments.

These acquisitions provide new product offerings, such as high-performance volumetric and gravimetric dispense, mixing, and shaking equipment, as well as additional channel partners and manufacturing capabilities.

Note L (Acquisitions) to the Consolidated Financial Statements of this Form 10-K has additional information on recent acquisitions.

We have particularly strong manufacturing, engineering and customer service capabilities that enhance our ability to provide premium customer experience, produce high-quality and reliable products and drive ongoing cost savings.

1 unchanged sentence

Values central to our identity - growth, product innovation, premium customer service, quality and continuous improvement - are leveraged to integrate and expand the capabilities of acquired businesses.

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

In 2024, we classified our business into three reportable segments, each with a worldwide focus:

Contractor, Industrial and Process.

9 unchanged sentences

We manufacture a majority of our products in the United States (“U.S.”).

We also manufacture products in Switzerland (Industrial segment), Italy (Industrial segment), the United Kingdom (Process segment), the People’s Republic of China (“P.R.C.”, or "China") (all segments), Belgium (all segments) and Romania (Industrial segment).

We also manufacture products in Switzerland (Industrial segment), Italy (Industrial and Contractor segments), the People’s Republic of China (“P.R.C.”, or "China") (all segments), India (Contractor segment), Belgium (all segments) and Romania (Industrial segment).

Our manufacturing is aligned with our business segments and is co-located with product development to accelerate technology improvements and improve our cost structure.

We perform critical machining, assembly and testing in-house for most of our products to control quality, improve response time and maximize cost-effectiveness.

We perform critical machining, assembly and testing in-house for most of our products to

control quality, improve response time and maximize cost-effectiveness.

We make our products in focused factories and product cells.

4 unchanged sentences

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, St.

Gallen, Switzerland, and Shanghai, P.R.C.

Operations in Maasmechelen, Belgium, Gossau, Switzerland, Modena, Italy, Gujarat, India and Shanghai, P.R.C.

reinforce our commitment to those regions.

Our manufacturing capacity is sufficient for current business demand levels.

In 2024, we completed significant expansion projects, including a worldwide distribution center in Dayton, Minnesota, a manufacturing and distribution facility for our Powder division in Gossau, Switzerland and the expansion of our Anoka, Minnesota facility.

In 2023, we completed an expansion of our Sioux Falls, South Dakota manufacturing facility and the construction of a new manufacturing facility in Sibiu, Romania.

We also took possession of our newly constructed worldwide distribution center in Dayton, Minnesota, which we anticipate will first be operational later in 2024.

In addition, in 2023, we continued construction of a new facility in St.

Gallen, Switzerland that will contain manufacturing operations for our Powder division, as well as began an expansion of our Anoka, Minnesota facility.

The completion of these projects, which we expect to occur in 2024, represents the culmination of a period of significant investment in expansion and modernization of our key manufacturing and distribution facilities.

Following completion of these projects, production requirements in the immediate future are expected to be met through existing facilities, the installation of new automatic and semi-automatic machine tools, efficiency and productivity improvements, the use of leased space and available subcontract services.

The completion of these projects represents the culmination of a period of significant investment in expansion and modernization of our key manufacturing and distribution facilities.

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

For more details on our facilities, see Item 2, Properties.

2 unchanged sentences

North Canton, Ohio;

Gallen, Switzerland;

Gossau, Switzerland;

Modena, Italy;

Barcelona, Spain;

Aachen, Germany;

Suzhou, Shanghai and Dongguan City, P.R.C.;

Suzhou, Shanghai, P.R.C.;

Dexter, Michigan;

7 unchanged sentences

The amounts invested in product development averaged approximately 4 percent of sales over the last three years.

Our product development activities are focused both on upgrades to our current product lines to provide features and benefits that will provide a return on investment to our end-user customers and development of products that will reach into new industries and applications to incrementally grow our sales.

Our product development activities are focused both on upgrades to our current product lines to provide features and benefits that will provide a return on investment to our end-user customers and the development of products that will reach into new industries and applications to incrementally grow our sales.

Sales of products that refresh and upgrade our product lines are measured and compared with planned results.

Sales of products that provide entry into new industries and applications are also measured, with additional focus on commercial resources and activities to build specialized third-party distribution and market acceptance by end users.

Sales of products that provide entry into new industries and applications are also measured, with an additional focus on commercial resources and activities to build specialized third-party distribution and market acceptance by end users.

Our Company measures the results of acquired businesses as compared to historical results and projections made at the time of acquisition.

1 unchanged sentence

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

1 unchanged sentence

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.

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 as well as high-performance volumetric and gravimetric dispense, mixing, and shaking equipment.

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.

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.

10 unchanged sentences

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.

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

Markets served include automotive and vehicle assembly and components production, including Electro or e-mobility, wood and metal products, rail, marine, aerospace, farm, construction, bus, recreational vehicles and various other industries.

15 unchanged sentences

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.

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.

1 unchanged sentence

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.

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.

16 unchanged sentences

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

2025 Change in Organizational Structure

As previously announced, effective January 1, 2025, the Company has classified its business into three reportable segments:

Contractor, Industrial and Expansion Markets.

• The Industrial segment consists of the newly formed Industrial Division and the Powder Division.

The Company’s former Industrial and Lubrication Equipment Divisions, along with the Process Transfer Equipment business that was part of the Company’s former Process Division, were combined to form the new global Industrial Division.

The Powder Division remains unchanged.

• The Expansion Markets segment consists of the Expansion Markets Division and will focus on driving inorganic growth in new and adjacent markets.

The Company’s environmental, semiconductor, high-pressure valves and electric motors businesses, together with select future ventures and acquisitions, reside within this division.

• The Contractor segment remains unchanged as a reporting segment relative to prior periods.

Segment operating results will be reported under the new organizational structure for the first quarter of 2025.

Segment information recast to conform to the new organizational structure is available as unaudited supplemental financial information on the Company’s website at www.graco.com.

Raw Materials

8 unchanged sentences

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

In 2023, the Company's supply chain stabilized, and the associated effects of inflation largely subsided.

While the Company experienced isolated supply chain disruptions in 2023, the impact was not as significant as compared to previous years in 2022 and 2021.

We are generally able to find alternative suppliers to source raw materials and components for our products in the event of isolated disruptions.

In 2024, the Company's global supply chain continued to stabilize, including improved lead times and lower inflationary effects.

Our efforts to identify alternative suppliers to source raw materials and components for our products as a result of the COVID-19 pandemic and other geopolitical tensions have improved our ability to mitigate isolated supply chain disruptions.

We endeavor to address fluctuations in the price and availability of various materials and components through close management of current suppliers, price negotiations and an intensive search for new suppliers.

6 unchanged sentences

Our Company also owns a number of trademarks in the U.S.

and foreign countries, including registered trademarks for “GRACO,” “Gema,” several forms of a capital “G,” and various product trademarks that are material to our business, inasmuch as they identify Graco and our products to our customers.

and foreign countries, including registered trademarks for "GRACO," "Gema," "Corob," several forms of a capital “G,” and various product trademarks that are material to our business, inasmuch as they identify Graco and our products to our customers.

We encounter a wide variety of competitors that vary by product, industry and geographic area.

5 unchanged sentences

We also face competitors with different cost structures and expectations of profitability, and these companies may offer competitive products at lower prices.

We refresh our product line and continue development of our distribution channel to stay competitive.

We refresh our product lines and continue the development of our distribution channel to stay competitive.

We also face competitors who illegally sell counterfeits of our products or otherwise infringe on our intellectual property rights.

25 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.

As of December 29, 2023, our executive officers responsible for setting overall strategy averaged nearly 21 years of tenure with us.

As of December 27, 2024, our executive officers responsible for setting overall strategy averaged nearly 23 years of tenure.

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

12 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